BA calls for airport regulation reform

The Civil Aviation Authority's decision to allow BAA to ramp up airport charges significantly demonstrates conclusively that the airport regulation system has failed, to the detriment of customers, says British Airways.

The CAA has today announced that Heathrow's charges over five years from April 1, 2008 will rise by 23.5 per cent above inflation in year one and by 7.5 per cent above inflation each year between 2009 and 2013. BAA will be allowed a cost of capital of 6.2 per cent.

Paul Ellis, British Airways' general manager airport policy and infrastructure, said: "When BAA's new owners, Ferrovial, bought them, the CAA said they would not be influenced by Ferrovial's high debt levels. In practice, they have ignored their own policy and caved in to intense pressure from BAA by setting excessive price increases. Heathrow passengers will pay, on average, 17 per cent more than the Competition Commission recommended in September 2007."

The airline believes urgent changes must be made to current UK airport regulation and has made its views known to the Competition Commission and the Pilling Review on the future of the CAA.

Paul Ellis said: "We suffer from very poor regulation and the whole process needs a root and branch review. The objective of the regulator should be to ensure that BAA provides the infrastructure and services that customers require but in a cost effective and efficient way that does not over compensate the airport operator financially.

"These overly generous charges far exceed what is required to upgrade facilities across Heathrow through investment in infrastructure and improved service quality levels. The CAA must hold BAA to account throughout the five year period to ensure the airport operator delivers improvements and does not divert funds to pay off Ferrovial's debts".