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Heathrow Airport (HAL) is one of the busiest airports in the world, handling over 75 million passengers per year. It is a ‘hub airport’ - one where airlines concentrate passenger traffic and routes to make their network of flights operate more efficiently.
Under the Civil Aviation Act 2012, the CAA regulates Heathrow’s operations because it considers that the airport has substantial market power that justifies detailed economic regulation.
Passengers passing through Heathrow pay a charge. This charge, separate from other taxes and charges such as the Air Passenger Duty, is bundled into airfares and passed on to Heathrow by the airline on behalf of the passenger.
The charge the passenger pays to use Heathrow is decided by the regulator (the CAA), after consultation with the airport and the airlines, and is currently about £21 per passenger.
The charge Heathrow levies on each passenger is subject to a regular review, normally every five years. The outcome of the current review, dubbed H7, will likely set a new charge from 2020.
The CCB was established in 2017 by the CAA in partnership with
HAL and the Heathrow airline community to strengthen the link between consumer
outcomes and priorities and the regulation of HAL for the H7 price control
review, in line with the CAA’s statutory duty to consumers(*).
The CCB’s role was to act as an independent advisory body (**) to
help ensure that HAL’s business planning and approach to Outcomes-Based
Regulation (OBR) is driven by a robust understanding of what consumers value.
* Note: Under the
Civil Aviation Act 2012, the CAA has a general duty to further the interests of
users of consumers
regarding the range, availability, continuity, cost and quality of airport
operation service.** Note: The CCB is a non-executive independent group. Members bring senior experience in a wide variety of relevant fields, including consumer representation and advocacy, consumer research, economic and regulatory affairs, competition policy, international airport infrastructure development, and the leadership of consumer facing businesses.
During 2017- early 2020, the CCB provided independent scrutiny and challenge to HAL on the consumer research and engagement it undertook to inform its business plan and approach to OBR (outcomes, measures, targets and incentives). It also engaged closely with the airline community and other stakeholders. During this time the CCB delivered a number of outputs, details of which can be found below. These include:
The CAA considers that the Court of Appeal's decision on Heathrow expansion and the severe financial impact of Covid-19 have led to a material change in circumstance in respect of the CCB's future role. Due to the extraordinary circumstances and challenges facing the aviation industry at this time, after due consideration and discussions with the CCB and industry stakeholders the CAA has reached a decision to conclude the CCB's work. The CAA will be exploring alternative approaches in continuing to ensure consumers' interests remains at the heart of its regulatory work for H7, building on the CCB's important work and best regulatory practice and in particular the CCB's report on HAL's Initial Business Plan.
The CAA's recent April 2020 consultation discusses the impact of these developments on its H7 economic regulatory work programme. The CAA is exploring alternative approaches to ensure consumers' interests remain at the heart of its regulatory work in H7 pursuant to its statutory duty to consumers and will set out its views in its June 2020 consultation.
The CAA recognises the CCB's important and valuable contribution to the H7 price control review. The CAA considers the CCB has helped progress cultural change in HAL's approach to consumer engagement and it will be important that this is maintained and built on and the issues identified in the CCB's report on the Initial Business Plan are addressed (to the extent that they remain relevant to the new circumstances that the sector is experiencing). The CCB's excellent work has given the CAA a strong platform to build on in considering how to adapt its regulatory approach to meet the challenges presented by the Court of Appeal's decision on Heathrow expansion and Covid-19. The CAA is clear that consumers remain at the heart of its work in H7. In building on the CCB's work, it is important that HAL continues to understand consumers' evolving priorities and to reflect these in its plans and approach to OBR, which the CAA considers will help further consumers' long-term interests. The CAA is hopeful that a CCB type role can emerge in the future when the industry outlook is more certain.
