18 November 2008

High Court agrees to Judivial Review over Gatwick airport charges

The High Court has approved EasyJetÃ¢â¬â¢s application for a Judicial Review of the regulatory process that allowed BAA to impose an increase in airport charges at Gatwick Airport last spring.

The airline said the move was a legal breakthrough and will be the first time that the Civil Aviation Authority has been subject to Judicial Review for a regulatory price decision.

EasyJet is objecting to the way the CAA has allowed BAA to raise prices at Gatwick by 21% (from Ã&#pound;5.61 to Ã&#pound;6.79) this year, and by 31% + RPI by 2013.

It is objecting on the following three grounds:

1. Unlawful departure from the Competition CommissionÃ¢â¬â¢s (CCÃ¢â¬â¢s) recommendations. The statutory powers under which the CAA sets the price cap at designated airports requires that the CAA must refer its proposals to the CC, and to Ã¢â¬Åâœhave regard toÃ¢â¬~ its recommendations and to state any reasons for not accepting them. EasyJet believes the CAA gave insufficient weight to the recommendations of the CC.

2. Unlawful treatment of BAAÃ¢â¬â¢s late submission of operating expenditure costs. The CAA failed to adopt a fair and lawful approach to handling a Ã&#pound;267 million (subsequently reduced to Ã&#pound;218 million) Ã¢â¬Åâœeleventh hourÃ¢â¬~ operating expenditure submission from BAA. This was submitted on November 8 2007, following more than two years of discussions, after the referral to the CC, and less than two weeks before the CAA was due to publish its firm proposals for airport charges.

3. Unlawfully disregarding the CCÃ¢â¬â¢s public interest finding that there was no justification for BAA to receive Ã¢â¬ÅâœbonusÃ¢â¬~ payments for meeting service levels, for which it would already have been paid. The CAA ignored the CC's public interest finding in relation to the Service Quality Rebate scheme, in which it saw no justification for bonuses to be paid to BAA for meeting its targets. Yet, the CAA has incorporated a bonus scheme into the price cap.

By Bev Fearis