UK airports warn of higher air fares and fewer routes if business rates soar

Current business rates at Heathrow equate to £1.40 per passenger

Highly rated: London Heathrow Terminal 5 (Simon Calder)

Air fares will rise and some routes will be cancelled if Britain’s airports are hit with a £1bn increase in business rates, the chancellor is to be warned.

Sky News has seen a draft letter from the trade association AirportsUK to Rachel Reeves which warns of a “catastrophic” impact from April 2026 if the rise in the property tax goes ahead.

AirportsUK represents more than 50 airports, including the five biggest: Heathrow, Gatwick, Stansted and Luton in the London area, as well as Manchester.

The letter says: “Airports are already some of the largest ratepayers in the country.”

Airports tend to have a large footprint and considerable business activity. Analysing the most recent financial results from Heathrow, Britain’s busiest airport is likely to pay £116m in the current year in business rates – less than it spends on utilities, and representing about £1.40 per passenger.

The Independent estimates the total payable by the airport sector to be £350m-450m.

AirportsUK says the revaluations will result in the industry being forced to pay more than £1bn – with some airports having to pay 12 times as much as currently.

The government said in the Budget that it would cut business rates for High Street retail, hospitality and leisure properties from 2026-27 – with the shortfall made up “through a higher multiplier for the most valuable properties”

Sky News says AirportsUK will tell Ms Reeves the rate rise “is equivalent to doubling the corporation tax levied on the sector, at a time when the government has committed to stable tax and policy regimes to drive business confidence and stimulate private sector investment”.

The letter warns: “Investment in airport assets will decrease, routes to and from the UK will be lost (as can already be seen in Germany where taxes are rising), trade will be hurt, and British travellers will be hit with higher costs and less choice.

“Without our sector as a major partner, the government’s ambition to secure the highest growth rate in the G7 and unlock an investment-led approach to transforming the economy will be materially damaged,” the letter says.

AirportsUK says any rise will threaten the nation’s status as a leader in aviation and a hub for global connectivity and trade. The letter says airports will have to scale back investment or cut routes.

“This would imperil your growth mission before it even gets started, and we request an urgent meeting in December to resolve this matter,” the letter says.

A spokesperson for AirportsUK told The Independent: “It is disappointing that this private letter has been made public. We work closely with government on a range of issues of importance to airports and the wider aviation industry to provide a stable, sustainable and affordable operating environment.

“Airports play a crucial role in the economy, enabling trade and tourism, bringing foreign investment and creating jobs. All together the sector contributes over £1bn per week to the UK’s gross value added (GVA), while almost £100bn in UK export GVA is facilitated by aviation.

“It is therefore right that we bring issues to the attention of government that might positively or negatively affect these benefits, especially at a time when government wants the UK to have the fastest growing economy in the G7.”

The Independent has asked the Treasury to comment.