BAA to raise airport landing fees at Heathrow and Gatwick
charges for Heathrow and Gatwick airports were announced.
its fees to pay for better facilities and more stringent security measures.
21% at Gatwick, the CAA said.
The increases were criticised by airlines including British Airways. “When BAA’s
new owners, Ferrovial, bought them, the CAA said they would not be influenced
by Ferrovial’s high debt levels,” said Paul Ellis, BA’s airport policy and infrastructure
general manager.
“In practice, they have ignored their own policy and caved in to intense pressure
from BAA by setting excessive price increases. Heathrow passengers will pay,
on average, 17% more than the Competition Commission recommended in September
2007,” he added.
However, BAA, which is owned by a group headed by Spain’s Ferrovial, said that
the changes did not go far enough.
“The review does not recognise sufficiently: the scale of the task we are embarked
on; the pressures of handling such large infrastructure projects; the full cost
of the increased security requirements; as well as the impact of the credit market
turmoil,” BAA said in a statement.
Ferrovial is heavily in debt and there have been repeated calls for BAA’s monopoly
as airport operator to be broken up.
BAA has a monopoly over the big three London airports – Heathrow, Gatwick and
Stansted – and its landing charges are fixed by the CAA. It is currently the subject
of a Competition Commission inquiry.
BAA believes the increase will not be enough to pay for £6.5bn rebuilding work at Heathrow and ageing facilities at Gatwick.
Also, security costs have spiralled since the 9/11 attacks in the US, and BAA,
along with other British airport operators, have to cover the costs themselves.
The BBC’s business editor Robert Peston said there was clear winner.
“Today’s settlement is very good news for the airports operator and its owner,
the consortium led by Ferrovial of Spain,” he said. “The airlines will squeal
because Heathrow and Gatwick are being allowed to increase what they charge them
from 1st April by far more than could have been expected.
“BAA will express disappointment with elements of the settlement, notably that
there has been no increase in the cost-of-capital assumptions that underpin the
pricing proposals.
“But BAA is largely trying to spare the blushes of the regulator.”
BBC
Airports landing fees ‘to rise’ [London]
also
From Travel Mole: 11 March, 2008
BA demands airport regulation shake-up
British Airways has called for a "root and branch" review of UK airport regulation
after charges were allowed to be hiked significantly.
The Civil Aviation Authority today publishing its decisions for price controls
for Heathrow and Gatwick for the five years from April 1.
The maximum charges at Heathrow are £12.80 per passenger in 2008/09, an increase of £2.44 on a like-for-like basis, representing a 23.5% rise in
real terms from the current (2007/08) price cap, with allowed charges subsequently
increasing in each of the following four years by no more than retail price index (RPI) inflation plus 7.5% each year.
At Gatwick the rate will be £6.79 per passenger in 2008/09, an increase of £1.18 on a like-for-like basis, representing a 21% increase,
with charges subsequently increasing in each of the following four years by no
more than RPI inflation plus 2%.
At both airports, the difference from the CAA’s November proposals is in the
first year increase, which is £0.83 per passenger or 7% greater at Heathrow and
£0.72 per passenger or 12% greater at Gatwick.
The CAA said its package of price caps and incentives "will enable and encourage
BAA to deliver genuine service quality improvements and to invest to raise the
level of facilities and service that can be delivered to passengers and airlines
"The outcome for passengers should be decently modern airports and consistently
high service standards."
The CAA admitted that the resulting increases in airport charges are "significant".
But it said they are "essentially paying for the modernisation of Heathrow and
Gatwick, in terms of both facilities and service, for the direct benefit of the
passenger".
At Heathrow, this entails paying for the full capital and operating costs of
Terminal 5 as it comes into service on March 27, the construction of the Heathrow
East Terminal by 2013, and bringing the rest of the airport up to comparable modern
standards.
At Gatwick, the next quinquennium will see the construction of a major new pier,
the redevelopment of the South Terminal check-in area and forecourt access, and
a new baggage system, according to the authority.
The CAA claimed its decision provides for shorter security queuing times, enhanced
levels of service across the airports (such as more reliable equipment and cleaner
terminals), and greater and more immediate information to passengers from BAA
(including displayed in the terminals themselves) of how it is performing against
the standards it has been set.
"It is important that airlines and passengers receive the services that they
are paying for in airport charges. The CAA therefore confirms its earlier proposals
for stronger incentives on each airport in the coming five-year period to deliver
higher and consistent service quality and improved infrastructure," the authority
said.
But condemning the new price rises, BA airport policy and infrastructure general
manager Paul Ellis said: "When BAA’s new owners, Ferrovial, bought them, the CAA
said they would not be influenced by Ferrovial’s high debt levels.
"In practice, they have ignored their own policy and caved in to intense pressure
from BAA by setting excessive price increases. Heathrow passengers will pay,
on average, 17% more than the Competition Commission recommended in September
2007."
The airline called for urgent changes to UK airport regulation and has made its
views known to the Competition Commission and a review on the future of the CAA.
Paul Ellis (BA) said: "We suffer from very poor regulation and the whole process
needs a root and branch review. The objective of the regulator should be to ensure
that BAA provides the infrastructure and services that customers require but in
a cost effective and efficient way that does not over compensate the airport operator
financially.
"These overly generous charges far exceed what is required to upgrade facilities
across Heathrow through investment in infrastructure and improved service quality
levels.
"The CAA must hold BAA to account throughout the five year period to ensure the
airport operator delivers improvements and does not divert funds to pay off Ferrovial’s
debts".
Dr Harry Bush, CAA group director, economic regulation, said: "These decisions
build on the enduring themes of the CAA’s previous regulatory proposals in this
review.
"Passengers and airlines deserve better than they have been provided with at
Heathrow and Gatwick in recent years.
"However, the resulting improvements in airport facilities and service standards
– some £5 billion of investment over the next five years and a halving of security
queuing times – have to be paid for in increased charges.
"But airlines and passengers need to be sure that they are getting the enhanced
facilities and services that they are paying for. Hence, the CAA’s emphasis on
greater financial incentives – with BAA being penalised a lot more if it fails
service standards and earning bonuses if it exceeds them (but only if passengers
in every terminal benefit).
"The price caps have been carefully based on investment programmes emerging from
airport–airline discussions and also on a shared airline-airport desire to improve
quality of service, in particular for passengers at security.
"The CAA hopes that the constructive engagement between airports and airlines
that underlies much of this pricing decision will continue in the future to the
benefit of their shared customers."
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