Heathrow slams ‘draconian’ price caps
Heathrow is to review its investment plans, blaming a "draconian" decision by the Civil Aviation Authority to impose a tougher than expected cap on airport charges.
In October, the CAA proposed that charges should rise in line with inflation, but in a surprise move today it has declared that Heathrow must limit charges to 1.5% below inflation for the next five years, starting in April.
The aviation regulation body said it had revised its original plans because "passenger traffic forecasts have strengthened since October, and the cost of capital has been revised".
"This decision places affordability centre-stage, while ensuring there is still a supportive environment for capital expenditure, with provision for nearly £3bn of investment," it said.
But Heathrow, which had asked for a rise of 4.6% above the RPI inflation rate, is concerned the charges leave no room for disruption.
It said it means per passenger airline charges will fall, in real terms, from £20.71 in 2013/14 to £19.10 in 2018/19.
Chief executive Colin Matthews said: "We are concerned by the degree of change since the CAA’s final proposals just a short while ago.
"In October the CAA accepted the need for changes to their April proposals, but has now reverted to a draconian position.
"We want to continue to improve Heathrow for passengers. We will review our investment plan to see whether it is still financeable in light of the CAA’s settlement."
Heathrow said the CAA’s final decision includes "aggressive operational, commercial and passenger forecasts".
"It requires Heathrow to reduce operational expenditure by more than £600 million, stretches commercial revenue targets by in excess of £100 million, which includes revenues from retail and car park charges, and assumes significant passenger volume growth over Q6.
"The settlement leaves little spare resource available to manage the consequences of potential disruption at Heathrow."
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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