Gatwick favours new payment model
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Gatwick Airport has announced it will invest GBP1 billion in the next five years with a preference to set airline prices through contracts instead of regulation.
In its ‘Contracts and Commitments’ 10-year plan put forward to the Civil Aviation Authority (CAA), the airport said removing regulation could enable it to offer lower prices to airlines over a longer period of time. Under its own calculations the airport predicted it could charge GBP10.68 per passenger in 2020/21 although would charge GBP11.45 by 2018/19 under current rules.
Plans laid out by Gatwick and Heathrow this week have raised concerns into fare increases for passengers following the higher fees for airlines to operate from the airports.
“Competition is by far the best mechanism for promoting the interests of passengers. It is the very reason why the Competition Commission took the decision to break up the BAA monopoly and why Gatwick is now thriving under separate ownership,” said Stewart Wingate, CEO of Gatwick.
“Our proposed new deal for Gatwick moves that competition judgement on further and is a better deal for airlines and their passengers than a regulatory outcome. Free from regulation, we would be able to respond more quickly to the changing needs of airlines and their passengers and we would be able to step up the pace of improvement in the passenger experience,” he added.
Virgin Atlantic said the airport should continue to price under regulations and could find other ways to improve customer services.
“Virgin Atlantic believes that Gatwick airport continues to hold significant market power and the CAA must continue to regulate to ensure that Gatwick delivers services our passengers need at a price which is good value for money,” the airline said in a statement.
“Around £1bn has been invested in the airport experience at Gatwick in recent years. Instead of repeating that level of expenditure, the airport should be looking at making smart investment decisions to further improve passenger services in a cost effective way,” it added.
Gatwick’s GBP1bn investment plan would include new check-in areas; new security facilities in the North Terminal and the redevelopment of Pier 1 to include a new baggage system and gate rooms.
Earlier this week Heathrow announced it aims to gain GBP3bn from private investors for refurbishments in the next five years.
