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Long haul fares to be deregulated
The Civil Aviation Authority is to remove its regulation of long-haul air fares because of greater competition in the airline market.
The CAA will discontinue fares regulation in two stages. The first will cover long-haul routes other than UK-US from December 1.
The second stage will be deferred until other pricing restrictions in the UK-US market are removed.
This signals the end of more than 30 years of fares regulation by the authority.
As a result of the first stage, regulation will be removed from flexible economy fares to Israel, Russia, Egypt, Ghana, Mauritius, Nigeria, South Africa, Bangladesh, India, Pakistan, Japan, Thailand, Mexico and Brazil.
The CAA regulates around 40 long-haul routes – those where competition is most constrained by government limits on which airlines can fly and how often.
Regulation on such routes was confined to the fully flexible economy fares – those applying to last-minute, changeable, refundable economy tickets, where airlines generally have the least incentive to compete on price.
Available data suggests that in recent years fewer passengers have been buying such fares in any case, and they now form only a tiny proportion of the hundreds of thousands of fares available in the market, the CAA said.
Economic regulation director Harry Bush, announcing the “historic” decision, said: “The CAA has regulated fares for more than 30 years. Airline competition has now reached the point where it is simply no longer appropriate for a regulator to dictate fare levels.”
Report by Phil Davies
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