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Airport market power assessment

Relevant documents relating to the market power assessments for Heathrow, Gatwick and Stansted.
  • Economic regulation
  • Licensing and price control
    • Overview
    • Airport market power assessment
    • Economic licensing of Gatwick
    • Economic licensing of Heathrow
    • NATS en route licence
    • Investors
  • Heathrow price control review H7
    • H7 Overview
    • Consultations and policy documents
    • Consumer Challenge Board
    • Enhanced Engagement Section 16
    • Financial Modelling
    • Reports by external consultants
    • Letters and Correspondence
    • Publications prior to Government’s October 2016 announcement on runway capacity
  • Competition policy
    • Competition powers
    • Airport charges
    • Groundhandling
    • East Midlands airport car parking competition case
    • Review of market conditions for surface access to airports
  • 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    We consulted on Draft Guidance from December 2015 to February 2016. The draft guidance and consultation document are below: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    • CAP 1355 - Draft guidance on the application of the market power test under the Civil Aviation Act 2012 - consultation (December 2015)
  • Individual responses to the consultation from stakeholders

    • British Airways plc
    • easyJet
    • Gatwick Airport Limited
    • Heathrow Airport Limited
    • IATA
    • Ryanair
    • Virgin Atlantic Airways Ltd
  • Request for a Market Power Determination for Manchester Airport

    January 2020 Notice

    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).

    August 2020 Notice

    The CAA has decided to postpone further work and the formal commencement of this MPD process until at least August 2021. In reaching this decision, the CAA has considered its prioritisation principles and has taken into account, among other things: the unprecedented impact of Covid-19 on the aviation industry; and a request from the requesting party that we postpone the formal commencement of the MPD process.

    The CAA intends to engage with the requesting party, the airport operator and other interested stakeholders before August 2021 to better understand stakeholders’ views on this matter at that time. Interested parties that would like to discuss this matter with the CAA may email economicregulation@caa.co.uk

    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:

  • Market power determinations

    • Market power determination for cargo services in relation to Stansted Airport - statement of reasons (March 2014)
    • Market power determination for passenger airlines in relation to Stansted Airport - statement of reasons(January 2014)
      • Appendix A
      • Appendix B
      • Appendix C
      • Appendix D
      • Appendix E
      • Appendix F
      • Appendix G
      • Appendix H
      • Appendix I
      • Appendix J
    • Market power determination in relation to Heathrow Airport - statement of reasons   (January 2014)
      • Appendix A
      • Appendix B
      • Appendix C
      • Appendix D
      • Appendix E
      • Appendix F
      • Appendix G
      • Appendix H
    • Heathrow Airport Limited operator determination   (January 2014)

    • Market power determination in relation to Gatwick Airport - statement of reasons   (January 2014)
      • Appendix A
      • Appendix B
      • Appendix C
      • Appendix D
      • Appendix E
      • Appendix F
      • Appendix G
      • Appendix H
      • Appendix I
      • Appendix J
    • Gatwick Airport Limited operator determination   (January 2014)

     

    Other documents for the market power assessments

    • Letter from Gatwick Airport 10 March 2014
    • Notes of meeting between CAA and Gatwick Airport Board 29 January 2014
    • Completing two market power determinations for Stansted Airport - letter to stakeholders (December 2013)
      • Response from Manchester Airport Group -    the CAA received a response from FedEx that was confidential 
    • Stansted Market Power Assessment consultation on relevant market developments- October 2013
      • Response from Manchester Airport Group
      • Response from Federal Express
      • Response from Gatwick Airport
      • Response from IAG
      • Response from London First
      • Response from Ryanair
      • Response from Stansted AAC
    • Letter to stakeholders for Stansted consultation - October 2013  
    • Consultation on Heathrow Market Power Assessment - May 2013
      • Heathrow Market Power Assessment
        • Summary
        • "Minded To" full report
        • List of terms used in Heathrow Market Power Assessment CAP 1051
      • Consultation Responses
        • Heathrow Airport Limited (HAL) 
        • London Airline Consultative Committee (LACC) & Heathrow Airline Operators Committee (AOC)
        • Virgin Atlantic Airways
    • Consultation on Gatwick Market Power Assessment - May 2013.
      • Gatwick Market Power Assessment
        • Summary
        • "Minded To" full report
          • Appendix 1: Assessing the Adverse Effect and Benefits of Regulation
          • Appendix 2: GAL commitments
        • List of Terms used in Gatwick Market Power Assessment CAP 1052
      • Consultation Responses
        • British Airways
        • easyJet
        • Gatwick Airport Limited (GAL)
        • Gatwick Airport Consultative Committee (GACC)
        • Virgin Atlantic Airways    
    • Consultation on Stansted Market Power Assessment - January 2013. 
      • Stansted Market Power Assessment
        • Summary
        • "Minded To" full  report
          • Annex 1
          • Annex 2
          • Annex 3
          • Annex 4
        • Leigh Fisher - Comparing and capping airport charges at regulated airports
        • Europe Economics - Advice on the application of long run incremental cost estimates
        • First Economics - Price monitoring as an alternative to RAB-based Price Cap regulation
        • Thomson Reuters - Benchmarking employment costs
      • Consultation Responses   
        • EasyJet
        • Gatwick Airport Limited (GAL)
        • Manchester Airport Group (MAG)
          • Annex A
          • Annex B
          • Annex C
          • Annex D
          • Annex E
          • Annex F
          • Annex G
        • Manchester Airport Group (MAG) comments on airlines submission
        • Ryanair
        • Southend Airport

     

    The CAA's initial views on airport market power

    • Heathrow, Gatwick and Stansted - Market Power Assessments - Summary    - January 2012
      • Heathrow
      • Gatwick
      • Stansted
    • Annex to the market power assessments

    Responses:

    • Gatwick Airport - letter   - April 2012,
    • Gatwick Airport - submission   - April 2012
    • Heathrow Airport   - March 2012
    • Ryanair - March 2012
    • Stansted Airport   - April 2012
    • David Starkie   - March 2012
    • Virgin - March 2012

     

    Other evidence

    • Two sided market analysis in the context of the CAA's market power analysis - report for the CAA by Charles River Associates (November 2013)
      • Gatwick Airport response to the CRA report   December 2013
    • The CAA has received a report it commissioned from  York Aviation/CTAIRA on the "Strategic Importance of London to Airlines" - 14 October 2013 
      • Gatwick Airport response the York Aviation/CTAIRA report   November 2013 
    • Manchester Airport Groups further submission on airport capacity   (August 2013)

     

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