We have powers under the Civil Aviation Act 2012 for the economic regulation of operators of airports in the UK. Under the legislation an airport operator that passes the following test requires a licence issued by us. The test is:
a) The relevant operator has, or is likely to acquire, substantial market power in a market, either alone or taken with such other persons as we consider appropriate.
b) Competition law does not provide sufficient protection against the risk that the relevant operator may engage in conduct that amounts to an abuse of that substantial market power.
c) For users of air transport services, the benefits of regulating the relevant operator by means of a licence are likely to outweigh the adverse effects.
Market power assessments
Starting in May 2011, we undertook market power assessments of Heathrow, Gatwick and Stansted airports. In January 2014, we published our findings that Heathrow and Gatwick met the market power tests and therefore the respective operators required a licence. We found that Stansted did not meet the tests for services to passenger airlines. In March 2014, we found that Stansted did not meet the tests for services to cargo airlines at the airport. More information is on the airport market power assessment page.
In February 2014, we granted licences to the operators of Heathrow and Gatwick airports which came into force on 1 April 2014. These licences include conditions relating to prices, service quality and operational resilience, amongst others. More details are on the economic licensing of Heathrow Airport and Gatwick Airport pages. Details of the development of the licence conditions, including those on price control, are on the price control page.
We have powers under the Civil Aviation Act to impose penalties for breach of a licence condition or breach of an enforcement order issued in relation to a licence condition. We may also impose penalties for non-compliance with information notices we have issued and for destroying information or knowingly supplying false information. We are required to publish a statement of policy on penalties for non-compliance under Chapter 1 of the Civil Aviation Act setting out the criteria we will use to determine whether a penalty is appropriate and the amount of any penalty. Our penalties statement is available here.
An airport operator whose annual turnover at the airport exceeded £1m in at least two of the last three financial years may apply for a certificate that confers rights on the operator as a statutory undertaker. Airport operators who already have a permission to levy airport charges issued under section 39 of the Airports Act 1986 retain their status as a statutory undertaker. A note on the transition between the Airports Act and Civil Aviation Act, including a list of airports that have rights as statutory undertakings is available.
Airport Charges Regulations
Documents relating to our powers with respect to the European Directive on airport charges, including a list of the regulated airports, are on The Airport Charges Regulations 2011.
Documents relating to our economic powers with respect to groundhandling are available on the page on Airports (Groundhandling) Regulations 1997.
Our competition powers with respect to airports are on the Competition Powers page.
Economic regulation of new capacity expansion of London airports
We are currently looking to provide clarity on its expected approach to the economic regulation of any new capacity expansion of London airports and any associated costs that may be incurred during Q6 and subsequently. Information on this is available here.