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Friday, 2 November, 2001, 11:24 GMT
UK landing charges might increase
A check-in at Heathrow Airport
Passengers will bear the burden, says BA
A possible change in aviation regulations might increase the cost of landing charges at many of the UK's major airports.


Customers will bear the brunt of any substantial increase in charges

BA spokeswoman
The Civil Aviation Authority has proposed that money from shops and other commercial activities should no longer be used to keep landing charges down.

The measure would be part of a shake-up in the way the air industry regulator polices airport finance.

The CAA has said that it does not expect the extra charges to be passed onto passengers, but some airlines disagree.

Revenue from landing & terminal charges (2000-01)
Heathrow: 5.25 per passenger
Gatwick: 4.06 per passenger
Manchester: 6.73 per passenger
Stansted: 4.36 per passenger
Source: CAA
"In a competitive aviation market, customers will bear the brunt of any substantial increase in charges," said a British Airways spokeswoman.

Airports likely to be affected include Heathrow, Gatwick, Stansted and Manchester.

Parking charges for the aircraft are also expected to increase as a result of the changes.

Price caps

The CAA is responsible for setting a price cap on landing charges, in consultation with the Competition Commission.

A duty free shop at Gatwick airport
Shop revenues won't be taken into account
Airports can then determine their own charges but are prohibited from going above the price cap.

Up until now, the CAA has taken commercial revenues from airport shops into account when setting the price cap.

The new proposal means revenues will no longer be considered by the CAA, although airports will be free to take them into account when imposing their own charges.

If the CAA proposals are accepted by the Competition Commission, landing charges could rise in April 2003.

British Airways, however, does not believe that the move to discount revenues from airport shops is "justified or necessary".

New initiative

This is the first time that the CAA has made regulatory proposals as part of a new initiative to make the process more open, Rodney Gander, a CAA economist, told BBC News Online.

A raft of proposals released by the CAA on Friday also include:

  • A provision to allow London Heathrow a higher price cap, if permission to build Terminal 5 is given. This will cover some of the extra costs to construct the terminal.

  • The addition of a "service quality term" to make airports more accountable. If there are consistent delays caused by the airport, price caps could come down in the future.

"The CAA's proposals address directly the need for airport charges to be set at a level which encourages investment in airports to meet the nation's needs," said the airport operator, BAA.

"The proposals are wide ranging," it added.

Consultation

The Competition Commission will take six months to consider the proposals, starting in February 2002.

The CAA is then expected to set new price caps in October or November, taking into account recommendations from the Commission.

If the proposals are passed, charges are expected to increase.

But Mr Gander cautioned that the proposals are based on current forecasts of airport revenues and traffic which could change.

"Everything has been very uncertain since 11 September," he said.

Bad news

Any extra costs will be bad news for many national airlines which are already struggling to overcome an economic slowdown and the effects of 11 September.

Recent figures from the International Air Transport Association (IATA) have shown that international air passenger traffic has suffered its biggest drop since the Gulf War.


Airlines are not in a position to absorb additional airline charges

BA spokeswoman
The average passenger load factor on international flights was just 69% in September, meaning that almost one-third of seats were empty.

"Airlines are not in a position to absorb additional airline charges," said the BA spokeswoman.

"The CAA's estimates on rising charges to fund new infrastructure are extremely high," she added.

The CAA argues, however, that the change in regulations is for the long-term benefit of airport infrastructure.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Martin Lewis
"BA says changes will end up having to be passed onto consumers"
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