Jeff's executive career was in CEO/ MD roles with consumer-facing companies such as Fox's Biscuits/ Northern Foods, First Milk, and Bernard Matthews. His background was in consumer marketing roles with leading international businesses such as Mars, and Colgate. He now has a number of non-executive Chair and Non-Executive Director roles, which span private, public, and third sector organisations. Of particular relevance to the CCB, he is Chair of Transport Focus, the consumer watchdog for public transport and England's highways, and Chair of Anglian Water's Customer Engagement Forum, which has a similar brief, in the water sector, to that of the CCB in respect of HAL.
David has twenty years' experience of advising at the highest level on the insight and implementation of market research data to solve business problems, having been involved in over 500 such research studies across a wide variety of business areas. He holds a PhD in Transport Economics, specialising in understanding consumer behaviour, priorities and sensitivities to changes in provision of services.
Isabel is a transport user champion with long experience investing in transport infrastructure, especially airports. She previously invested in airports in the UK, Asia Pacific, and the Americas while working with leading international airports as an executive and board member. Isabel is currently on the board of Pensions Infrastructure Platform, formed by UK pension schemes to invest in UK infrastructure. She is a board member of Transport Focus, the consumer watchdog for public transport and England's highways.
Trisha is also a member of the CAA Consumer Panel and has outstanding consumer advocacy and engagement experience. She is currently a Non-Executive Director of NHS Greater Glasgow and Clyde, which is Scotland's largest Health Authority and through this she is Chair of the Glasgow City Health and Social Care Partnership Board. Trisha is a Non-Executive Director of Northern Ireland Water and has also been recently appointed as a member of the ORR Consumer Panel. Based in Scotland, Trisha brings an important perspective from outside of the South East of the UK.
Jayne brings excellent experience of a variety of regulated sectors. She is currently a panel member of the Competition and Markets Authority, a Non-Executive Director of the Marine Management Association, Chair of the Audit Committee of the Registers of Scotland and also of the Private Healthcare Information Network. She is a former Non-Executive Director and Chair of the Audit Committee at Ofgem and a former member of the Audit Committee for the Department of Energy and Climate Change. Based in Perth, Scotland, Jayne also brings a perspective from outside the South East.
Claire has extensive consumer advocacy and engagement experience. She is currently a member of a number of bodies including: the Ofgem Stakeholder Engagement and Consumer Vulnerability Panel; the Finance and Leasing Association Disciplinary Panel; the Advertising Advisory Committee; and the Money Advice Trust Board. She has recently been appointed to the Office of Rail and Road (ORR) Consumer Panel and is also a member of the CAA's Consumer Panel - bringing specific aviation knowledge and experience to the role.
JH, IL, DH, JS, TM, CW
Current Status of Consumer Engagement
Consumer Engagement Strategy feedback (Horizon quarterly report and Airport Choice brief)
JH met with HAL Executive Board where he took them verbally through the key points of the Challenge Log, Version 5. It was a good and constructive discussion. It was noted that the work of the CCB is appreciated by HAL, and Emma Gilthorpe specifically asked JH to pass on HAL's thanks to all CCB members.
JH met with Beth Corbould of the CAA to discuss the final version of the Challenge Log Version 5.
JH met with John Holland Kaye prior to the CCB meeting to discuss the Challenge Log Version 5 as he was out of the country at the time of the Executive Committee meeting on the 14th.
Following the CCB meeting JH met with Paul Smith of CAA to discuss the Challenge Log Version 5
JH meeting with Beth Corbould for CAA catch-up
BA's view on:
1. Development priorities for H7 and the consumer engagement evidence to support BA's priorities.
2. Aspects of SQRB BA see as important to go forward into H7 and what consumer engagement evidence BA have in support.
3. Discuss draft Interim report and Challenge Log
4. Views on approaches to R3, including affordability getting defined as keeping charges flat and how that might be achieved, and alternative developers.
5. Resilience - views on how operational changes or investment can improve resilience.
IL, DH, JS, TM, CW, AB
Preliminary outcomes and measures, expansion workshops results and actions and Current status of work package feedback.
JH, CW, DH, AB
Consumer Challenge Board Secretariat - Claudette Williams
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