BAA LONDON AIRPORTS INQUIRY

• Whether the three London airports should be regulated individually or as a system;
• Whether regulation should be on a single till or dual till basis (under the single till, profits from commercial activities are used to off set airport charges; under the dual till, airport charges have to cover the cost of aeronautical facilities);
• The possible allowance for the additional costs of Terminal 5 when it comes into operation, and possible specification of a price path commitment for future quinquennia;
• Treatment of under investment in the present quinquennium, and whether there should be allowance for assets in the course of construction in future, eg on T5;
• Whether there should be further incentives relating to, for example, the number of Air Transport Movements in peak periods at Heathrow and additional stands brought into use;
• Whether there should be a volume term, and whether the current pass through of additional security costs should be maintained;
• Whether there should be an element of charges related to achievement of quality of service targets (referred to as the Q factor); and
• Whether there should be relatively light-handed regulation at Stansted.

Issues relating to the size of X

Such issues include

• Appropriate passenger forecasts;
• Appropriate cost of capital for BAA;
• Calculation of the regulatory asset base and depreciation;
• Scale of investment; and
• Changes in operating cost and commercial revenues.

Public Interest issues

These include:

• Whether there has been lack of investment by BAA;
• Whether its consultation procedures are adequate;
• Quality of service performance;
• Airport charging;
• Practices in relation to non regulated charges; and
• Other specific complaints raised with us.