The CAA has powers under the Civil Aviation Act 2012 to license airport operators that pass a market power test.

This test consists of three parts:

a) that the airport operator has, or is likely to acquire, substantial market power in a market, either alone or taken with other such persons as the CAA considers appropriate
b) that competition law does not provide sufficient protection against the risk that the airport operator may engage in conduct that results in an abuse of the substantial market power
c) that, for users of air transport services, the benefits of regulating the airport operator by means of a licence are likely to outweigh the adverse effects

Guidance on applying the market power test

We have issued guidance on how we intend to approach the market power test and to make market power determinations.

The guidance and the summary of responses are below:

• CAP 1433 - Market power test guidance (August 2016)
• CAP 1432 - Market power test – summary of responses to the consultation (August 2016)
  

We consulted on Draft Guidance from December 2015 to February 2016. The draft guidance and consultation document are below:

• CAP 1354 - Market power test guidance: draft for consultation (December 2015)
• CAP 1355 - Draft guidance on the application of the market power test under the Civil Aviation Act 2012 - consultation (December 2015)

Request for a Market Power Determination for Manchester Airport

The Civil Aviation Authority (CAA) has received a request from an interested party for the CAA to undertake a Market Power Determination (MPD) in relation to Manchester Airport, under section 7 of the Civil Aviation Act 2012 (the Act), to decide whether the market power test is or is not met.  In the case of large airports where the CAA has not previously carried out an MPD, as is the case with Manchester Airport, the CAA must do so if it receives a request from an interested party.

As per the CAA’s market power test guidance (CAP 1433), the CAA is now at a planning stage.  During this period, the CAA may contact the airport operator and other relevant parties to obtain information from them and to seek their views.  Interested parties that would like to discuss this with the CAA should email economicregulation@caa.co.uk by 20 February 2020. 

If the CAA makes a determination that the market power test is met, the airport operator in question would be subject to economic regulation by means of an economic licence, as set out in Chapter I of the Act. Appeals against MPDs may be made to the Competition Appeal Tribunal.

The CAA’s preparations are at an early stage.  The CAA has not reached a view on this matter and no assumption should be made at this point whether the market power test will or will not be met in relation to Manchester Airport.  As a result, it would not be appropriate to include any further estimates of the timing of any later steps at this stage.  Further details of the CAA’s procedures in relation to MPD is available in our guidance (CAP 1433).

Market power determinations for Heathrow, Gatwick and Stansted

Starting in May 2011, the CAA undertook market power assessments of Heathrow, Gatwick and Stansted airports. In January 2014, the CAA published its findings that Heathrow and Gatwick met the market power tests. The CAA found that Stansted did not meet the tests for services to passenger airlines at the airport. In March 2014, the CAA found that Stansted did not meet the tests for services to cargo airlines at the airport.

The CAA's market power determinations for Heathrow, Gatwick and Stansted are below: