London, April 1, 2026, 15:13 BST
International Consolidated Airlines Group SA (IAG) may catch a break on costs after Britain’s aviation regulator floated just a modest increase in Heathrow passenger fees for the 2027-2031 period. That’s significant for the owner of British Airways, which is based at Heathrow.
The proposal drops a little more than five weeks ahead of IAG’s first-quarter results, set for May 8, and arrives as European airlines face higher fuel costs and network headaches tied to Middle East unrest. For Heathrow, the next price-control period—covering charges from 2027 through 2031—stands out as a major flashpoint on costs for airlines based at the airport.
The Civil Aviation Authority is backing a passenger charge at Heathrow in the 27.20 to 30.50 pound range, landing on a 28.80 pound midpoint—just a shade above the current 28.40 pounds. That target sits 16% under Heathrow’s projection, but it’s still 25% higher than what airlines had pressed for. “This draft aims for fairness but keeps investment in play,” CAA consumer and markets chief Selina Chadha said. Heathrow boss Thomas Woldbye countered, warning the cap could mean hard choices on passenger service and slow down projects. The airport is looking to handle roughly 85 million travelers this year and has a 33 billion pound expansion goal, though that project falls outside the present pricing scope. Civil Aviation Authority
IAG heads into the conversation on the back of improved earnings. Back in February, the company reported a 13% jump in 2025 operating profit before exceptional items, reaching 5.02 billion euros, as lower fuel costs and steady demand on key North Atlantic routes gave a lift. Over the next 12 months, IAG has promised to return 1.5 billion euros to shareholders. Chief Executive Luis Gallego noted, “Since Q3 we have seen a rebound,” citing strong premium and corporate demand at British Airways. Reuters
But the immediate pressure is showing up in other regions. British Airways has pushed back flights to Amman, Bahrain, Dubai and Tel Aviv through May 31, and to Doha until April 30, according to Reuters. Abu Dhabi is still off the schedule until further notice later this year. Iberia Express is also scrapping Tel Aviv flights through May 31.
IAG, on March 10, said it isn’t moving to hike ticket prices just yet, pointing to its fuel hedges that secure prices for now and cover the short-to-medium term. Temporary relief, though, not a shield—consultant Rigas Doganis called the situation a “perfect storm” if softening demand ends up combining with stubbornly high fuel bills. For Barclays analyst Andrew Lobbenberg, there’s only one lever: “the only way to get prices up is to reduce capacity.” Reuters
Several rivals aren’t mincing words. Ryanair boss Michael O’Leary warned Wednesday that airlines could face flight cancellations if jet fuel supplies come under pressure during June, July, or August. J.P. Morgan numbers, relayed via Reuters, suggest a lasting 10% jump in jet fuel costs would take a 3% to 10% bite out of operating profit at IAG, Air France-KLM, Lufthansa, and Ryanair.
Heathrow’s reprieve remains temporary. The CAA will lay out its final proposals in November, with an ultimate ruling set for April 2027. Meanwhile, the energy squeeze isn’t letting up—IEA chief Fatih Birol warned Wednesday that tight supplies of jet fuel and diesel, now squeezing Asia, could hit Europe by April or May. For IAG, the draft price cap removes one immediate headache, but it doesn’t guarantee relief through the summer.
