Heathrow fees to be capped by watchdog

 
Marion Dakers
BRITAIN’S aviation watchdog plans to force Heathrow to cut the fees it charges airlines, in a move that could see savings passed down to passengers.

However, carriers said the new cap does not go far enough to curb the power of Europe’s busiest airport.

The Civil Aviation Authority found “clear evidence of substantial market power” at Heathrow and from 2014 will cap the airport’s charges at 1.3 per cent below the retail price index (RPI) measure of inflation.

Heathrow hit back, saying a drop in fees will hamper its ability to spend money on improving its services. The airport’s profits last year rose 12 per cent to £1.3bn, boosted by an increase in airline tariffs, which had been capped at RPI plus 7.5 per cent since 2009.

British Airways, Heathrow’s biggest carrier, said the CAA’s limits were not tough enough.

“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,” said Willie Walsh, boss of BA’s parent IAG.

“In the past the CAA has rewarded Heathrow for inefficiency and it is now the most expensive hub airport in the world. Its charges have tripled in the last 11 years with inflation-busting increases year-on-year.”

Gatwick also faces a cap on its fee rises, at RPI plus one per cent, after the watchdog found signs of “substantial market power”, with little alternative for low-cost carriers.

Gatwick, which has lobbied for deregulation, said it was “very disappointed” and plans to contest the decision.

The CAA will make its final ruling on licence conditions in January 2014. It has not proposed a limit on Stansted Airport but said it wants to see fees fall in real terms.