Holidaymakers will see the cost of air travel rise after Rachel Reeves increased business rates, airports have warned.

The rates bill at hubs including Heathrow and Gatwick will more than double within three years after the Chancellor ignored pleas from the sector to limit increases to 40pc.

Heathrow, already Britain’s biggest rate payer, will see its bill climb from £117m this year to almost £240m in three years’ time, according to calculations by tax firm Ryan.

Gatwick faces a bill in excess of £80m by the 2028-29 financial year, the second-highest in the country. Manchester Airports Group, which also owns the Stansted and East Midlands hubs, said its property tax bill will reach £75m.

Karen Dee, the chief executive of trade body AirportsUK, said the increases – which stem largely from the success of the travel industry in luring back travellers after Covid – would inevitably be passed on to airlines, leading to higher fares.

“It’s a short-sighted move that passengers will feel in their pockets with both hard-working families and business flyers experiencing price rises and more limited choices,” she said.

Ms Dee criticised the rises as inconsistent with Labour’s enthusiasm for new runways and terminals as a driver for growth, and warned that some operators would need to reconsider their expansion plans.

She said: “An increase in their business rates of over 100pc could force some to review billions of pounds of transformational investments across the UK and potentially puts thousands of jobs at risk in the longer term.

“This will obviously have a knock-on effect for the businesses that depend on airport connectivity in all areas of England, negatively impacting local economies that depend on the supply chains, tourists and connections their airports provide.”

Airports had been pressing Ms Reeves to grant higher levels of transitional relief after the Valuation Office Agency (VOA) recommended jumps of almost 400pc in rates, based on last year’s profits.

The VOA’s previous assessment was determined according to performance in 2021, when passenger numbers and ticket sales were at an all-time low due to Covid.

Eurotunnel, owner of the Channel Tunnel, will face the fifth-highest bill after a strong rebound in travel between London and Paris in the wake of the pandemic.

The firm said last week that it was scrapping all UK investment, including a freight terminal in east London, based on an evaluation of its likely business rates bill.

The Treasury said bill increases would be capped at 30pc next year and 25pc in the two subsequent years, adjusted for inflation. That indicates an overall increase of 110pc.

Alex Probyn, Ryan’s Europe practice leader, said: “Even with caps in place, the compound effect over three years is substantial. This relief delays the pain; it does not remove it.”

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