Civil Aviation Auth.

Airport Quinquennial Review

Civil Aviation Authority
31 August 2001

News Release

31 August 2001


A paper reviewing the financial performance to date of the BAA London Airports
and of Manchester Airport was published today by the Civil Aviation Authority.

Entitled Peformance Reports of BAA London Airports and Manchester Airport, it
is the latest in a series of papers covering issues surrounding the setting of
airport charge controls to apply from April 2003 at Heathrow, Gatwick,
Stansted and Manchester Airports.  The report covers the financial and
operational performance of the airports.  It will provide relevant background
material for when the CAA refers the airports to the Competition Commission,
planned for January 2002.  The document is available on the CAA website:

The CAA will be publishing its preliminary conclusions on airport regulation
in the near future.

The report follows the publication of 11 other documents since July 2000.
They are:

*         July 2000: Issues for the Airport Reviews - Consultation Paper

*         October 2000: The CAA Approach to Economic Regulation and Work
          Programme for the Airport Reviews

*         December 2000: The Use of Benchmarking in the Airport Reviews,
          Quality of Service Issues, and The Single Till and Dual Till Approach 
          to the Price Regulation of Airports

*         January 2001: Economic Regulation and Capital Expenditure

*         February 2001: Direct Contracting Between Airports and Users: A
          Default Price Cap;  Competitive Provision of Infrastructure and 
          Facilities Within Airports;  Economic Regulation and Incremental Costs

*         March 2001: Pricing Structures and Economic Regulation

*         May 2001: Practicalities of Implementing a Dual Till.

*         June 2001: Cost of Capital

Notes to Editors:

The CAA is required by the Airports Act 1986 to set limits on user charges at
designated airports every five years.  The designated airports are Heathrow,
Gatwick, Stansted and Manchester.  As part of the process the CAA is also
required to refer the airports to the Competition Commission.

The CAA last referred BAA's London Airports (Heathrow, Gatwick and Stansted)
to the Commission in December 1995 and in October 1996 set a price cap from 1
April 1997 to 31 March 2002.  Manchester was referred a year later, in
December 1996, and a price cap was set for the five years from 1 April 1998 to
31 March 2003.

In May 1999 the CAA extended the price cap for BAA's London Airports one year
to 31 March 2003 to allow it to take into account the Government's final
decision on BAA's planning application for Terminal 5 at Heathrow, on the
assumption this would be published in late 2001.  This means that the CAA will
review all four airports and refer them to the Commission at the same time.  New
price caps will be set for the five years for each of the four airports from 1
April 2003 to 31 March 2008.

The present charging formulae for Heathrow and Gatwick taken together is RPI-3
per cent and for Stansted, RPI+1.  For Manchester it is currently RPI-5 per