CAA’s final decisions on London airport prices shift the balance back towards the airlines… for now

The regular quinquennial review of airport charges at London's three biggest airports has finally come to its conclusion. As always, this has been an exercise in attempting to reconcile the irreconcilable. Nevertheless, with the publication of its final decisions on 10-Jan-2014 (not to be confused with its 'final proposals', published in Oct-2013), the UK's Civil Aviation Authority (CAA) has ruled a line between the wishes of the airlines and airports.

After very substantial price increases in the previous regulatory period, the clamour from airlines for the CAA to place more aggressive caps on airport charges for the period 2014 to 2019 appears to have been heard. At Heathrow and Gatwick, the CAA's price caps are below inflation. Not low enough, say the airlines, but their comments do not have the same vehemence as in the past, while these two airports sound genuinely dismayed by the decisions and by the changes since Oct-2013.

At Stansted, price regulation is to be abandoned altogether as the CAA now judges that the airport no longer has substantial market power after long term agreements, incorporating price discounts, were struck directly with the main airlines there.