CAA considers deregulation for Stansted after airport strikes deals with airlines

Date: 17 October 2013

The UK Civil Aviation Authority is today launching a consultation on the impact of long-term agreements made by Stansted Airport and its principal customers on the airport’s market power.

Under the Civil Aviation Act 2012 a market power test is required as part of the process to decide whether an airport should be regulated in the future and, if so, how.

The consultation sets out the CAA’s provisional view that the deals Stansted has agreed with its two principal customers change the assessment of the airport’s market power, and mean that deregulation could be appropriate. However, this provisional view is subject to consultation, and may change depending on stakeholders’ responses.

Iain Osborne, CAA Group Director of Regulatory Policy, said: “Our aim is to protect passengers, so we will act if the market fails. But regulation must achieve more benefits for consumers than it costs. That is why, following the airport’s recent deals with easyJet and Ryanair, it is sensible for us to consider whether regulation remains the best thing for Stansted’s passengers.”

The CAA originally published a consultation on its ‘minded to’ assessment for Stansted’s market power in January 2013. The CAA acknowledged in its consultation that the change of ownership of Stansted and its impact on the airports relationship with its customers could alter its view when it consulted.

Following Stansted’s subsequent acquisition by Manchester Airports Group (MAG) and MAG’s agreements with Ryanair and easyJet, today’s consultation invites stakeholders to comment on the CAA’s assessment of how these agreements may affect the market power assessment.

The consultation focuses solely on the impact of the key developments on the ‘Minded to’ assessment we consulted on in January, and their implications on the licensing of Stansted after April 2014. It does not update the CAA’s thinking on all matters raised in the assessment, nor does it afford stakeholders the opportunity to comment on submissions made by other stakeholders in response to that consultation.

After the consultation, the final determination on Stansted’s market power will be published early in 2014. The form of regulation for Stansted will be finalised after that.

The CAA consultation can be found here: http://www.caa.co.uk/CAP1104

For further media information contact the CAA Press Office on: 00 44 (0)207 453 6030. press.office@caa.co.uk.

Follow the CAA on Twitter @UK_CAA.

Notes to Editors
1. On 28 February 2013 Manchester Airports Group plc acquired Stansted airport from Heathrow Airport Holdings Limited (previously BAA).
2. In April 2013, the CAA published its initial proposals on the appropriate economic regulatory framework for Stansted Airport Limited from April 2014, when the present regulatory arrangements end.
3. On 16 September Ryanair and Manchester Airport Group plc announced a long-term agreement to grow traffic through Stansted Airport: http://www.stanstedairport.com/about-us/media-centre/press-releases/mag-and-ryanair-sign-ten-year-growth-agreement-at-london-stansted
4. On 13 June 2013, Stansted airport announced a new long-term growth framework deal with easyJet to allow the airline to more than double its passenger numbers at Stansted from a current 2.8 million passengers to six million passengers a year over the next five years. http://www.stanstedairport.com/about-us/media-centre/press-releases/easyjet-sign-long_term-deal-to-double-traffic-at-stansted

5. The CAA has not reached a provisional view on whether the developments change the market power assessment for the cargo market but would welcome stakeholders' views on the benefits and the adverse effects of regulating the cargo market on its own.
6. The CAA is the UK's specialist aviation regulator. Its activities include: making sure that the aviation industry meets the highest technical and operational safety standards; preventing holidaymakers from being stranded abroad or losing money because of tour operator insolvency; planning and regulating all UK airspace; and regulating airports, air traffic services and airlines and providing advice on aviation policy.