Review of Q4 (2003-2008) Price control reviews
In 2004 and 2005, the CAA reviewed the processes by which it carries out its price reviews of airports. The review looked back at the 2003 airport price cap reviews and set out how the CAA believed that airport regulation should develop in the run-up to the next reviews.
Airports Price Review (Heathrow, Gatwick, Stansted and Manchester 2003-2008)
- Economic Regulation of BAA London Airports (Heathrow, Gatwick and Stansted) 2003-2008: CAA decision (February 2003) - decision, annexes
- Economic Regulation of Manchester Airport, 1 April 2003-31 March 2008: CAA decision (March 2003) - decision, decision to extend price control (November 2005)
The reports of the Commission Competition with its recommendations for the 2003-2008 price caps are available via the following links:
Following a decision by the CAA in May 1999 to extend the price caps at the BAA London airports into a sixth year (the maximum extension the Airports Act allows) the previous price caps at Heathrow, Gatwick, Stansted and Manchester expired on 31 March 2003. New price caps were set for the period from 1 April 2003 to 31 March 2008. The CAA reviewed the BAA London airports and Manchester in parallel.
It followed a programme of work which led up to the decisions on the new price caps in early 2003. This programme was as follows:
- July 2000 - CAA published consultation paper 'Issues for the Airport Reviews'. Until September 2000, it received over 30 submissions to the consultation paper.
- October 2000 - CAA published position paper 'The CAA Approach to Economic Regulation and Work Programme for the Airport Reviews'.
- From November 2000 - CAA published a series of discussion papers on the key issues for the review, as set out in the October 2000 Paper;
- 31 August 2001 - CAA published a report on the performance of the BAA London airports and of Manchester Airport during the price control period; Performance Reports of BAA London Airports and Manchester Airport. The CAA inadvertently omitted to include the submission by the Heathrow AOC in the report, the AOC's comments were summarised in an addendum to the report; Heathrow AOC Response to CAA questions for Performance Reports of BAA London airports and Manchester Airport.
- 2 November 2001 - "Heathrow, Gatwick, Stansted and Manchester Airports Price Caps - 2003-2008: CAA Preliminary Proposals - Consultation Paper", November 2001. Full document, Executive Summary, Cost of Capital annex, Incremental Costs annex, Peak Pricing annex, Demand Valuation annex, Revised Regulatory Cost Base annex. The following submissions to the paper were received.
- January 2002 - 9/10/11 January 2002 - Oral presentations from industry participants. Transcripts of the presentations are available (9 January, 10 January, 11 January).
- 28 February 2002 - CAA made references to the Competition Commission (Heathrow, Gatwick, Stansted, Manchester). It published its advice on the BAA London Airports (Summary - 330kb, Full Document - 4.4mb, capital expenditure annex, cost of capital annex, Heathrow demand valuation survey annex, financial modelling annex, Heathrow incremental costs annex, RRCB allocations annex, traffic forecasts annex) and Manchester Airport (Summary - 250kb, Full Document - 2.4mb, cost of capital annex, RRCB allocations annex, traffic forecasts annex, benchmarking annex (appendix - NERA report).
BAA London airports
In October 2000 the CAA commissioned Europe Economics to investigate airport cost allocation and the feasibility of implementing a dual till. The report 'Airport Cost Allocation - Report for the CAA by Europe Economics' is available, as well as an Executive Summary. The CAA produced a related position paper 'Practicalities of Implementing a Dual Till' on the next steps to a possible dual till. The CAA commissioned AviaSolutions in January 2002 to advise the CAA on the appropriateness of BAA’s regulatory accounting systems for use in a RRCB environment. In April 2002 the CAA commissioned AviaSolutions to provide similar advice on Manchester Airport's regulatory accounting systems. AviaSolutions' reports are available on this website (BAA report, BAA appendix, MA report, MA appendix).
The CAA held a number of workshops with the industry to discuss its consultation papers.