CAA extends price controls at UK’s biggest airports

The Civil Aviation Authority has extended current price controls at Heathrow and Gatwick airports by one year following consultation with industry stakeholders.

This will provide an opportunity for the next price controls to be developed in line with the Government’s proposed reforms for airport economic regulation, it said in a statement.

The CAA said it welcomed "the constructive approach taken by both the airlines and the airports concerned in working together to agree the commercial terms of the extension, within a framework set by the regulator".

Commenting on the announcement, CAA group director of regulatory policy Iain Osborne said: “We fully support the Government’s proposals to give us a more flexible set of tools to help to place the passenger at the heart of economic regulation.

"By extending the current price controls we have the best chance of being able to use those tools as we devise the most appropriate price and service quality regulation for the three designated airports, taking into account their respective competitive positions.

"In doing so, we hope to build on the momentum we have recently established in encouraging the airports and their airlines to agree commercial terms that are in passengers’ interests."

“We applaud how well industry have worked jointly during our consultation to agree terms together, with the regulator providing the broad framework for these discussions. I look forward to being able to continue such constructive working during the development of the Bill and the next round of price controls.”

The Government’s proposals include introducing a new licensing regime for airports with significant market power, in line with other economic regulators.  This allows regulation to be tailored to meet the requirements of individual airports, rather than the current one size fits all approach being applied to the designated airports.

The CAA said this will enable it to better target regulatory activity where and when it is needed to protect the interests of passengers.

The Government expects to introduce the legislation to implement their reform proposals early in the second session of the current Parliament. The CAA said it could not begin to develop its price controls until it is certain of the final shape of the reforms.

"Extending the current controls is the best way to try and maximise the chance the next ones can be undertaken under the new system while minimising upfront cost and risks for stakeholders," it added.

By Linsey McNeill