The Civil Aviation Authority (CAA) has rejected a "disproportionate" request for funding from Heathrow which would have increased passenger charges by 10%.

Heathrow said on Thursday a first quarter loss of £329m took total losses since the start of the pandemic to nearly £2.4bn.

It said only 1.7m passengers travelled through the London airport in the three months to 31 March, down 91% compared to the first quarter of 2019.

Heathrow is attempting to offset these losses incurred because of the pandemic.  It wants to increase passenger charges by £2, but the CAA says it will allow only 30p.  Meanwhile, British Airways-owner IAG said it was "extremely disappointed" with the CAA´s decision to grant even a smaller increase which it said "will unfairly penalise consumers."

In a war of words Heathrow said the CAA had recognised the need for action to support its business, but had "failed to deliver."

It said this would undermine investor confidence in UK regulated businesses, and put the Government's infrastructure agenda at risk.

Heathrow is controlled by interests including Spanish builder Ferrovial SA, the Qatar Investment Authority, private-equity firm Alinda Capital Partners and China Investment Corp. Qatar Airways is the largest shareholder in IAG.

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.  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.”  Heathrow will now have to seek further finance from investors.