36/02
11 July 2002
COMPETITION COMMISSION'S CURRENT THINKING ON DUAL TILL
PROPOSALS FOR BAA LONDON AIRPORTS
The Competition Commission (the Commission) has today published
a statement of its current thinking on the Civil Aviation Authority (CAA)
proposal to introduce the 'dual till' approach to the setting of charges
for the three BAA London airports: Heathrow, Gatwick and Stansted.
Under the current single till system, revenues from BAA's commercial
activities at its London airports (shops, restaurants, short term car-parking
etc) are all taken into account in setting the maximum amount BAA may
charge airlines using the airports. With the dual till system these commercial
revenues are ignored. Airport charges calculated by the single till method
are likely to be lower than those calculated under a dual till because
of the substantial profits generated by BAA's commercial activities.
The Commission has considered the dual till approach over the last four
months and its current thinking on this matter is that, so far, the arguments
and current evidence for moving to the dual till are not persuasive. The
Commission has not yet reached a final view and remains open to further
representations on this point but, subject to this, wishes now to focus
on other key aspects of the CAA's proposals. In particular these include
the need for and financing of major new investment, primarily Terminal
5; and the quality of service provided to airlines and passengers at BAA's
three London airports.
The Airports Act requires the Commission to investigate and report every
five years to the CAA on the maximum airport charges that the airport
operators can charge during the next five-year period. The Commission
is also required to report whether at any time during the previous five-year
period the airport operators have pursued any course of conduct as regards
airport charges and the operation of the airports that may have been against
the public interest.
A statement concerning the Commission's current thinking on the single/dual
till issues is attached.
Notes to Editors
1. The references of the three London airports to the Competition Commission
were made by the CAA on 28 February 2002.
2. Under the Airports Act 1986, the CAA is required to refer the three
London airports owned by BAA plc every five years. Following a decision
by the CAA in May 1999 to extend the current price caps at the BAA London
airports into a sixth year (the maximum extension the Airports Act allows)
the price caps at Heathrow, Gatwick and Stansted will each expire on
31 March 2003. New price caps will have to be set for the period from
1 April 2003 to 31 March 2008. The CAA's proposals and background information
are published on their website at http://www.caa.co.uk
3. Further information can be found on the Competition Commission's
website http://www.competition-commission.org.uk/inquiries/baa.htm
4. Enquiries should be directed to: Francis Royle, Press Officer, tel:
020 7271 0242.
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