CAA responds to Department for Transport’s announcement on airport regulatory financing package
13-Oct-2009 The UK Civil Aviation Authority (CAA) has noted the Secretary of State for Transport’s Written Ministerial Statement on the proposed ‘financing package’ and is making this statement to give market participants a provisional interpretation of how the announcement will affect them.
As the Department for Transport (DfT) statement makes clear, the 'financing package' is envisaged as part of an overall reform of economic regulation whereby the CAA would be given a primary duty to promote the interests of existing and future consumers. In this context, the CAA's provisional view is that the proposed 'financing package' would require the CAA to encourage efficient and economic investment by allowing reasonable returns over time. However, it would not require the CAA to ensure the financing of regulated airports in all circumstances. For example, the CAA would not expect the proposed 'financing package' announced today to require the CAA to adjust regulation of price, service and investment to take account of an airport operator's particular financial arrangements.
The DfT has confirmed that its policy intent accords with this interpretation, and that it is also consistent with the introduction of a primary duty towards consumers.
The Secretary of State's Written Ministerial Statement represents a Government decision on this issue. It does not yet represent a change in law which is, ultimately, a matter for Parliament. In the meantime, market participants should understand that the CAA will continue to regulate in accordance with its duties under section 39 of the Airports Act 1986, and would expect to do so having regard to the policies set out in its decisions on the Heathrow and Gatwick price controls and in respect of the Stansted price control decision.