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UK Civil Aviation Regulations

These are published by the CAA on our UK Regulations pages. EU Regulations and EASA Access Guides published by EASA no longer apply in the UK. Our website and publications are being reviewed to update all references. Any references to EU law and EASA Access guides should be disregarded and where applicable the equivalent UK versions referred to instead.

Final and Initial proposals for H7 price control

H7 Final Decision

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Final decision

CAP2980 Economic Regulation of Heathrow - Final issues, March 2024



Economic regulation of Heathrow airport: H7 final issues (CAP2980) deals with both the matters that were remitted to us by the Competition and Markets Authority by its Final Determinations of the appeals of our Final Decision on the H7 price control and the matters that we had not been able to resolve prior to making the Final Decision. This consultation sets out our analysis of each of these issues, our proposals for resolving them and the statutory notice of the licence modifications we propose to implement our proposals.

We have published the Price Control Model and a report on the Cost of Index-Linked Debt.

The CAA has asked GAD to perform a review of the deficit repair costs of Heathrow Airport Ltd. This report sets out the results of our analysis.

Close CAP2980 Economic Regulation of Heathrow - Final issues, March 2024

CAP2605 H7 Guidance on capital expenditure governance



CAP2605 H7 Guidance on capital expenditure governance sets out the CAA’s updated guidance on capital expenditure governance for the H7 period, following a consultation on draft guidance issued in March 2023.

Close CAP2605 H7 Guidance on capital expenditure governance

Independent Review of Heathrow Other Regulated Charges cost allocation

We have written to Heathrow (December 2023) to provide our assessment of the responses received to our consultation on draft terms of reference for Independent Review of Heathrow Airport Limited’s cost allocation methodology for Other Regulated Charges, and to confirm the final terms of reference for the independent review.

Responses

This letter (November 2023) sets out the CAA’s approach to the independent review of HAL’s cost allocation methodology for Other Regulated Charges and details a draft terms of reference for the Independent Review that HAL should use when procuring the reviewer and facilitating the review.

Close Independent Review of Heathrow Other Regulated Charges cost allocation

CAP2591 H7 Guidance on Other Regulated Charges (ORC) protocols and dispute resolution for Heathrow Airport

CAP2591 confirms the high-level principles that HAL should follow when working with stakeholders to develop new protocols and a dispute resolution function for Other Regulated Charges.

Close CAP2591 H7 Guidance on Other Regulated Charges (ORC) protocols and dispute resolution for Heathrow Airport

CAP2524 Economic regulation of Heathrow Airport Limited: H7 Final Decision, March 2023

CAP2524 sets out our final decision for Heathrow Airport Limited's (HAL) H7 price control review. It includes:

The appendices provide further information on the main issues covered in our determination:

We have also published:

Responses to CAP2524F

Responses to CAP2524G

Close CAP2524 Economic regulation of Heathrow Airport Limited: H7 Final Decision, March 2023

Interim price cap for 2023

Economic regulation of Heathrow Airport Limited: setting an interim price cap for 2023

This Decision follows the consultation (CAP2488) on setting the interim price cap for 2023 and replaces the holding cap that was put in place by CAA in 2022.

Close Economic regulation of Heathrow Airport Limited: setting an interim price cap for 2023

Final Proposals

CAP2488 Economic regulation of Heathrow Airport Limited: setting an interim price cap for 2023

CAP2488 sets out the interim price cap for 2023 and replaces the holding cap that was put in place by CAA in 2022.

This interim price cap replaces the current one-year interim cap that applies to HAL’s charges in 2022,which expires at the end of this year. It is required to protect the interests of consumers in the short term as our final decision and licence modifications for a five-year price control (H7) will not be made until later in 2023.

The proposed interim price cap will be £31.57 (equivalent to £29.68 in 2020) prices per passenger (in nominal prices). This value is in line with our Final Proposals (FPs) issued in June 2022. As with our interim price cap for 2022, once we have set the final price control for the H7 period, any difference between it and this proposed interim price cap for 2023 will be trued up or down. 

Putting this interim price cap in place will enable us to make Final Decisions on the main H7 price control in an orderly way, while avoiding having a gap emerge in the price control arrangements for HAL at the start of 2023. The work to finalise the main H7 price control involves taking account of the representations we received on Final Proposals and assessing whether any changes are appropriate in the light of the new information that has emerged since then, including on issues such as passenger numbers and changes to wide macro-economic factors (in particular inflation and interest rates). We will issue a short statement in the near future confirming the timetable for reaching a final decision on the main price control.

Alongside the consultation on the interim holding cap, we are proposing a small number of specific changes to HAL’s licence to remove obligations under the service quality framework that we consider are no longer needed. 

Following this short consultation, which ends on 22 December 2022 and having taking into consideration stakeholder responses, we expect to publish our decision on the level of the interim price cap promptly in the New Year, with the licence modifications taking legal effect in February 2023.

