CAA calls for real-time price freeze - CILT(UK)
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CAA calls for real-time price freeze

03 October 2013/Categories: Industry News


The Civil Aviation Authority (CAA) has proposed a real-time control on prices at Heathrow.


This comes after the latter called for a 4.6 per cent increase in real-term charges across the next five years and airlines, in response, asked for a 9.8 per cent annual cut. CAA has decided on a freeze wherein prices cannot go up by more than inflation.


A spokesperson for CAA said: "The proposals will put an end to over a decade of prices rising faster than inflation at Heathrow."


The airport's chief executive Colin Matthews said: "This proposal is the toughest Heathrow has ever faced.


"The CAA’s settlement could have serious and far-reaching consequences for passengers and airlines at Heathrow."


He argues the cost of capital proposed by CAA will not be enough for partners to invest willingly. The airport states this rate of return has declined from 7.75 per cent between 2003 and 2008 and by 6.2 per cent from 2008 to 2014, resulting in a gross loss every year and a lack of return on investments which is "unsustainable" for its shareholders.

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