Virgin Atlantic says the formula used to set passenger charges at Heathrow is ‘broken’ and is calling for a review.
In a statement issued this morning, it said change was needed to ensure that ‘customers are protected ahead of shareholders’.
The statement came after the competition watchdog largely backed the formula used by the Civil Aviation Authority to set the latest cap on charges at London’s busiest airport.
Virgin had joined British Airways and Delta Air Lines to appeal against the CAA’s cap, saying it was too high, even though the CAA had lowered it from an average of £31.57 per passenger to £25.43 per passenger over the next three years.
Heathrow had also appealed against the cap, saying it should be raised to allow further investment in the airport.
But the appeal body, the Competition and Markets Authority (CMA), said today that it had ‘broadly found in favour of the CAA’, although it has asked it to reconsider three aspects of its pricing decision.
The CMA said it found that CAA’s Heathrow price control ‘struck broadly the right balance between ensuring prices for passengers are not too high and encouraging investors to maintain and improve the airport over time’.
It added that there was ‘a handful of smaller issues’ which it has asked the CAA to look at again.
The first of the three issues relates to the CAA’s cost of capital calculation, the second relates to a part of its passenger forecast, and the third relates to a specific adjustment known as the ‘AK factor’.
In response to the ruling, a Virgin spokesperson said: “Following more than three years of regulated consultation on Heathrow charges, it’s disappointing that the CMA has largely endorsed the CAA’s decision, which did not go far enough to protect consumers from excessive charges at Heathrow. Heathrow Airport’s repeated attempts to impose excessive charges demonstrate how the regulatory framework, including the formula used to set charges at the world’s most expensive airport, is broken.
“With fresh leadership at both the CAA and Heathrow, now’s the time for a fundamental review of how these charges are set, ensuring that customers are protected ahead of shareholders.
“Heathrow must work collaboratively with airlines to ensure it gets back to its best, so it can deliver a world class experience commensurate with being the world’s most expensive airport.”
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In a statement issued this morning, it said change was needed to ensure that ‘customers are protected ahead of shareholders’.
The statement came after the competition watchdog largely backed the formula used by the Civil Aviation Authority to set the latest cap on charges at London’s busiest airport.
Virgin had joined British Airways and Delta Air Lines to appeal against the CAA’s cap, saying it was too high, even though the CAA had lowered it from an average of £31.57 per passenger to £25.43 per passenger over the next three years.
Heathrow had also appealed against the cap, saying it should be raised to allow further investment in the airport.
But the appeal body, the Competition and Markets Authority (CMA), said today that it had ‘broadly found in favour of the CAA’, although it has asked it to reconsider three aspects of its pricing decision.
The CMA said it found that CAA’s Heathrow price control ‘struck broadly the right balance between ensuring prices for passengers are not too high and encouraging investors to maintain and improve the airport over time’.
It added that there was ‘a handful of smaller issues’ which it has asked the CAA to look at again.
The first of the three issues relates to the CAA’s cost of capital calculation, the second relates to a part of its passenger forecast, and the third relates to a specific adjustment known as the ‘AK factor’.
In response to the ruling, a Virgin spokesperson said: “Following more than three years of regulated consultation on Heathrow charges, it’s disappointing that the CMA has largely endorsed the CAA’s decision, which did not go far enough to protect consumers from excessive charges at Heathrow. Heathrow Airport’s repeated attempts to impose excessive charges demonstrate how the regulatory framework, including the formula used to set charges at the world’s most expensive airport, is broken.
“With fresh leadership at both the CAA and Heathrow, now’s the time for a fundamental review of how these charges are set, ensuring that customers are protected ahead of shareholders.
“Heathrow must work collaboratively with airlines to ensure it gets back to its best, so it can deliver a world class experience commensurate with being the world’s most expensive airport.”
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