In today’s publication the CAA puts forward proposals for the separate regulation of each airport, grounded in the market circumstances…
In today’s publication the CAA puts forward proposals for the separate regulation of each airport, grounded in the market circumstances of each:
- a continuation of the current price cap framework for Heathrow and Gatwick
- for Stansted, a recommendation to Government that it consider removing the requirement on the CAA to set price controls
Heathrow and Gatwick Airports
Indicative Price Caps
For Heathrow and Gatwick airports, the CAA is putting forward indicative ranges for caps on airport charges in the five years 2008 to 2013 of:
- Heathrow: RPI plus 4 to 8% each year, compared to the current rate of growth in price caps of RPI +6.5%
- Gatwick: RPI minus 2 to plus 2% each year, compared to the current rate of growth of RPI +0%
Regulatory Framework
The CAA has confirmed its preference for retaining key elements of the existing regulatory framework at Heathrow and Gatwick including:
- Regulatory Asset Base regulation, through which the airports are rewarded for investment
- the single till, through which commercial revenues effectively offset airport costs
- separate price caps for each of these airports
Investment
Rising demand and the need to upgrade existing infrastructure and services is evident in the scale of BAA’s investment programme, focused currently at Heathrow on the new Terminal 5 which will open in 2008. Significant further investments are planned in airfield and terminal infrastructure, to enable better use of the existing runway capacity and to give an improved passenger experience. Capital expenditure at Heathrow and Gatwick is projected by BAA to be some
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
