Airlines slam CAA price proposals

Airlines slam CAA price proposals

Continued regulation of Gatwick will protect the interests of all passengers who use the airport,
 easyJet claims in its response to new regulations for London’s three major airport.

This came as the airport contested the planned new regime by the Civil Aviation Authority, with Gatwick chief executive Stuart Wingate saying: “The CAA must not hold us back through imposing heavy handed regulation, red-tape in the form of a licence and an inflexible price control, but should allow us to build on success.”

But easyJet, the biggest carrier at Gatwick, said it agreed “in principle” with the CAA's new approach to regulation at Gatwick despite calling on the regulator to reduce the proposed charges at the airport. 

The airline said its preference is always to engage constructively with airports to reach commercial agreements which are in both parties’ interests - and the interests of passengers.

“Despite easyJet’s efforts to achieve such an agreement with Gatwick we were unable to reach a mutually agreeable commercial deal,” the carrier added. 

“This reflects the market power which Gatwick wields and shows the need for continued regulation.”

Airlines using Heathrow hit out at CAA proposals that increases in landing fees at the London hub should be capped at 1.3% below the retail prices index  measure of inflation.

The authority’s proposal is substantially lower than Heathrow’s own plans to raise tariffs by 5.9% above inflation for the five years from April 2014.

But airlines had been pushing for a deeper reduction amid claims that charges at the airport have tripled over the last decade.

International Airlines Group chief executive Willie Walsh told the Daily Telegraph: “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.”

Virgin Atlantic chief executive Craig Kreeger said any other business would seek to reduce costs by well below the rate of inflation and he believed Heathrow could do more to improve efficiency.

But Heathrow warned the CAA’s plan could deter investors and put its competitive position at risk as it faces growing competition from European hubs such as Amsterdam Schiphol.

But easyJet voiced disappointment at proposed charges of RPI +1% which it said “appears to be driven by capital expenditure that doesn't provide value for money for passengers and an unreasonably high cost of capital”.

Board of Airline Representatives in the UK chief executive Dale Keller said: "It is encouraging that the CAA has listened to industry concerns over the need for a more flexible market based approach than previous regimes and we are cautiously optimistic that the final regulation will better meet the needs of consumers and the airline industry.

“Incorporating increased collaboration between airport operators and the airlines within the regulatory framework is particularly welcome since industry agreement is always preferable to excessive regulation.

“Whilst we believe that the pricing caps do not go far enough to drive the level of efficiency gains at airports that airlines and their passengers are seeking, the proposals are a step in the right direction."


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