News: BA question increased charges at Heathrow

Flights > News > # 1178 (05/02/2007)

British Airways is calling for tighter controls over airport charges at London Heathrow.

It is also urging the Civil Aviation Authority (CAA) to put safeguards in place to ensure that the airport’s operator, BAA, cannot use money for improved airport facilities to pay off debt.

Responding to a CAA consultation on preliminary price proposals for charges at BAA London airports, BA said charges should not rise by more than inflation between 2008 and 2013.

The CAA’S preliminary proposal is to raise charges at London Heathrow by inflation plus 4-8% each year between 2008 and 2013. It has proposed a lower cost of capital at 6.2%, down from 7.75% currently, and assumed that BAA can achieve a 1% operating efficiency improvement each year.

BA said a 50% rise in charges over the next five years is unjustified on top of the 50% increase during the current charging period between 2003-8. Instead, the airline is calling on the CAA to set BAA’s cost of capital at 5.5% and target BAA with a 3% a year operating efficiency improvement. It claims this would enable charges to increase by no more than inflation.

BA airport policy manager, Paul Ellis, said: “While the CAA has told (new BAA owners) Ferrovial that it won’t allow them to increase charges to pay off debt or acquisition costs, it is vital that sufficient measures are put in place to ensure this does not happen. Revenue from the regulated parts of the business must be ringfenced to protect the airport's operational integrity and secure Heathrow’s future.

“The opening of Terminal 5 in March 2008 will be a catalyst for change at BAA. The cost of investing at Heathrow can be cut by 5% because terminal congestion will be reduced, lowering building costs and making it easier to modernise the airport.”

He added: “Also, an improved operating efficiency target is achievable. By opening a brand new terminal and redeveloping older facilities such as Terminal 2, there is an opportunity for better working and operational practices to be introduced.”