Low-costs respond to CAA price policy

17th May 2006

In a staement released today the ELFAA has welcomed the assurance given by the CAA in its Policy Update on Price Control
at BAA regulated airports Heathrow, Gatwick, Stansted and
Manchester that it will not permit any Finance costs or risks, incurred by the
current or potential future owners, to be passed on to airlines and their
passengers.The staement continues:

“ELFAA is concerned, however, at the already high charges applicable within the
current five year review period, at the airports concerned and trusts that this will
be borne in mind by the Regulator in approaching the next five year review period
from 2008.

“ELFAA is also concerned to note that the CAA, as Regulator for BAA, is giving
consideration to whether there should be more of a link between revenues and
investment plans and sees such consideration as inconsistent with the position,
taken by the CAA, in proscribing the passing on to users of costs and risks of
financing or indebtedness of any potential acquirer of BAA.

“Air Transport already meets the full costs of its infrastructure, in contrast to the
massive subsidies meted out to its competitor, rail. “Any further loading of charges
for airports, to take account of future investment, would represent a quite
unacceptable further distortion of competition between the two modes.  Airports,
particularly privatised ones, such as BAA, should be no more shielded from the
normal commercial risks of investment than are their airline customers, who have to
manage the financing of future fleet renewal.

“If BAA continues to be shielded from normal commercial risks, it will continue to
build unnecessary and costly facilities that do not meet the requirements of users
and lead to increased costs to consumers.  “ELFAA is therefore calling on the CAA to
take a consistent approach to commercial risks and require the BAA monopoly to bear
more of the risks of providing infrastructure. This would force BAA to provide
facilities, that meet the requirement of users and that airlines and their customers
can afford.”




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