Stansted could abuse its power, warns CAA
The Civil Aviation Authority has warned Stansted might take advantage of the lack of capacity at other southeast airports to increase passenger charges from 2014 if it were fully de-regulated.
Charges at the airport have been capped since 2009 by the CAA, but today the authority launched a consultation on whether the airport, which is being sold by Heathrow Holdings (formerly BAA), should remain regulated.
In a statement issued today, the CAA said it was minded to rule that Stansted should not be fully de-regulated at this time. "Its assessment is that, in terms of services to low cost and charter carriers, the airport at present has a level of market power that may be substantial and it is likely to be become substantial between 2014 and 2019 as airport capacity constraints continue to tighten in the London region."
The CAA has provisionally concluded that it would be better to remedy possible abuse of Stansted’s market power both with economic regulation and also general competition law.
It said the benefits to consumers of continuing economic regulation at the airport were likely to outweigh the possible adverse impacts of regulation on the airport.
Iain Osborne, CAA director of regulatory policy, said: "Our core focus is protecting consumers and improving their experience.
"The evidence tends to suggest we cannot be confident competition alone will deliver this. However, this does not mean we would necessarily continue with traditional price controls – we would consult on that next year."
Ryanair, Stansted’s largest airline, has already criticised current regulation at the airport, where it claims passenger charges have doubled in five years. The airline has previously called on the CAA to force price cuts on Stansted.
"Whilst we have provisionally found Stansted should be subject to continuing regulation to protect consumers, that view will now be consulted on, and we look forward to engaging with our stakeholders closely throughout the process especially on their views on the most proportionate form of regulation to reflect the circumstances at Stansted," said Osborne.
The assessment comes about because of new powers granted to the CAA as part of the Civil Aviation Act 2012 (which received Royal Assent yesterday).
The Act gives the CAA the power to be more flexible in its approach to economic regulation.
Instead of the current situation whereby an airport judged to have market power must face a price control, in future the CAA will be able to grant airports economic licences with varying conditions to ensure consumers are protected.
The Act also gives the CAA a duty to put consumers first when designing its economic regulation. The changes bring the CAA in line with other economic regulators.
By Linsey McNeill
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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