easyJet calls on DfT to reject CAA advice

easyJet is calling on the Department for Transport to reject the advice of the Civil Aviation Authority (CAA) and ensure that passengers at London Stansted Airport continue to be protected from what the airline sees as BAA’s market dominance.

In July, the CAA recommended to the DfT that Stansted should be “de-designated” – i.e departure rates for passengers should no longer be regulated, and BAA should be free to charge whatever it wants.

easyJet has today submitted its evidence to the DfT which argues that price controls MUST be retained at Stansted to safeguard passengers and airlines from the BAA’s market power. This would also mean that the airport would continue to be regulated for service – BAA has just been reprimanded for poor service at Heathrow and Gatwick airports, yet de-designation would remove the service penalties from Stansted and the financial incentive for operational excellence. easyJet’s evidence is accompanied by a detailed report from Frontier Economics setting out the failures in the analysis provided by the Economic Regulation Group of the CAA.

easyJet demonstrates that:

- Stansted has significant market power over airlines, and therefore passengers – and that without regulation Stansted will be able to increase prices
- East Midlands is not an alternative to Stansted airport, this is common sense, but not the belief of the CAA
- There are significant gaps in the CAA’s analysis, which the CAA has effectively ignored

easyJet Chief Executive, Andy Harrison, said:

"The fact the current airport regulatory system is fundamentally flawed is no justification for the CAA’s cop out proposals. Consumers need proper protection from BAA’s market dominance at Stansted in terms of both getting value for money and a better airport experience. Stansted needs tougher regulation not these 'head in the sand’ proposals from the CAA.

“It is bizarre that the Competition Commission has recently suggested tougher price controls and service penalties at Gatwick and Heathrow and yet the CAA is proposing the very opposite for Stansted. This demonstrates the CAA’s lack of understanding of how the London airport market operates.

"The importance of effective regulation of our major monopoly–controlled airports is reinforced by the UK’s policy of allowing these key infrastructure assets to be internationally traded, often on a highly indebted basis, which strongly encourages the new owners to set short term profit maximisation at the expense of the consumer."