Heathrow may have to turn to its sovereign wealth fund shareholders, including those from Qatar, China and Singapore, for a cash injection after the UK aviation regulator blocked its “disproportionate” bid to raise airport charges to recoup £2.6bn lost during the pandemic. However, airlines reacted with anger as the Civil Aviation Authority (CAA) still permitted a smaller rise of £300m in 2022, and warned that the money would be passed on to passengers in higher fares. The CAA’s consumers and markets director, Paul Smith, described Heathrow’s request as “disproportionate and not in the interests of consumers”. He said: “We do, however, recognise that these are exceptional circumstances for the airport and there are potential risks to consumers if we take no action in the short term.” Heathrow expects losses of up to £3bn during the crisis, including an annual loss of £2bn for 2020, as its passenger numbers have plunged to their lowest levels since the 1960s because of travel bans. About 542,000 people travelled through the west London airport in March, down 83% year on year, while cargo volumes fell by more than a quarter. The airport asked the CAA for a £2.6bn increase under the funding model that recovers airport investment through landing charges. Instead the regulator has agreed a £300m interim adjustment, adding about 30p per passenger, a 1.5% rise, in 2022. The CAA will consider potential further raises as part of the airport’s next regulatory period, which begins on 1 January, “but only if it brings long-term benefits to consumers”. The CAA’s ruling noted: “We are clear that any risks to Heathrow’s actual financing are a matter for its shareholders, not for consumers to resolve.” Smith added: “The decision we have announced today will incentivise and allow Heathrow to maintain investment, service quality and be proactive in supporting any potential surge in consumer demand later this year.” Heathrow, whose major shareholders are the Spanish infrastructure group Ferrovial, the Qatar Investment Authority, the sovereign wealth funds of Singapore and China, and pension funds, said the CAA decision undermined investor confidence in UK businesses. “The CAA accepted the need for it to act in order to meet its duties to consumers and to Heathrow’s financeability – but today it has failed to deliver,” a Heathrow spokesperson said. “The interim adjustment falls far short. This undermines investor confidence in UK regulated businesses, and puts at risk the government’s infrastructure agenda.” IAG, the parent company of British Airways, which operates most of the flights at the airport, expressed disappointment that the CAA was allowing an interim increase, saying it would “unfairly penalise consumers”. Heathrow is already the most expensive hub airport in the world, IAG said, and it should seek funds from its shareholders. “For over seven years, passengers paid Heathrow higher airport charges to cover the risk in the case of lower traffic,” IAG said. “Meanwhile, Heathrow’s shareholders have earned nearly £4bn in dividends.” Willie Walsh, the former BA and IAG chief who now heads the International Air Transport Association, said: “The CAA have caved to pressure from Heathrow. Consumers will pay millions more to travel, to the benefit of Heathrow’s shareholders. “Heathrow’s landing charges are already the highest in the world, damaging UK competitiveness and burdening travellers … We do agree with the finding of the CAA that Heathrow must invest in better services for airlines and travellers.” The CAA also confirmed that Heathrow would be allowed to recover up to £500m spent in developing a planned third runway at the airport, a further bone of contention with airlines. IAG and others have objected to paying for infrastructure that has yet to be delivered, and whose completion has been placed in doubt by political opposition and the decline in flying.