September 29 2022, Kimpton Fitzroy London
Friday 30 September 2022, JW Marriott Grosvenor
21 November 2022, Hilton London Metropole
A Civil Aviation Authority (CAA) submission to the Competition Commission” inquiry into airport operator BAA says there is ”a clear case for regulatory reform” as the system has remained largely unchanged in 20 years.
Following its price cap review last week allowing BAA to raise landing charges at Heathrow and Gatwick, numerous airlines were calling for an overhaul of the regulator itself, or a replacement of it.
But CAA group director of economic regulation Harry Bush said: ”There is now widespread agreement ” between airlines, BAA and the regulator ” that the current regulatory framework needs modernising. However there is likely to be considerable debate about the best way to do this.
”The CAA has placed significant weight on passengers” interests ” notably in its recent decisions on investment and service quality at Heathrow and Gatwick ” but the regulatory regime could be improved by placing the interests of consumers unambiguously at the heart of the CAA”s duties and by encouraging competition between airports and between airlines for their business.
”Regulatory reform is no magic bullet ” airport investments and service quality will still need to be paid for.”
He said the CAA wants ”smarter” regulation rather than more of it ” it considers the vast majority of UK airports should continue to operate free of detailed economic regulation.
It wants more ”flexibility and discretion” so it can tailor regulation better across airports, ”responding to the continually changing market.”
A spokesman told ABTN that a change to the five-year timeframe of a review was not necessarily needed, but that the CAA wanted a clearer remit.
”It”s perhaps not the period we would like to change, more the style and the process.
We don”t have one overriding remit ” if we could prioritise the consumer, they are the end user, then it would make the regulatory process simpler and more effective.”
And he said the CAA was not too troubled after both the operator and airlines attacked its price cap decision last week.
”In a way, if both sides are unhappy, then as a regulator you”ve got it about right. But this recommendation today is not as a result of that ” we began putting this together months ago.”
When asked about the CAA”s review task last week, BAA commercial director Dr Duncan Garrood told ABTN: ”This is always a difficult process ” the CAA have to sit in a position where they are trying to decide effectively on behalf of the passenger whether the settlement should be at a particular level which is potentially going to make one side or another feel more positive about it.
”Inevitably when you get a regulatory settlement at least one of the parties is going to feel that it”s not to their liking. We don”t want the industry to not be competitive but we do need to be incentivised and given the level of risk of some of the investments that are being made we felt that a higher degree of return on capital was warranted.”