CAA consultation on airport price controls
CAA consultation (309 pages, 4.3M PDF) on airport price controls. Some consultants' reports are also available.
CAA recommends that the Government should consider removing the Competition Commission price control system for Stansted airport, "recognising that:
- there is no evidence of exploitative market abuse by Stansted at present, and limited possibility that Stansted can be expected to enjoy a position of market power that gives rise to a significant risk that it will exploit that position through charging unreasonably high prices;
- in any case, to the extent that Stansted airport both developed a position of dominance, and sought to abuse that position of dominance through exploitative or excessive pricing, users would enjoy the protections afforded by standard UK and European competition legislation; and
- the costs of regulation, in terms of increased regulatory risk on investment at Stansted, could be potentially significant".
On unit operating expenditure, CAA relies on consultancy studies identifying potential efficiency gains of about 1 per cent a year. Taken together with hypotheses about relative price/cost trends in different sectors, an analysis showing rapid recent productivity improvement by the airports, and a view that the balance of risks favoured assuming faster wage increases, this leads CAA to assume a trend of RPI-1 for unit operating expenditure.
Responses by Monday 5 February 2007.
For further information or advice please contact Franck Latrémolière.
Filed under CAA, Price controls.
