easyJet welcomes Stansted price cap

easyJet has welcomed the Department for Transport’s decision to maintain price caps at London Stansted Airport as ‘a victory for common sense and for consumers’.n July, the Civil Aviation Authority recommended to the DfT that Stansted should be “de-designated” - i.e. the prices it charges should no longer be capped and BAA should be free to charge whatever it wanted. In its evidence to the Government, easyJet argued that Stansted, like the other major London airports, is a near monopoly and price controls MUST be retained to safeguard passengers from BAA’s market power - it controls over 90% of London’s airport capacity.

According to easyJet today’s decision provides “a breathing space for the DfT and the CAA to rethink the basis of airport regulation, which is fundamentally flawed.  The current scheme which guarantees BAA a fixed return on its regulated asset base encourages neither operating nor capital efficiency. A new, more appropriate, regulatory scheme is needed to take Britain’s airports into the 21st Century. This is particularly important in the UK where our open economy means that these monopoly airports can be sold on the world markets to the highest bidder - bidders who are often highly indebted, with every incentive to exploit the weakness of current regulation.”

Andrew Barker, easyJet Planning Director, said:

                “Ruth Kelly and the Department for Transport officials should be congratulated for protecting air travellers from BAA ripping-off airlines at Stansted. They recognise that, without regulation, customers would be at the mercy of a highly-indebted infrastructure owner seeking short-term profit maximisation at the expense of air traveller.

                “Rather than simply abandoning the existing regulatory system, the DfT has realised that passengers need protection through a better one and this will be the case whether the ownership structure of BAA is retained or the company is broken up. It is now incumbent on the CAA to act on the DfT’s findings and put in place a modern, forward-thinking regulatory system that works and to avoid “de-designation by the back door” at Stansted. We will be presenting our proposals to the Competition Commission, which is currently examining many of these issues.”