CAA ends regulation of air fares following report

The number of passengers travelling on long haul flights at UK airports has grown from 32 million in 1996 to 47 million in 2006, says a report by the Civil Aviation Authority.

Meanwhile, the number of flights has grown from 133,000 in 1996 to 227,000 in 2006.

But, according to the report, it is predominantly the same airlines carrying the majority of the UK’s long haul passengers now as at the time of the CAA’s last study of long haul services in 1994.

The report has prompted the CAA to announce that it will no longer regulate air fares.

CAA group director, economic regulation, Dr Harry Bush said: “This report charts significant change in the long haul aviation market which is crucial to the UK’s business connectivity to the fast growing economies on other continents.

“Competition is increasing and with it the choice of destinations, routes and fares to the benefit of passengers. As a result the CAA is ending its regulation of air fares.”

The report reveals that, when the EU-US Open Skies agreement starts next year, over 60% of passengers on long haul routes from the UK will be covered by a ‘liberalised’ agreement that does not constrain the number of international services that airlines are allowed to offer.

Including the European Common Aviation Area, over 90% of the UK’s international air travel will take place within Open Skies or more liberal Open Aviation Area-style agreements.

The authority had decided in principle to remove all remaining elements of air fares regulation on long-haul routes last November, but to defer the implementation of this decision on UK–US routes until other regulatory restrictions on prices were removed.

“This has now been achieved following the Government’s decision to remove those regulatory restrictions ahead of the recent agreement liberalising the EU–US aviation market, which takes effect from March 2008,” said a CAA statement.

“The CAA believes that the interests of users will be best served if airlines are free to set their own prices without regulatory intervention, subject only to the application of normal competition policy.”

The report also found:

– over 60% of passengers at Heathrow travelling on long haul routes for business purposes (or more than five million) are using economy, or premium economy tickets

– over 50% of passengers on scheduled long haul services from UK airports (or more than 20 million) are making a connection to another service at one end or the other of their flight

– over three million passengers flying between the UK and a long haul destination are making a short haul connection at a non-UK hub airport

– although the majority of UK passengers on long haul routes travel from the London airports, the number of scheduled long haul flights at Manchester, Birmingham and Glasgow has grown from 8,000 in 1996 to 23,000 in 2006

– during this time services have also begun at a further six regional airports (Edinburgh, Belfast, Bristol, Cardiff, Exeter and Newcastle).

By Bev Fearis