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CAA plans may limit air fare rises

Plane parked at airport30/04/13

By Matt Gibson

Plans to charge airlines less for using London's three main airports have come as welcome news to air passengers who are likely to benefit from the proposals.

Under the guidelines from regulator the Civil Aviation Authority (CAA), the amount airlines are charged for using Heathrow, Gatwick and Stansted airports will be reduced in 2014-19 from what they paid in the period of 2009-14.

Passengers using these airports will therefore expect to see the reduced charges, to be finalised next year, passed on to them in some way in the form of limited fare rises.

The news also comes as a boost for the airlines themselves as they have been arguing for some time now against what they regard as excessive charges placed upon them by the airports.

The CAA can put a limit on how much airport bosses charge airlines in take-off and landing fees.

It has proposed that during the 2014-19 period, airlines should not be allowed to charge more than the RPI rate of inflation minus 1.3 per cent.

Currently, the charge for using Heathrow is the rate of RPI plus 7.5 per cent.

Heathrow bosses had suggested that for 2014-19 charges should increase from the equivalent of £19.33 per passenger for 2012/13 to as much as £27.30 for 2018/19.

The CAA has proposed a more flexible system for Gatwick, which had called for complete deregulation, but this will still be underpinned by a licence from the watchdog.

The regulator believes this new approach will encourage more collaboration between airports and airlines. It said that so far "the airport has not yet made acceptable proposals along these lines".

If things cannot be resolved, the CAA said 2014-19 charges at Gatwick would have a cap of RPI plus 1 per cent imposed on it, which is lower than the RPI plus 2 per cent regime implemented at the West Sussex airport during 2009-14.

At Stansted, the CAA will monitor charges and quality of service. This follows complaints from Ryanair chief executive Michael O'Leary who has raised concern over how much airlines are charged.

The CAA said that this would limit the amount of regulatory burden placed on the airport and airlines while also ensuring passengers at the Essex airport are protected.

However, it warned that it could implement stricter regulation if prices at the airport are not reduced over time.

CAA chief executive Andrew Haines said: "Protecting consumers and improving their experience is the core focus of our regulatory decision-making.

"Few passengers flying from Heathrow, Gatwick and Stansted fail to notice their differences, so it should be no surprise that our regulatory approach also differs at each airport.

"The proposals we publish today reflect their individual circumstances, ensure passengers are protected when they travel, and allow for continuing improvements in service and competition."

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