bmi warns against inflation-busting prices

bmi, Heathrow's second largest airline, has reacted angrily to the Competition Commission's (CC) report that recommends that airport charges levied by BAA at London Heathrow can increase by an inflation-busting RPI plus 7.5 per cent every year over a five year period starting from April 2008.

The move threatens to put under further scrutiny the existence and viability of vital UK regional air links into Heathrow and has the potential of pricing them out of the market.

Tim Bye, deputy chief executive of bmi, said: "We warned the CC that sanctioning inflation-busting price rises at Heathrow could have a devastating effect on vital regional services into Heathrow. The availability of routes from key UK regions to feed into a wide range of destinations through the world's busiest international airport sustains the lifeblood and the economic growth of many of these regions.

"At a time when competition between airlines has demanded that they drive down their costs and generate higher levels of efficiency to survive, we have had to endure inflation-busting increases for the last five years for indifferent levels of service. We are now facing even higher increases over the next five years with limited improvements until the opening of the new Heathrow East terminal in 2012."

The fees per departing passenger at Heathrow in 2007/2008 is £18.55. Under the CC recommendations this could nearly double to £35.28 in 2012 based on an RPI each year of 4.1 per cent as was recorded in August 2007.