Great Britain's airline regulator has announced higher fees will be charged to travelers using London's two biggest airports. The Civil Aviation Authority said higher fees, effective April 1, are needed to pay for improvements at Heathrow and Gatwick airports, and for increased security.
 British Airways accused the agency of caving in to pressure from the airport owner, BAA, a subsidiary of Grupo Ferrovial of Spain, but BAA complained that the settlement was insufficient. Virgin Atlantic, bmi, easyJet and Ryanair joined in the criticism, saying the regulatory system had failed. They called for an end to BAA's monopoly of London's big three airports, including Stansted.
BAA contended that the Civil Aviation Authority recognized "the scale of the task we are embarked on, the pressures of handling such large infrastructure projects, the full cost of the increased security requirements, as well as the impact of the credit market turmoil."
The Civil Aviation Authority said it would allow fees to rise 23.5 percent at
Heathrow to the equivalent of $25.82 per passenger, effective April 1. At
Gatwick it is allowing a 21 percent increase to the equivalent of $13.70 per
passenger. The fee is charged for each departure or arrival at the
airport. Although the fee is assessed against airlines, the charge is
generally added to ticket prices. In the following four years, fees at
Heathrow will increase by no more than retail price inflation, while Gatwick
fees can go up by 2 points more per year than the inflation rate. The airports
are the two busiest in Britain.
"These higher airport charges are essentially paying for the
modernization of Heathrow and Gatwick, in terms of both facilities and service,
for the direct benefit of the passenger," the Civil Aviation Authority
said. At Heathrow, that includes paying for the new Terminal 5, which
enters service this month, the building of a new East Terminal by 2013 and
upgrading of existing facilities. At Gatwick, there are plans for
expanding terminal facilities and installing a new baggage system.
British Airways, the dominant carrier at Heathrow and the sole customer at
Terminal 5, rejected that explanation and said the regulatory system had failed.
"These overly generous charges far exceed what is required to upgrade
facilities across Heathrow through investment in infrastructure and improved
service quality levels," said Paul Ellis, British Airways general manager
for airport policy and infrastructure. "When BAA's new owners,
Ferrovial, bought them, the CAA said they would not be influenced by Ferrovial's
high debt levels," Ellis added. "In practice, they have ignored
their own policy and caved in to intense pressure from BAA by setting excessive
price increases. Heathrow passengers will pay, on average, 17 percent more than
the Competition Commission recommended in September," he added.
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