BAA backs new airport charges
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.BAA, the airports group, yesterday backed a new five-year price regime set by the industry regulator which, as expected, will cut charges at Heathrow and Gatwick by pounds 150m.
The formula caps increases in charges at the two London airports at no more than 3 percentage points below inflation, endorsing recommendations made by the Monopolies and Mergers Commission in July. Within these price controls, charges for airlines using Heathrow will go up by slightly more than those at Gatwick.
The Civil Aviation Authority also confirmed that charges at Stansted Airport, which is also operated by BAA, would be allowed to increase by 1 per cent above inflation.
Clifford Paice, the CAA's director of regulation, defended the price formula which he said would enable BAA to go ahead with plans to invest up to pounds 1.5bn in the proposed fifth terminal at Heathrow.
The CAA said it would monitor BAA's investment each year to make sure the company kept its side of the bargain and publish its annual review of the company's activities for the first time.
The news was warmly welcomed by the City, which sent BAA shares surging ahead by 14.5p to 519.5p. Analysts suggested the stock could be rerated by investment institutions. Leading transport analysts at Swiss investment banking group UBS suggested BAA should be treated as much as a retailer as a utility, implying that the share price could rise by as much as 20 per cent. Almost half the company's income now comes from retailing concessions inside its airports.
Mr Paice rejected suggestions that the price formula was too generous. "I'm quite satisfied this decision is not only what the airlines want but what the people who use the airlines want," he said.
Russell Walls, BAA's finance director, claimed the controls would be "challenging". He said: "We asked for inflation minus 0 per cent and we got inflation minus 3 per cent."
The price formula also gives BAA an additional pounds 55m to compensate for the withdrawal of the duty-free concession on travel between European Union countries planned for 1999.
Investment column, page 25
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments