Passenger to come first in airport regulation shake-up

10.3.2009   (Guardian)

by Mark Milner

The government has unveiled plans to modernise the regulation of Britain’s airports
with new measures designed to ensure improvements for passengers.

The aviation regulator, the Civil Aviation Authority, has been given a primary
duty of promoting passengers’ interests while Passenger Focus, the organisation
that champions the interests of rail and bus users, will take on a similar role
for airline passengers.

The CAA will also be given the job of ensuring airports meet their environmental
responsibilities, and that the economic and environmental regulation of Britain’s
airports are consistent.

Transport secretary Geoff Hoon said: “I want to put passengers at the heart of
how our airports are run. This will help ensure that we get the most efficient
and competitive aviation sector possible.”

Hoon said survey evidence showed passengers were broadly happy with their experience
at airports but there were areas of concern, including baggage handling, the need
for more seating and toilets and better flight information. “These are exactly
the kind of issues that we will expect the CAA to address in discharging its new

Under the current regime the CAA’s primary duty is to airport users, which includes
airlines as well as passengers.

“The CAA has told us that their current duties lack clarity,” Hoon said.  “They
ask them to further the interests of both airlines and passengers, without saying
who comes first.   Today I am removing that lack of clarity – the passenger must
come first.”

The CAA welcomed the proposals, which include a three-tier licensing system that
will allow it to adapt the regulatory regime and take swifter action to remedy
service quality issues.

Harry Bush, the CAA’s director of economic regulation, said:   “Giving the CAA
a primary duty to passengers reflects the growing consensus that passengers need
to be put at the heart of airport regulation.  It is also important to maximise
the benefits for passengers from the upcoming sale of Gatwick – and possibly Stansted
– by supporting the increase in competition for passengers and airlines with a
flexible and clear regulatory framework.”

BAA, which runs seven British airports including Heathrow and Stansted, welcomed
the government proposals. A spokesman said: “We support the key policy objectives
of the review and will fully engage in the consultation process.

“It is important that future regulation improves customer service at every stage
of the passenger journey, provides strong incentives for appropriate and timely
investment in additional airport capacity, and addresses the wider environmental
impacts of aviation and airport development.”


see also

Financial Times

Airport reform to put passengers first

by Kevin Done

The interests of consumers rather than of airlines should be at the heart of
the future regulation of the largest UK airports, the government said on Monday
in response to heavy criticism of the current regulatory regime.

The proposals immediately came under heavy attack from leading UK carriers, however.

Andy Harrison, chief executive of EasyJet, the largest UK low cost airline, said the Civil Aviation Authority, the airports
economic regulator, "lacks the resources, expertise and above all credibility
to an effective regulator."

The system of UK airport regulation had "clearly failed and requires a fundamental
restructuring" he said. It would be "a high risk strategy" to put so much more
regulatory power into such an unproven structure.

British Airways said the CAA must be accountable to all airport users – both passengers and airlines.
There should be tough sanctions in the event of serious performance failures with
the ultimate sanction being the withdrawal of the licence itself. "Over-charging
combined with poor operational performance must be a thing of the past," it said.

The proposed reform of airport economic regulation is the latest move in the
far-reaching shake-up of the airports industry, which will include next week the
demand from the Competition Commission for the break-up of the BAA monopoly of
the main airports in London and Scotland.

The CAA role in setting the caps on charges at price-regulated airports has come
under heavy attack from leading airlines reluctant to pay the big increase in
fees in particular at Heathrow and Gatwick approved by the CAA last year to fund
costly future capital investment programmes.

The campaign for reform was intensified by the avalanche of criticism about failing
service standards especially at the main London airports and by the chaotic opening
of the showpiece Heathrow Terminal 5 a year ago.

Geoff Hoon, transport secretary, said on Monday, "I want to put passengers at
the heart of how our airports are run – this will help ensure that we get the
most efficient and competitive aviation sector possible.

"The CAA has told us their current duties lack clarity. They (the duties) ask
them (the CAA) to further the interests of both airlines and passengers, without
saying who comes first. Today I am removing that lack of clarity – the passenger
must come first."

The CAA welcomed the move to give it "a clear primary duty to protect consumers."
The proposals will be subject to a 12-week public consultation.

The present system has remained essentially unchanged for more than 20 years
since the then British Airports Authority (since renamed BAA) was privatised in

The government proposed a licence-based system similar to the one already in
force for other utility sectors such as power and water.  It will give the CAA
powers to react with far greater flexibility and speed, whenever problems with
service quality are identified.

Only the 13 largest UK airports handling more than 5m passengers a year will
require a licence with three licence tiers and varying levels of control depending
on the market power of the airport.

At present only three Heathrow, Gatwick and Stansted – the future tier one airports
– are subject to the setting of price caps by the CAA.

Mr Hoon said the licensing system would deliver greater certainty about the ability
of airport operators to finance the investment in airport and runway capacity
needed to improve the passenger experience.

Under the proposals the CAA will be given a duty for the first time to consider
the environmental consequences of its decisions

It is also suggested the new airports legislation, expected to be considered
by parliament in 2010/11 at the earliest, should remove the Competition Commission
from the process of setting price controls and transform its role into an appeals
body, as is the case in other utility sectors.

Air travellers are to be given a new champion in the shape of Passenger Focus, the consumer watchdog, which already represents rail passengers and in addition
will soon take on the role of representing bus and coach users.

The functions of the existing air transport users council would be transferred
to Passenger Focus, said Mr Hoon, to enable "a traveller’s end-to-end journey"
to be considered within a single organisation.