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The current regulatory controls on the charges and services that Heathrow Airport Limited (HAL) offers to airlines, and ultimately to consumers, are due to expire on 31 December 2019.
We have therefore launched a review (called 'H7') of the appropriate regulatory arrangements that should be put in place after that date, including our approach to the economic regulation of new airport capacity and any associated costs that may be incurred during the current
regulatory period (Q6).
This document follows on from the consultations that we published on the regulatory framework to support capacity expansion at Heathrow airport in January, June and December 2017 and April and October 2018. It consults further on the development of the regulatory framework and includes:
CAP1782 - Economic regulation of capacity expansion at Heathrow: policy update and consultation
CAP1782A - Arcadis high-level assessment of the Arora scheme proposal
CAP1782B Possible ways of implementing ex-ante efficiency incentives for Heathrow's capital expediture, by CEPA, April 2019
CAP1782C - report on gearing sharing mechanisms and application to LHR, by EY, April 2019
The Arcadis report on HAL's reflection of consumer interests in developing its expansion masterplan
We asked Arcadis to carry out an assessment of how Heathrow Airport Limited (HAL) had reflected the consumer interest in developing its expansion masterplan. This was an opportunity to gather information on HAL's masterplanning process, as well as evidence of how HAL was considering consumer views.
- CAA comments on Arcadis Report
- Arcadis report
The CAA is consulting on the interim arrangement to apply after the end of the Q6 price control for Heathrow Airport Ltd.
The consultation seeks views from stakeholders on the commercial arrangements which are proposed to put in place and whether they are in the interests of consumers. The consultation also outlines proposed changes to the Heathrow licence.
The report follows on from our recent consultations CAP 1610 and CAP 1658.
The responses have been published below:
We asked Arcadis to carry out an initial assessment of Heathrow Airport Limited's (HAL's) procurement strategy for capacity expansion at Heathrow airport. This was primarily an information gathering exercise but presented Arcadis with the opportunity to comment on the appropriateness of HAL's procurement strategy and activities.
We have published a review of the planning costs incurred by Heathrow Airport Limited (HAL) as part of its bid to build a third runway.
This independent review carried out by PwC is intended to increase transparency and allow interested parties to comment on the process so far. The review also looks at the level of efficiency associated with the planning costs.
This short consultation document sets out our initial views on the planning costs incurred by HAL during the period of the review.
We would welcome comments from stakeholders on any of the matters included in this consultation document or raised in the PwC reports by Friday 8 February.
Responses should be emailed: email@example.com
This document (CAP1722) follows on from the consultations on the regulatory framework to support capacity expansion at Heathrow airport that we published in January, June and December 2017 and April 2018. It consults further on the development of the regulatory framework and includes:
It also complements our letter to the Department for Transport of September 2018 on the progress of the “Enhanced Engagement” process under section 16 of the Civil Aviation Act 1982 reporting on airport-airline engagement.
We have also published an FTI report on scarcity rents at Heathrow Airport (CAP1722b)
We are making available the regulatory financial model (RFM) that we used to produce the analysis on financeability and affordability presented in CAP 1658. Since the model is in a file format that is not currently compatible with this website the model will be distributed to individuals on request via our file sharing site. If you would like access to the model, please contact Dan Rock (firstname.lastname@example.org) or Maggie Kwok (Maggie.email@example.com).
We intend to continue to use the RFM for assessment of financeability and affordability through the H7 process. We are publishing the RFM to provide transparency around the process and to facilitate consultation on the detail of our modelling approach. The RFM will be further developed as we proceed towards setting the H7 price control and we expect that in that time there may be changes to some of the assumptions as we develop our financeability policy. We invite comment and discussion of our modelling approach to help us to refine the RFM.
We have also published an associated user guide which describes how to operate the model.
The sources used to populate the RFM with data are described in CAP 1658. In summary, base case capital expenditure data was provided by Heathrow and other data are assumptions developed by the CAA in consultation with Heathrow and the airlines.
We are separately developing a model that will be used for the interim price control known as iH7. The RFM models the years of the iH7 period so that, once the iH7 control is set, the RFM can reflect an appropriate opening position at the beginning of H7. The RFM will not be used for setting the iH7 price control.
Questions relating to the model or requests for meetings to discuss detailed modelling points should be addressed to Dan Rock (firstname.lastname@example.org) or Maggie Kwok (Maggie.email@example.com).
We have published this Technical information note in the context of the possibility, raised by stakeholders, that capacity expansion at Heathrow may be developed by more than one party. Alternative means of delivering new capacity (or elements of it) have been suggested by respondents to our recent consultations (CAP 1610 and CAP 1658). The note also addresses issues raised by the Arora Group and HAL.
HAL has subsequently responded in writing to the technical information note. The CAA's response can be found here.
Letter from Bernadette Kelly to Richard Moriarty
This working paper focuses on technical issues relating to the cost of capital and incentives for the next main H7 price control review of HAL.
The CAA is consulting on a number of issues relating to the regulation of Heathrow Airport Limited's (HAL's) price control and in particular issues relating to new capacity. The report follows on from our recent consultations CAP 1610 and CAP 1658.
Letter from Richard Moriarty to Bernadette Kelly
This document follows on from our consultations on the regulatory framework to support capacity expansion at Heathrow in June and December 2017. It consults further on the development of the regulatory framework and includes:
Our final report to the Secretary of State under section 16 of the Civil Aviation Act 1982 reporting on airport-airline engagement will be published shortly.
CAP1610 follows on from the June 2017 Consultation on the core elements of the regulatory framework to support capacity expansion at Heathrow.
It confirms our approach in respect of key elements of the regulatory framework for Heathrow Airport Limited and discusses issues around the relationship between the regulatory framework and alternative delivery mechanisms, the cost of capital, financeability, financial resilience, the regulatory treatment of early construction costs and the further extension of existing Q6 price control.
Consultation on core elements of the regulatory framework to support capacity expansion at Heathrow
This consultation follows from our January 2017 consultation on the priorities and timetable for our programme of work on the economic regulation of new capacity at Heathrow. It confirms our priorities and seeks views on our latest thinking on the development of core elements of the regulatory framework for Heathrow Airport Limited (HAL). These core elements also build on our discussion document on Strategic Themes for the review of HAL's charges. The consultation also updates our thinking on the timetable issues discussed in our guidance for HAL in preparing its business plans for the H7 price control review.
Letter from Andrew Haines to Philip Rutnam
The CAA published a number of documents with initial policy ideas prior to the Government's announcement that Heathrow North West Runway was the preferred option for capacity expansion, and these publications are below.
The Secretary of State for Transport has asked the CAA to prepare a report on how well Heathrow Airport Limited has engaged with airline community on the design of the capacity expansion scheme. Below are the documents relating to this work.
An independent expert panel, the Consumer Challenge Board (CCB), will help ensure that the H7 process is driven by a robust understanding of what consumers value.
Find out more about the H7 Consumer Challenge Board
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