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Friday 26 January, 2001

Civil Aviation Auth.

Airport QuinQuennial Review

Civil Aviation Authority
26 January 2001


A new discussion paper entitled Economic Regulation and Capital Expenditure was
published today by the Civil Aviation Authority. It is one of a number of
discussion papers covering issues surrounding the setting of airport charges
controls to apply from April 2003 at Heathrow, Gatwick, Stansted and Manchester
Airports. It is available on the CAA website;

Today's paper follows the publication of papers in July, October and December.
In July, Issues for the Airport Reviews - Consultation Paper outlined the key
areas that the CAA considered needed to be addressed in its approach to the
economic regulation of the airports. This was followed in October by The CAA
Approach to Economic Regulation and Work Programme for the Airport Reviews. This
reviewed the responses to the July paper and covered how the CAA's initial
thoughts had been developed. In December three discussion, papers were
published concerning 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.

The CAA plans to refer the four airports to the Competition Commission in
December 2001 in order to set new conditions relating to airport charges for
the five years from April 2003.

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

Press Office
Civil Aviation Authority, CAA House, 45-59 Kingsway, London WC2B 6TE
Telephone:  (020) 7453 6030 6pm - 8.30am & Weekends: (020) 7379 7311
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Email:  [email protected]



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