Heathrow Airport attacks regulator's price-control plan

Plans to cap Heathrow landing fees are a "good deal" for passengers, says Richard Moriarty from the Civil Aviation Authority

Related Stories

Heathrow Airport has criticised proposed new price controls on the annual fees it can charge airlines.

The Civil Aviation Authority (CAA) on Thursday said that Heathrow's yearly rise between 2014-18 should not be more than the retail price index (RPI).

But the airport's chief executive Colin Matthews said this could restrict investment and have major consequences for passengers and airlines.

The CAA also proposed capping rises at Gatwick airport to RPI plus 0.5%.

Heathrow airport has been more expensive than others, says travel expert Simon Calder, due to "arcane" charges

Airports charge airlines for use of their facilities, including landing fees, security and use of terminals.

Heathrow had submitted a plan, rejected by the CAA, seeking to raise annual tariffs for airlines by 4.6% above RPI inflation.

Dame Deirdre Hutton, chairwoman of the CAA, said in a statement: "The proposals will put an end to over a decade of prices rising faster than inflation at Heathrow.

"Tackling the upward drift in Heathrow's prices is essential to safeguard its globally competitive position. The challenge for Heathrow is to maintain high levels of customer service while reducing costs. We are confident this is possible and that our proposals create a positive climate for further capital investment, in the passenger interest."

But Mr Matthews said: "This proposal is the toughest Heathrow has ever faced. The CAA's settlement could have serious and far-reaching consequences for passengers and airlines at Heathrow.

"We want to continue to improve Heathrow for passengers. Instead, the CAA's proposals risk not only Heathrow's competitive position but the attractiveness of the UK as a centre for international investment. We will now carefully consider our investment plans before responding fully to the CAA."

Despite the criticism, the CAA's price control is an improvement on a draft proposal earlier this year that Heathrow's five-year cap should be RPI minus 1.3%.

'Disappointing'

Airlines said that the CAA's final proposals on Thursday were too lenient and that it had bowed to pressure from Heathrow and its shareholders.

Willie Walsh, head of British Airways' parent group IAG, said: "With this settlement, Heathrow will continue to levy charges well above other major hub airports.

"We want a Heathrow that is efficiently run, fairly rewarded and priced comparably with other airports. We will carefully consider our next steps," he said.

Virgin Atlantic said in a statement that the CAA's proposal was "deeply disappointing".

For Gatwick, the CAA's price control will cover seven years from April 2014. The owners of the West Sussex airport gave the proposal a "a cautious welcome".

Gatwick chief executive Stewart Wingate said: "The CAA's proposal to take forward our commitments framework would deliver an improved future outcome for passengers in terms of service quality, facilities and price.

"We will now redouble our efforts to work with our airlines partners to make this work in the best interests of all parties, and in particular for passengers."

A CAA proposal on a charging regime at Stansted for 2014-19 is expected next week, with a final ruling on all three airports due in January.

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

BBC Business Live

  1.  
    YELLEN SPEECH 09:34: BBC Radio 4
    Janet Yellen

    All eyes will be on US Federal Reserve chair Janet Yellen later when she addresses a gathering of central bankers and other policymakers at Jackson Hole, Wyoming. Analysts will be studying the speech for clues as to when the US might raise rates. James Bevan at CCLA Investment Management tells Today that she wants to see wage inflation picking up before taking action.

     
  2.  
    LONDON STOCK EXCHANGE 09:19:

    In addition to setting out plans for a rights issue, the London Stock Exchange has also announced a big rise in quarterly profits following a "resurgence in the IPO market". The surge in the number of firms floating shares on the market helped to push pre-tax profits for the three months to June to £83.6m, up 40% from a year earlier.

     
  3.  
    AIRPORT SURVEY 09:05: BBC Breakfast
    BBC Breakfast

    Some of Britain's biggest and busiest airports have been named as the worst for customer satisfaction by the consumer group Which?. Smaller airports did much better, including Doncaster Sheffield airport, where Dominic Laurie is for BBC Breakfast. Aviation analyst Laurie Price says smaller airports have a great opportunity but are hard pressed to compete with bigger airports which have the greater volume of flights.

     
  4.  
    MARKET UPDATE 08:50:

    European stocks are largely up before a key speech from US Federal Reserve chief Janet Yellen. She is due to speak at a gathering of central bankers in Jackson Hole, Wyoming, as investors continue to speculate on the direction of US interest rates.

    • London's benchmark FTSE 100 index rose 0.04% to 6,780.08 points
    • Frankfurt's Dax gained 0.12% to 9,390.29
    • The CAC 40 index in Paris fell 0.04% to 4,291.06
     
  5.  
    EDF ENERGY 08:36:
    Gas rings

    "We recognise that for a period of time the service to our customers was not up to the standards they deserve," says Beatrice Bigois from EDF Energy following this morning's announcement from Ofgem that it will pay out £3m. "We apologise to those customers who were impacted during this period. We have co-operated fully with Ofgem and have taken this matter very seriously."

     
  6.  
    MARKET UPDATE 08:17:

    After nine consecutive days of gains, Japan's Nikkei share index has closed lower. The benchmark index ended the day down 47.01 points at 15,539.19. In Hong Kong, the Hang Seng is up 104.96 points at 25,099.06.

