Competition Commission report on Stansted Airport charges

Competition Commission report (19 PDF files with more to follow) to the CAA recommending price controls for Stansted Airport for the five years from 1 April 2009.

The report rejects suggestions to use long-run average incremental cost estimates (as an estimate of competitive price) to set price limits, or of setting price limits deliberately higher than the expected competitive price, on the grounds that Stansted Airport cannot be expected to be subject to effective competition. It rejects easyJet's suggestions for terminal development tendering, taking the view that any such change is a matter for the BAA market investigation rather than a price control review.

The recommended price control is therefore based on a continuation of building-block methods based on a regulatory capital value:

4.15 We concluded that a RAB-based building block approach, augmented [by more scrutiny of capital expenditure plans] to deal with uncertainties in the required level of capex, was the most appropriate regulatory approach for setting the price caps at Stansted in Q5.

For further information or advice please contact Franck Latrémolière.

Filed under CAA, Competition Commission, Price controls, Public transport.

Reckon LLP is an economics consultancy with expertise in data analysis, economic regulation and competition law.

About Reckon