IATA lashes price hikes at London airports
GENEVA – – The International Air Transport Association (IATA) has blasted the UK’s Civil Aviation Authority’s decision to allow costs at London airports to rise by a massive 50% between 2008 and 2013.
“Failure is the only word to describe the CAA’s decision,†said Giovanni Bisignani, IATA’s director general and CEO.
For Heathrow the CAA has allowed charges per passenger to rise by 23.5% from April 1, 2008, followed by increases of 7.5% plus inflation for each of the following four years.
In the case of Gatwick, a similar 21% hike from April 1, 2008 will be followed by increases of 2% plus inflation for each of the following four years.
Bisignani noted that in 2006 BAA generated an operating profit of 35% at Heathrow, which produced a net return on capital invested of 15.3%—twice the level of the cost of capital set by the regulator.
“Economic regulation must produce results that are measured by improved efficiency and quality, not reward excessive monopoly profits and embarrassingly low service levels,†said Bisignani.
“The regulator already allowed a 50% increase between 2003 and 2008 and now the road is being paved with gold for a further 50% increase.
“Only an out-of-control monopoly could think in such terms. And only a phantom regulator that is the result of a flawed structure could allow this to happen,†said Bisignani.
“Compare that to the 64% improvement in labour productivity and 16% reduction in non-fuel unit costs achieved by airlines since 2001â€.
“The bureaucrats have proved to be impotent in defending the interests of travellers against monopolies. This decision impacts London’s competitiveness as a world city. If we don’t fix London’s dysfunctional airports, the city’s regular travellers will find a more convenient home.
“Frankfurt, for example, would be only too happy to welcome them,†said Bisignani.
Ian Jarrett
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