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UK Civil Aviation Authority publishes final decisions on economic regulation at Heathrow, Gatwick and Stansted airports

Jan 10, 2014

The UK Civil Aviation Authority (CAA) has published its final decisions on economic regulation at Heathrow, Gatwick and Stansted airports after April 2014.

The decisions announced today have been made using powers set out in the Civil Aviation Act 2012, which requires that regulation reflects the circumstances of individual airports. The CAA has therefore assessed the market power of Heathrow, Gatwick and Stansted airports (passenger market only for Stansted). It has decided passengers would not benefit from further regulation of Stansted, but that Heathrow and Gatwick will both require airport licences from April 2014 onwards.

Heathrow

At Heathrow, the CAA’s price control decision will see prices fall in real terms by 1.5% per year between 2014 and 2019 (RPI-1.5%). This has changed from the CAA’s Final Proposals published in October, which suggested prices rising in line with inflation. The changes have been made as passenger traffic forecasts have strengthened since October, and the cost of capital has been revised.

Gatwick

The CAA has based regulation on the airport operator’s own commitments to its airline customers. These and various airport-airline contracts cover price, service quality, investment and other issues normally covered by a regulatory settlement, and the CAA states that this should enable a more ‘flexible and commercial approach’.

The CAA is backing the commitments with a licence, to allow the CAA to step in if there are reductions in service quality that are against what it believes are the passenger interest. The CAA will monitor the application of the new framework to ensure that prices remain competitive and that service quality is sustained. The licence will also provide for CAA scrutiny of most second runway costs before they can be passed on to airlines and passengers.

The airport licences will ensure that issues like cleanliness, queuing times, seating availability and information provision are addressed appropriately. There will be a requirement for Heathrow and Gatwick airports to put in place plans to ensure they are better prepared for disruption and can manage it effectively when it does occur.

Stansted

The CAA has completed its assessment for Stansted Airport’s passenger market, taking into account the long-term contracts the airport now has in place with its main airline customers, and determined that the airport does not have substantial market power. This means the airport will not be economically regulated by the CAA from April 2014 onwards. The CAA will publish our decision on Stansted’s cargo market power before the end of March 2014.

  • An overview of the CAA’s decisions for the airports can be seen here, with links through to the separate documents.
  • The decision document for each airport along with several associated documents can be found here.
  • A briefing about airport economic regulation, setting out why regulation is necessary and the CAA’s approach is available here.

House of Commons Transport Select Committee report: Ready and waiting? Transport preparations for winter weather

Jan 3, 2014

3 Jan 2014 – PDF Icon House of Commons Transport Select Committee report: ‘Ready and waiting? Transport preparations for winter weather’ 

The House of Commons Transport Select Committee have published the report ‘Ready and waiting? Transport preparations for winter weather. The report recognises the progress made by Government and transport providers, however the Committee has identified a number of areas where they believe there is scope for further improvement. The Committee recommends:

  • The Highways Agency should review the barriers to providing comprehensive realtime information to drivers; identify technological and other solutions for doing so, particularly during periods of disruption; and develop a strategy to implement these solutions across the strategic road network.
  • The Office of Rail Regulation (ORR) should ensure that train operating companies develop more robust procedures to identify how long a period of disruption is likely to last and to communicate this clearly to passengers.
  • The Civil Aviation Authority (CAA) should set out how it will evaluate the impact of the new airport licence conditions on passenger welfare, by Spring 2015. The CAA must also ensure that best practice on the provision of information and on passenger welfare is shared across all UK airports.

The Committee also supports pro-active decision making by the rail and aviation industries to reduce or cancel services in anticipation of a severe weather event. It believes that when used effectively, this approach would provide greater certainty to passengers and minimises their risk of getting stranded.

The report also makes the point that winter weather is about more than just snow and low temperatures, as illustrated by the ‘St Jude’ storm across southern England (on 28 October 2013) and the storm across the north of the UK on 5 December 2013. The Committee believes that the transport sector must continue to work closely with the Met Office and other forecasters to understand the challenges posed by different types of severe weather.

Finally, the Committee believes that embedding a culture of continuous review and improvement must remain a priority for both Government and the transport sector; to ensure that all modes and networks are made more robust year after year and that the sector is well placed to address further issues as and when they arise – concluding that a year or two of mild winter weather should never breed complacency or lead to a false sense of security.

Civil Aviation Authority: 2012 passenger survey

Nov 4, 2013

The UK Civil Aviation Authority (CAA) has today published the results of its 2012 passenger survey, revealing the impact of last year’s Olympic Games on passenger numbers at Britain’s airports.

The CAA carries out its annual passenger survey to improve its understanding of the people who use the UK’s airports. Despite overall passenger numbers between July and September in 2012 falling compared to the same period in 2011, the results show over 800,000 passengers passed through London’s airports for Olympic-related journeys during these months. Fifty four per cent of these journeys were at Heathrow, with the next highest proportion at Gatwick (18 per cent).

The majority (71 per cent) of these Olympic journeys were for leisure with visitors heading to the UK to enjoy the London 2012 experience. However, almost a third (29 per cent) of these journeys for business purposes – which would include many of the 10,000 athletes who attended the Games.

The 2012 survey questioned over 210,000 departing passengers at five London airports (City, Gatwick, Heathrow, Luton and Stansted) as well as Birmingham, Manchester, East Midlands, Bristol, Cardiff, and Exeter).

