Heathrow Slams Price Cap Put On Airline Fees

The operator of Heathrow airport has slammed a price cap limiting how much it can charge airlines to use the west London site.

The Civil Aviation Authority (CAA) has imposed a far greater price cap on the amount it can charge airlines than it originally proposed.

From April, prices can only rise by 1.5% below the retail prices index (RPI) measure of inflation at Britain's busiest airport.

Heathrow, whose owners include Spain's Ferrovial and the sovereign wealth funds of Qatar, China and Singapore, described the cap as draconian.

Its chief executive Colin Matthews said: "We want to continue to improve Heathrow for passengers.

"We will review our investment plan to see whether it is still financeable in light of the CAA's settlement."

The CAA said the -1.5% cap would mean prices would fall for passengers and service for customers would be improved.

Heathrow said the CAA's final decision includes "aggressive operational, commercial and passenger forecasts".

Gatwick was hit by severe delays over the Christmas period

The company said it required reductions in operational expenditure by more than £600m and stretches commercial revenue targets by in excess of £100m, which includes revenues from retail and car park charges.

It said the settlement leaves little spare resource available to manage the consequences of potential disruption at Heathrow.

The CAA also released new regulation details for London's other key airports - Gatwick and Stansted.

The regulator said it supports more diversity in what Gatwick - which suffered significant delays over the Christmas break - offers to its various airlines, so passengers receive a tailored service.

It said travellers would be protected if there was a reduction in service that was not in their interests.

For the first time, there will be a requirement for Heathrow and Gatwick airports to put in place robust plans to ensure they are better prepared for disruption and can manage it effectively when it does occur.

Because Stansted's status is below the other two airports it would not be economically regulated by the CAA from April onwards.

Dame Deirdre Hutton, chair of the CAA, said: "London's airports have benefited from substantial investment over the past decade, which has created world-class facilities for passengers.

"But prices have risen substantially in that time, with service quality sometimes failing to match the standards passengers have every right to expect.

Stansted is to come under different regulations to the other two airports

"We have focused on putting the passengers' interest at the heart of our decisions and today's announcement means passengers can look forward to lower prices and high service quality from London's busiest airports."

Virgin Atlantic Airways said the Heathrow ruling was "a far cry from the reduction needed to mitigate the incredibly steep price rises customers haveseen in Heathrow charges in the last few years".

The airline added that the CAA had "not gone far enough" at Gatwick, saying the passenger experience at Gatwick "can be improved with a more significant reduction in charges".

EasyJet, one of the airlines that suffered from the Christmas Eve problems at Gatwick, welcomed the decisions over Gatwick and Stansted.

It said it was now "up to Gatwick to show that this more commercial approach can deliver lower charges and improved service for airlines and their passengers".

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