- The Washington Times - Wednesday, March 12, 2008

LONDON (AP) — Travelers using London’s two biggest airports can expect to be charged higher fees announced yesterday by Britain’s airline regulator.

The Civil Aviation Authority said higher fees, effective April 1, are needed to pay for improvements and increased security at Heathrow and Gatwick airports.

British Airways accused the agency of caving in to pressure from the airport owner, BAA, a subsidiary of Grupo Ferrovial of Spain, but BAA complained that the settlement was insufficient.

Virgin Atlantic, BMI, EasyJet and Ryanair joined in the criticism, saying the regulatory system failed. They called for an end to BAA’s monopoly of London’s big three airports, including Stansted.

BAA contended that the CAA recognized “the scale of the task we are embarked on, the pressures of handling such large infrastructure projects, the full cost of the increased security requirements, as well as the impact of the credit market turmoil.”

The CAA said it would allow fees to rise 23.5 percent at Heathrow to the equivalent of $25.82 per passenger, effective April 1. At Gatwick it is allowing a 21 percent increase to the equivalent of $13.70 per passenger.

The fee is charged for each departure or arrival at the airport.

Although the fee is assessed against airlines, the charge is generally added to ticket prices.

On its Web site, British Airways tells passengers: “You must pay any taxes, fees and charges imposed on us or on you by governments or other authorities, or by operators of airports.”

In the ensuing four years, fees at Heathrow will increase by no more than retail price inflation, while Gatwick fees can go up by 2 points more per year than the inflation rate. The airports are the two busiest in Britain.

“These higher airport charges are essentially paying for the modernization of Heathrow and Gatwick, in terms of both facilities and service, for the direct benefit of the passenger,” the CAA said.

At Heathrow, that includes paying for the new Terminal 5, which enters service this month, the building of a new East Terminal by 2013 and upgrading of existing facilities.

At Gatwick, there are plans for expanding terminal facilities and installing a new baggage system.

British Airways, the dominant carrier at Heathrow and the sole customer at Terminal 5, rejected that explanation and said the regulatory system had failed.

“These overly generous charges far exceed what is required to upgrade facilities across Heathrow through investment in infrastructure and improved service quality levels,” said Paul Ellis, British Airways general manager for airport policy and infrastructure.

“When BAA’s new owners, Ferrovial, bought them, the CAA said they would not be influenced by Ferrovial’s high debt levels,” Mr. Ellis added.

“In practice, they have ignored their own policy and caved in to intense pressure from BAA by setting excessive price increases.

Heathrow passengers will pay, on average, 17 percent more than the Competition Commission recommended in September,” he added.

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