Other key findings from the CAA’s 2012 Air Passenger Survey include:

  • Heathrow is the only airport surveyed in 2012 where the majority of passengers were foreign residents (59 per cent). By contrast, Exeter had the smallest proportion of foreign residents using the airport (9 per cent).
  • Heathrow had the highest proportion (37 per cent) of connecting passengers using the airport, up by three percentage points from 2011. By comparison, Bristol, Cardiff and East Midlands airports all saw less than one per cent of their passengers using the airport to change aircraft.
  • London City had the largest proportion of passengers travelling for business (54 per cent). However this represents a 9 percentage point drop since 2010 (when the airport was last surveyed) as a greater proportion of leisure passengers have used the airport. The next highest was Heathrow with 30%, whilst the airports with the highest proportion of leisure passengers were East Midlands 91 per cent, and Bristol and Cardiff both with 86 per cent.

Travellers from Heathrow took a higher proportion of trips (21 per cent) lasting more than two weeks than anywhere else. In contrast, London City had the lowest proportion of the London airports at only 4 per cent. Outside of London, the highest percentage of trips over two weeks was recorded at Manchester, with 13.4 per cent. The lowest was at Cardiff at 5.2 per cent.

A summary of the Passenger Survey is available to download for free from the CAA website at www.caa.co.uk/surveys. More detailed results are available for purchase by emailing [email protected].

Heathrow Airport Operational Freedoms Trial: The Civil Aviation Authority’s supplementary views on Heathrow Airport’s end-of-trial report

Oct 18, 2013

PDF Icon Heathrow Airport Operational Freedoms Trial 2013

The Civil Aviation Authority (CAA) and Heathrow Airport Limited (HAL) have published a report into Heathrow Airport’s Operational Freedoms Trial. The trial, overseen by the CAA, tested whether additional operational flexibility – in the form of tactical use of enhanced arrival and departure flow rates in limited circumstances – would benefit Heathrow’s resilience to disruption and facilitate recovery. The report provides separate and independent analysis on the way the trial was run and on Heathrow Airport’s conclusions.

The hypothesis being tested by the trial, as proposed by the South-East Airports Taskforce, was that granting additional operational freedoms at Heathrow could potentially deliver:

  • significant benefits for passengers by improving the resilience and reliability of the airport, and
  • environmental benefits, with fewer unscheduled night flights, lower emissions and less stacking.

The data from the trial was found to be inconclusive.

Any operational benefits of operational freedoms were found to be offset by some redistribution of aircraft noise among local communities, and preliminary work suggests some detrimental impact. Communities below the westerly approach paths had their respite period interrupted by aircraft arriving on the runway usually used for departures, while others were found to be affected by vectoring off the established departure routes.

Developing earlier work by HAL, the CAA sought to estimate the monetary value of the costs and benefits of the measures trialled:

  • The CAA estimates that operational benefit from the operational freedoms trialled in Phase 2 was likely to lie somewhere between -£7.7 million and +£10.6 million a year, with a mean estimate of around +£1.8 million. This reflects the ‘substantial uncertainties’ found around the calculations.

Heathrow Airport Limited’s engagement programme was felt to be ‘largely successful in publicising the trial and bringing together technical experts to discuss data issues’. However, it was reportd to be ‘less obvious that much progress was made in improving its relationship with the wider community’.

The report concludes that ‘before taking a decision on any more permanent application of the freedoms, the Government has undertaken to hold a public consultation. The CAA has set out a number of ‘insights’ built up during the trial and recommends that the Government consults stakeholders on these insights as well as the overall value of the freedoms to Heathrow Airport’.

Stansted Market Power Assessment: consultation on relevant market developments

Oct 17, 2013

PDF Icon Stansted Market Power Assessment: consultation on relevant market developments

The UK Civil Aviation Authority has launched a consultation on the impact of long-term agreements made by Stansted Airport and its principal customers on the airport’s market power. Under the Civil Aviation Act 2012 a market power test is required as part of the process to decide whether an airport should be regulated in the future and, if so, how.

The consultation sets out the CAA’s provisional view that the deals Stansted has agreed with its two principal customers change the assessment of the airport’s market power, and mean that deregulation could be appropriate. However, this provisional view is subject to consultation, and may change depending on stakeholders’ responses.

Following Stansted’s subsequent acquisition by Manchester Airports Group (MAG) and MAG’s agreements with Ryanair and easyJet, today’s consultation invites stakeholders to comment on the CAA’s assessment of how these agreements may affect the market power assessment.

The consultation focuses solely on the impact of the key developments on the ‘Minded to’ assessment we consulted on in January, and their implications on the licensing of Stansted after April 2014. It does not update the CAA’s thinking on all matters raised in the assessment, nor does it afford stakeholders the opportunity to comment on submissions made by other stakeholders in response to that consultation.

The consultation will close on the 11 November 2013. After the consultation, the final determination on Stansted’s market power will be published early in 2014. The form of regulation for Stansted will be finalised after that.

The consultation documents is also available here.

London Airspace Consultation

Oct 15, 2013

PDF Icon London Airspace Consultation

 The London Airspace Consultation runs for 14 weeks until 21 January 2014.  This is the first stage in a wider programme of airspace modernisation to be complete by 2020.  This stage addresses changes to airspace supporting Gatwick, London City, Southend and Biggin Hill airports.

The attached note provides some headlines on the consultation.  Final route positions will be determined after considering feedback from the consultation.

NATS state that the aim of the consultation is to create less noise – with aircraft climbing higher, more quickly on departure and staying higher for longer on arrival.  However, they add that this will mean flight paths will change – and this may mean some areas will be overflown more than today, others less, and some will not notice any significant change.

In respect of the Gatwick Airport proposals, this is a joint consultation by NATS and Gatwick Airport.  Gatwick Airport is leading a consultation on proposed changes to its departure and arrival routes below 4,000ft; NATS is leading the consultation on proposals for changes to network airspace above 7,000ft.  Intermediate airspace between 4,000-7,000ft, where low altitude and network airspace connect, requires partnership between the two companies.

Comments can be left here.

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