Stansted owners face fines scheme

Passenger queues will be one area scrutinised under the scheme

A major airport in Essex used by budget airlines faces penalties of up to £10m a year if found guilty of poor service to passengers and airlines.

The Civil Aviation Authority (CAA) is introducing an incentive scheme at Stansted Airport like one already operating at Heathrow and Gatwick.

Security queues, baggage systems, cleanliness, signage and flight information will all be monitored.

The CAA said similar schemes had led to an overall improvement in performance.

Stansted's owners also plan to increase the airport's passenger capacity from 25 million to 35 million a year.

However, operator BAA - whose UK airports include Heathrow, Gatwick and Stansted - had still incurred penalties of £4.9m at Heathrow and £3.8m at Gatwick for the first 10 months of 2008-09.

The CAA has also announced the amount BAA can charge airlines to use Stansted for the period from April 2009 to March 2014.

The amount will be equivalent of £6.53 per passenger for 2009/10 and 2010/11 and will then rise to £6.85 by 2013/14.

Right balance on price

These are lower figures than those recommended by the Competition Commission (CC).

The CAA said there was strong evidence that prices charged at Stansted had an impact on other airports, notably Luton.

It added that setting the price caps too low would harm investment to meet passenger demand at both Stansted and other competing airports.

"Against this, the CAA has weighed the risk that if the price cap were too high, and Stansted were to develop and exploit more market power than is currently in prospect, the resulting levels of charges would penalise passengers and airlines," a spokesman said.

"The CAA believes that its decision strikes the right balance in protecting passengers and airlines while allowing price caps to rise in coming years to enable investment."

In reply BAA said: "We note the CAA settlement. We recognise the cost pressures facing the entire industry today, and have agreed realistic capital spending plans with airlines over the coming five years.

"Looking to the long-term, the regulator should not discourage future important investment which it accepts is necessary.

"We are disappointed that a large element of the full cost of developing new capacity has been retrospectively disallowed."