Airport Regulation

 

The CAA has 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 the CAA.  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 the CAA considers 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.

On 10 January 2014 the CAA made market power determinations that the market power test has been met at both Heathrow and Gatwick airports and therefore the respective operators do require a licence. The CAA has also made a market power determination that the market power test was not met at Stansted airport for the passenger airline market at the airport. The CAA is currently considering whether Stansted meets the test for the cargo market. More information on this is on the airport market power assessment page

On 13 February, the CAA granted licences to the operators of Heathrow and Gatwick airports which will come into force on 1 April 2014. These licences include conditions relating to price controls, service quality and operational resilience, amongst others. More details are available on the quinquennial review of designated airports page. Until 1 April 2014, the operators of Heathrow, Gatwick and Stansted airports are exempted from the need to hold a licence and will continue to be regulated under the Airports Act 1986.

The CAA has 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. It may also impose penalties for non-compliance with information notices issued by the CAA and for destroying information or knowingly supplying false information.The CAA is required to publish a statement of policy on penalties for non-compliance under Chapter 1 of the Civil Aviation Act setting out the criteria it will use to determine whether a penalty is appropriate and the amount of any penalty. The CAA's 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.

Documents relating to the CAA's powers with respect to the European Directive on airport charges, including a list of the regulated airports, are available on The Airport Charges Regulations 2011.

Documents relating to the CAA's powers with respect to are available in the section on Airports (Ground handling) Regulations 1997.

The CAA's competition powers with respect to airports are on the Competition Powers page.

Documents relating to the CAA's powers under the Airports Act 1986 are available on  The Airports Act 1986. The CAA's economic regulation powers for the non-designated airports in England, Scotland and Wales under part 4 of the Airports Act and for the non-designated airports under the Airports (Northern Ireland) Order 1994 ceased from 6 April 2013.  Its powers under the Airports Act for the designated airports of Heathrow, Gatwick and Stansted will cease from 1 April 2014.

The CAA is 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.  The current plan for this workstream is set out here.