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CAA outlines latest policy decision over price caps at London airports
The Civil Aviation Authority has taken the next step towards implementing its price capping policy for BAA’s three London airports.
The body is responsible for setting limits on how much airports’ operator BAA can charge airlines for using London Heathrow, Gatwick and Stansted.
The charges airlines pay are essentially passed on to consumers as part of the ticket cost, so the CAA is able to use price caps to protect passengers.
In September it is due to announce its proposals for price caps for the five years from April 2008 to end of March 2013.
In this latest policy document, it confirms its intention to regulate BAA’s London airports separately to prevent the airports’ operator from using revenues from one airport to cross subsidy the other.
“This is the best means of encouraging each airport to meet airlines’ and passengers’ demands for service quality and capacity in an efficient manner,” said the report.
This policy was used to set the current price caps, despite objections from BAA.
CAA group director economic regulation, Harry Bush, said: “Although there is still a long way to go in this review, the CAA has made good progress on some of the key policy decisions for the review – such as separate regulation of BAA’s airports – and remains on track to publish its initial price control proposals in September.”
He said the CAA’s decision will not be affected by the possible change in ownership of the BAA.
In April, Airports Development and Investment Limited, a company owned by Ferrovial, CDP and GIC, announced that it would be making an offer for the entire share capital of BAA.
BAA’s management has advised shareholders to reject the offer and earlier this month posted a document outlining the reasons for this advice.
“The CAA has made it clear that it will not accommodate in price control decisions the costs and risks arising from any financial transactions entered into as a result of that bidding process,” said Bush. “These will be for the owners and financiers of BAA – present or future – to bear.”
By Bev Fearis
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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