Aviation watchdog slams Heathrow’s legal threats over £1.7bn airport charge hike
The Civil Aviation Authority (CAA) has hit back at Heathrow Airport over threats that it will take the regulator to court unless it budges on its decision to reject Heathrow’s attempt to increase airport charges by £1.7bn.
Earlier this month, the CAA turned down the request from the UK’s largest airport, which wanted to hike charges to compensate from the financial damage done by Covid-19.
The airport runs on a mechanism that allows it to recoup the losses it makes by increasing charges, but the watchdog said its proposals were not “proportionate”.
Yesterday, the Telegraph reported that Heathrow’s finance chief Javier Echave had accused the regulator of “failing [its] duties” by not reconsidering its request.
“If the CAA does not change its decision this could require us to launch a legal challenge. Because the consequences [on Heathrow] would be severe”, Echave added.
But in a letter to Heathrow’s chief strategy officer Andrew Macmillan today, CAA group director of consumers and markets Paul Smith slammed Echave’s comments.
“The quote attributed to Javier claims incorrectly that the Q6 [current] price control in some way includes provisions that require us to grant HAL’s (Heathrow) request to reopen the price control”, the letter, which City A.M. has seen, read.
“Such obligations do not exist. Accordingly, it is both inappropriate and wrong to claim or imply that the CAA may be acting outside our legal obligations.”
“We would strongly urge that HAL ensures that any further comments it makes about the scope for re-opening the Q6 price control are clear about what the control requires, and in particular, do not state or imply, that the CAA is in some way legally obliged to grant HAL’s request”, it went on.
Smith also said that reports that the CAA had threatened to nationalise Heathrow were false.
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“This is not and never has been the case. It is not within the scope of our powers”, he wrote.
In conclusion, Smith added: “I note the article’s claim that Javier’s aim is to change the CAA’s mind. Rather than threatening legal action in the media, I would encourage HAL to engage fully with the formal consultation process.”
Heathrow’s decision to ask the CAA to let it hike charges led to widespread outrage among the aviation community, with airlines group IAG dubbing it “staggering”.
“Heathrow is a wealthy, privately owned company, which should seek funds from its shareholders”, it told the Telegraph.
The company is owned by Spanish infrastructure firm Ferrovial, as well as Qatari and Chinese sovereign wealth funds.
As of September, Heathrow had cash reserves of £2.4bn, enough to see it through until 2023.
A Heathrow spokesperson said: “We stand by our position that the Q6 regulatory settlement was predicated on a balance of risk and reward which is no longer valid in light of the impacts of Covid-19.
“We have made the CAA aware of this significant impact and requested the balance be redressed. The CAA has statutory duties to protect consumers and ensure Heathrow can be privately financed.
“We are firmly of the view that granting the amendment is the best way for the CAA to fulfil these duties. We are actively engaging with the CAA on its consultation and look forward to the CAA responding to the substance of the issues.
“In the event that the CAA does not grant the amendment we will carefully consider what further action is appropriate.”