The Civil Aviation Authority today proposed to drastically cut how much London's three main airports can charge airlines in a move that will likely limit the fare rises imposed on passengers.
Heathrow, Gatwick and Stansted will have to charge carriers far less in take-off and landing fees between 2014 and 2019 than they were allowed to during the 2009 to 2014 period, if the proposals are approved next year.
The three London airports are the only ones regulated by the CAA, which can cap how much they charge carriers.
Since 2009, Heathrow has been able to charge the RPI rate of inflation plus 7.5 per cent - from next year this could plummet to RPI minus 1.3 per cent.
The situation is different at Gatwick, where "because Gatwick’s market power is weaker than Heathrow’s" the CAA opted to give bosses more time to sort out a suitable flexible system of airport/airline cooperation.
However, should a satisfactory solution not be arrived at, then the CAA will subject the airport to a cap of RPI plus 1 per cent for the five years from April 2014.
At Stansted, the CAA proposes to monitor charges and service quality.
The recommendations have been met with a mixed response by airlines.
IAG chief executive Willie Walsh said: “The Gatwick proposals, which will result in a significant increase in charges, are completely unjustifiable, totally unacceptable and directly contravene the CAA’s new remit to represent customers’ interests.
“Heathrow airport is over-priced, over-rewarded and inefficient and these proposals, which will result in an increase in prices, fail to address this situation.
“In the past the CAA has rewarded Heathrow for inefficiency and it is now the most expensive hub airport in the world. Its charges have tripled in the last 11 years with inflation busting increases year-on-year.
“The CAA must not be allowed to fail again."
However, Easyjet was more positive about the Gatwick proposals.
A spokesperson said: "Easyjet welcomes the CAA's announcement that it views Gatwick as a monopoly airport. Continued regulation of Gatwick will protect the interests of all passengers who use the airport."
Virgin Atlantic was cautiously optimistic about the Heathrow recommendations, but believes they do not go far enough.
A statement said: “Although today’s recommendations from the CAA are a welcome step to address the incredibly steep price rises we have seen in Heathrow airport charges in the last few years, we believe they should have gone even further.
"This move compounds the huge increases that passengers have endured in recent years with prices at Heathrow already triple the level they were ten years ago. Coupled with ever increasing Air Passenger Duty, passengers flying to and from the UK are facing some of the highest travelling charges in the world."
Andrew Haines, CAA chief executive, said: “Protecting consumers and improving their experience is the core focus of our regulatory decision making.
"Few passengers flying from Heathrow, Gatwick and Stansted fail to notice their differences, so it should be no surprise that our regulatory approach also differs at each airport.
"The proposals we publish today reflect their individual circumstances, ensure passengers are protected when they travel, and allow for continuing improvements in service and competition.”
For more information, visit caa.co.uk.
Report by Graham Smith
