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LCCs win early battle on Stansted project funding

22-Dec-2005

SYDNEY (Centre for Asia Pacific Aviation) - Ryanair and easyJet have had an early victory in the tussle over future development of London’s Stansted Airport, a key UK LCC and freight hub.

The Civil Aviation Authority (CAA) has published its first major consultation paper on its policy for the forthcoming reviews of airport price controls at Heathrow, Gatwick, Stansted and Manchester airports. New price controls from Apr-08 to Mar-13 are due to be set in early 2008. (Under the Airports Act 1986, the CAA is charged with setting price controls every five years at each of these airports).

The CAA is proposing to retain two important elements of the existing regulatory regime, namely:

  • The regulation of each of BAA’s airports on a ‘stand-alone’ basis, ie setting price caps by reference to each airport’s own air traffic, costs, and assets; and
  • Continuing to set the next caps on airport charges using a ‘single till’ approach, ie setting caps on airport charges by reference to the costs of the airport as a whole, and taking into account projected commercial revenues.

BAA had proposed cross-subsidising the cost of a new runway at Stansted by imposing higher charges on airlines using Heathrow and Stansted.

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