Heathrow attacks pricing proposal

HeathrowNew airline-pricing control proposals could have "serious and far-reaching consequences for passengers and airlines at Heathrow", bosses of the west London airport have said.

The Civil Aviation Authority (CAA) has made its final proposals on how much Heathrow and Gatwick can increase charges to airlines in the period 2014-19.

The CAA has proposed that Heathrow charges for the five-year period starting in April next year do not rise by more than the RPI rate of inflation, while the Gatwick formula for the same period should be RPI plus 0.5%.

Although for Heathrow this represents an improvement on the RPI minus 1.3% proposed by the CAA earlier this year, the latest figure has angered the airport's chief executive Colin Matthews.
He said: "The CAA's settlement could have serious and far-reaching consequences for passengers and airlines at Heathrow.

"We want to continue to improve Heathrow for passengers. Instead, the CAA's proposals risk not only Heathrow's competitive position but the attractiveness of the UK as a centre for international investment.

"We will now carefully consider our investment plans before responding fully to the CAA."

The Gatwick proposal was given "a cautious welcome" by bosses of the West Sussex airport.

The Gatwick regime will cover a seven-year period.

Heathrow, Gatwick and Stansted are the only airports which have charges regulated. A CAA proposal on a charging regime at Stansted for 2014-19 is expected next week.

A final ruling on all three airports is due in January.

CAA chairman Dame Deirdre Hutton said: "Our proposals demonstrate how we can regulate airports more flexibly where this seems best for passengers, but also setting a tough efficiency challenge. We expect the airports to work closely with airlines to provide high-quality services to passengers.

"Tackling the upward drift in Heathrow's prices is essential to safeguard its globally competitive position. The challenge for Heathrow is to maintain high levels of customer service while reducing costs. We are confident this is possible and that our proposals create a positive climate for further capital investment, in the passenger interest."

She went on: "Gatwick has tabled a revised price offer to airlines that we consider fair, and its new commitments framework offers a chance for a more commercially driven and tailored approach.

"To protect the diverse interests of passengers, we propose a licence based on the commitments. We would monitor the success of such a new approach and adjust our regulation over time to ensure it remains proportionate."

Gatwick chief executive Stewart Wingate said: "The CAA's proposal to take forward our commitments framework would deliver an improved future outcome for passengers in terms of service quality, facilities and price.

"We will now redouble our efforts to work with our airlines partners to make this work in the best interests of all parties, and in particular for passengers."