A judgement about how much Heathrow Airport can charge airlines was made with several flaws, according to the competition regulator’s preliminary findings.
The Civil Aviation Authority (CAA), the organisation in charge of overseeing aviation, has been asked to reconsider some parts of its finding, according to the Competition and Markets Authority (CMA).
The CAA stated in February that the maximum on the average passenger fee at Heathrow must be lowered from £31.57 for 2023 and last year to £25.43 over the following three years.
Charges are paid by airlines, however they are typically included in air costs for customers.
The CAA’s judgement was appealed by the airport and three carriers, British Airways, Delta Air Lines, and Virgin Atlantic.
The CMA made the provision that “the CAA was not wrong in most” of its conclusions.
The competition watchdog supported the airlines on a “relatively minor” aspect of the CAA’s cost of debt calculation and a “small element” of its allowance for extraordinary events that could result in a drop in passenger volume.
The CMA also concurred with Heathrow that it was “inappropriate” to apply an adjustment to the recovery of income lost as a result of the coronavirus outbreak.
The CMA declared: “We have provisionally decided to require the CAA to reexamine them where we have provisionally established that the CAA has made mistakes.
Even though it is currently impossible to estimate how the price cap might change if the CAA reconsiders these aspects, we would anticipate that any such changes would have a negligible overall impact on the CAA’s choice to control prices, especially given that they might even have the opposite effects.
According to a Heathrow representative, “We are carefully considering the CMA’s initial findings to understand what impact they may have on passengers and our ability to deliver our investment plans.”
The provisional decision of the CMA is open for comment from Heathrow, the airlines, and the CAA.
The CMA announced that it will make a final decision by October 17.
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