bmi warns CAA of BAA Heathrow price rises

bmi, Heathrow’s second largest airline, has today told the UK Civil Aviation Authority (CAA) that Heathrow Airport charges will increase by over 40 per cent from 1st April if recent late submissions by BAA are accepted on top of the CAA’s own current indicative proposals.

Over the five-year period currently under review by the CAA, Heathrow charges could rise by over 85 per cent for short haul carriers.

The impact on short haul carriers such as bmi, will be disproportionately high due to changes in the way BAA intends to restructure charges for Air Navigation Services and baggage. If such increases are allowed it will place further pressure on the sustainability and viability of vital regional and short haul links to Heathrow - feeder services that BAA itself claims are a vital ingredient to Heathrow’s future success as a world class hub airport.

bmi chief executive officer Nigel Turner said: “These are unfair and unreasonable proposals. We have today again spelled out to the CAA without equivocation that they must not allow BAA the right to implement these huge increases in charges.

“Only a monopoly provider with inadequate regulation could possibly get away with increases in prices of this magnitude, when the reputation for service provision at Heathrow is at an all time low. A regulatory authority must regulate, not sit by and watch. It must robustly defend and protect the interests of the consumer and ensure Heathrow has efficient services that are delivered cost effectively.

“Not only is the BAA seeking an enormous hike in its general charges for the next five years, it plans to uniquely change the mechanism it uses for Air Navigation Services (ANS) to a system that penalises smaller aircraft. Today ANS charges are by weight of aircraft, in accordance with the European Directive on the Single European Sky.

“However, BAA at Heathrow will be virtually unique in the world when this formula is changed to a ‘per movement charge’ – irrespective of aircraft size. This will have a detrimental impact upon those operators using smaller aircraft to provide short haul and domestic services who will have to pay more per passenger than their long haul competitors.

“The Competition Commission in their recommendations stated that the structure of charges was an area that the CAA should be involved in and we expect it to recognise the prejudicial impact such changes will have and to reverse its stated intent not to involve itself in the structure of charges.

“Airports in Paris, Amsterdam and Frankfurt will be celebrating if these increases go ahead, as many UK regional airports will have stronger links with them than with Heathrow in the future. This cannot be in the interests of UK plc and the aviation industry as a whole. Once broken, the regional links will not easily be restored.

“We have stated in our evidence to the CAA that we were far from happy with the way that this whole review process has been handled. The issues under examination and the extremely important decisions that will be made will impact upon the aviation industry for years to come. The amount of late and inadequate information and the timescales for review and response have in our opinion been thoroughly inadequate.

“We will be expecting to see significant reductions in the proposed charges in the CAA’s final recommendations.”

In November 2007 the Civil Aviation Authority (CAA) published its proposals for price controls for Heathrow and Gatwick airports for the five years from 1st April 2008 to 31st March 2013. There is an opportunity for airlines make further representations at oral hearings this week. The CAA will make its final price control decisions in March 2008, which will come into effect on 1st April 2008.