     
  7.  
    CO-OP BANK RESULTS 08:08: Radio 5 live

    Chris Wheeler, a banking analyst at Mediobanca, is on 5 live talking about the Co-op Bank results. He says "there are signs of progress" but still "problems they have to deal with," including a drop in deposits. A reduction in money set aside for bad debts "flattered" the profit figures, he said.

     
  8.  
    BANK OF AMERICA 08:01: Radio 5 live

    Bank of America can easily afford the record $16.7bn (£10bn) settlement with US authorities for misleading investors about the quality of loans it sold, US investment expert George Conboy tells Radio 5 live. He says the bank is likely to make $10-15bn over the next 12 months.

     
  9.  
    CO-OP BANK RESULTS 07:54:

    An offer of shares to the public via a stock market listing is "logistically unlikely" before the end of 2014, the Co-op Bank says. It is setting up a committee to work out when it will do that. The Prudential Regulation Authority "has indicated it would be concerned if an IPO were to distract focus from the primary goal of delivering the Bank's Turnaround Plan," it said.

     
  10.  
    ARGENTINA DEBT 07:46: BBC Radio 4

    Argentina risks becoming an "international financial pariah" again over its latest debt row, James Bevan, chief investment officer at CCLA Investment Management tells the Today programme. "The problem is that investors won't trust them, [so] they won't provide money," he says.

     
  11.  
     
  12.  
    LSE RIGHTS ISSUE 07:35:
    LSE sign

    The London Stock Exchange has said it plans to raise £938m through a rights issue. The money is to be used to part-fund the acquisition of Frank Russell Company. The LSE announced in June it was buying the US asset manager for $2.7bn (£1.6bn).

     
  13.  
    PPI SPENDING 07:25: Radio 5 live

    Consumers have about £23bn of payment protection insurance redress from banks, says James Bevan, Chief Investment Officer at CCLA Investment Management on Wake Up to Money. When that dries up, it may have an effect on spending, he says.

     
  14.  
    EDF ENERGY PENALTY 07:15:

    Ofgem said it found that between May 2011 and January 2012, "EDF Energy did not have appropriate procedures in place to properly receive, record and process all customers' complaints in accordance with complaints handling rules". However, it adds EDF took action quickly to rectify the problems. It also says EDF "has acknowledged that their customers were caused significant disruption" and has apologised.

     
  15.  
    CO-OP BANK RESULTS 07:09:
    bank

    Co-operative Bank has reported a loss of £75.8m for the six months to the end of June. That compares with a loss of £845m the year earlier. The bank says it has cut staff numbers by 21% from a year earlier to 5,860.

     
  16.  
    EDF ENERGY PENALTY Breaking News
    EDF bill

    EDF Energy is to pay £3m after an investigation by energy regulator Ofgem found that the company breached complaint-handling rules. The company will pay the money "to benefit vulnerable customers", Ofgem says.

     
  17.  
    BANK OF AMERICA 06:55: BBC Radio 4

    Chris Wheeler, an analyst at Mediobanca, has been discussing Bank of America's massive $16.7bn settlement with US authorities. He told the Today programme that while banks were at fault, investors were also "in a hurry" at the time, and failed to carry out proper credit analysis of what they were buying.

     
  18.  
    EUROZONE 06:44: Radio 5 live
    ECB headquarters

    James Bevan is chief investment officer at CCLA Investment Management and he's on Wake Up to Money talking about the eurozone's performance. "Interest rates are so low" in some of the countries that when you factor in the risk of investing the rates are negative, he says. Sustainable growth in the UK hasn't yet been seen either, he says. with house price growth and PPI repayments from banks driving consumer spending.

     
  19.  
    GAP IN INDIA 06:30:
    Gap logo

    US clothing store Gap is bringing its brand to India, aiming to open 40 outlets. It will launch its first two stores there early next year in Mumbai and the capital Delhi - India's biggest and busiest cities.

     
  20.  
    BANK OF AMERICA 06:20: Radio 5 live
    Bank of America

    Chris Orndorff, a fund manager at Western Asset Management is on Wake Up to Money talking about Bank of America's record $16.7bn settlement. The penalty dates back to the behaviour of a company it purchased, Countrywide. "The timing of the Countrywide purchase has to be one of the worst in history," he says. The fine wipes out the cumulative net income of the bank for the last three years. The bank is very safe though, he says.

     
  21.  
    ARGENTINA DEBT 06:06:

    Argentina's plan to exit its debt default by asking investors holding defaulted bonds to swap them for new locally issued debt has been ruled "illegal" by a US court. New York Judge Thomas Griesa said the plan was "lawless". Argentina was trying to get around an earlier court ruling banning it from paying interest to investors who had accepted restructured bonds.

     
  22.  
    OIL PRICE 06:00: Radio 5 live
    Oil barrels

    After rising sharply in June, oil prices have now slipped back to 14-month lows. Amrita Sen from Energy Aspects tells Wake Up to Money. She says that "the initial price rise was on the back of the fears should any disruptions come at peak demand". However, despite geopolitical risks, supply has remained undisrupted while demand has fallen.

     
  23.  
    06:00: Nick Edser, Business reporter

    Good morning. Get in touch with us via email: bizlivepage@bbc.co.uk or on twitter @BBCBusiness.

     
  24.  
    06:00: Howard Mustoe, Business Reporter

    Hello! We'll be bringing you all the latest business news, data and analysis. Stay with us.

     

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.