BAA has today responded to the publication of the Competition Commissions report to the CAA around price controls at Heathrow and Gatwick Airports over the next five years.
The CC has proposed a cost of capital of 6.2% at Heathrow and 6.5% at Gatwick. Further, the Commission recommends that airport charges rise by RPI +7.5% at Heathrow and RPI-0.5% at Gatwick.
Stephen Nelson, chief executive officer of BAA, said: We are absolutely committed to improving the passenger experience in our airports and addressing the current concerns around customer service standards. In the last year, BAA has placed an unprecedented focus and resource on improving service levels.
However, we see little in the CCs report which delivers the incentives to transform the airports. Nor do we believe that the CC recognises the scale and nature of the challenges we face in seeking to deliver a step change in the passenger experience. At a time of increased complexity and risk in the UK airports sector, the CC is proposing at Heathrow – a dramatic reduction in returns.
As we prepare to hand over T5 on time and on budget, we are being rewarded with a regulatory settlement of unprecedented severity, down from 7.75% to 6.2%. It is striking that at Gatwick, one of the busiest yet cheapest airports in Europe, the CC is recommending cutting prices.
We have proposed exciting plans to deliver £4 billion of investment and transform these national assets by 2012 and we are still looking to the CAA to provide the appropriate framework to deliver this.