Responses to CAP2488

Close CAP2488 Economic regulation of Heathrow Airport Limited: setting an interim price cap for 2023

CAP2365 Economic regulation of Heathrow Airport Limited: H7 Final Proposals, June 2022



This consultation sets out our Final Proposals for the Heathrow Airport Limited's (HAL) H7 price control review. It includes:

  • This Summary document which provides an executive summary of our Final Proposals, and discusses the particular challenges and uncertainties we have carefully considering in setting the H7 price control.
  • Section 1 which discusses:
    • our passenger forecasts for H7 and our proposed form of regulation for HAL, including our intention to introduce traffic risk sharing arrangements; and
    • our proposals for implementing outcome-based regulation (OBR).
  • Section 2 which sets out:
    • our projections for each of the key price control 'building blocks' (including operating and capital  costs, charges for other services and commercial revenues) that have informed our Final Proposals; and
    • our proposals for developing stronger capital efficiency incentives;
  • Section 3 which describes:
    • our views on the WACC, financeability and the price control on airport charges;
    • related financial issues of HAL's request for a covid-19 related RAB adjustment, and the treatment of asymmetric risk; and
    • how we will modify HAL’s licence to implement our Final Proposals.
  • The appendices provide further information on the main issues set out in this consultation.
  • We have published the Price Control Model and the Cost of New Debt Indexation Model alongside the Final Proposals.  

Final Proposals

Reports by external consultants

  • CAP2366A - Business Travel Trends, Skylark Consulting Group, March 2022
  • CAP2366B - H7 Updated Beta Assessment, Flint Global, March 2022
  • CAP2366C - OBR Phase 2 Targets Assessment, Arcadis, June 2022
  • CAP2366D - Review of the CAA’s Approach to H7 Traffic Forecasting, Skylark Consulting Group, June 2022
  • CAP2366E - Review of the CAA’s proposed traffic risk sharing mechanism, Deloitte, June 2022
  • CAP2366F – H7 capex plan assessment, Arcadis, June 2022
  • CAP2366G – Review of CAA’s capex categories and delivery objectives, Arcadis, June 2022
  • CAP2366H – Review of commercial revenues, CEPA, Tailor Airey, June 2022
  • CAP2366I - Review of Opex, CEPA, Tailor Airey, June 2022
  • CAP2366J – Management stretch technical annex, CEPA, Tailor Airey, June 2022

Responses 

External reports submitted by Airlines

 

 

 

 

 

 

Close CAP2365 Economic regulation of Heathrow Airport Limited: H7 Final Proposals, June 2022

Initial Proposals

CAP2275 H7 Initial Proposals Draft Licence Modifications, November 2021



CAP2275 sets out draft modifications to Heathrow Airport Limited's (HAL) licence to show how the CAA proposes to implement the policy proposals in the October 2021 Initial Proposals for HAL's H7 price control review.

The consultation deadline has been extended to close of business on Friday 21 January 2022.

Responses to CAP2275

Close CAP2275 H7 Initial Proposals Draft Licence Modifications, November 2021

CAP2274 H7 Initial Proposals - Working paper on outcome based regulation, November 2021



CAP2274 follows on from the October 2021 Initial Proposals consultation and provides further details of the CAA's proposed approach to implementing outcome based regulation (OBR) in the H7 price control for Heathrow Airport Limited (HAL). It sets out the CAA's Initial Proposals on targets, rebates and bonuses and summarises the key proposed changes to HAL's licence.

The consultation deadline has been extended to 12 noon on Tuesday 18 January 2022.

Reports by external consultants

Responses to CAP2274

Close CAP2274 H7 Initial Proposals - Working paper on outcome based regulation, November 2021

CAP2265 Economic regulation of Heathrow Airport Limited: H7 Initial Proposals, October 2021

This consultation sets out our Initial Proposals for the Heathrow Airport Limited's (HAL) H7 price control review. It includes:

  • This summary document which discusses our overall approach and the impact of the particularly challenging circumstances created by covid-19 on Heathrow airport, the price control review and these Initial Proposals.
  • Section 1 which discusses:
    • our proposed approach to the form of regulation for HAL, including our intention to introduce traffic risk sharing arrangements and to set a 5-year price control; and
    • our projections for each of the key price control 'building blocks' (including numbers of passengers, costs and commercial revenues) that have informed our Initial Proposals.
  • Section 2 which sets out:
    • our views on HAL's request for a covid-19 related RAB adjustment, the treatment of asymmetric risk, the WACC, finance ability and our provisional range for the H7 price control on airport charges; and
  • Section 3 which describes:
    • our proposals for developing stronger capital efficiency incentives and implementing outcome based regulation (OBR); and
    • our approach to dealing with airport charges in 2022 noting the particularly difficult and challenging circumstances that have been created by the pandemic and its impact on the CAA's H7 price control timetable.
  • The appendices provide further information on the main issues set out in this consultation.

Initial Proposals

We are also publishing, alongside these Initial Proposals, a number of supporting consultancy studies.

Reports by external consultants

  • CAP2266A - Review of H7 Opex and Commercial Revenues: Initial Assessment and Forecasts, CEPA Taylor Airey, October 2021
  • CAP2266B - HAL RBP Update: Capex plan Review, Arcadis, October 2021
  • CAP2266C - HAL RBP Update: Review of capex categories and delivery objectives, Arcadis, 2021
  • CAP2266D - H7 Forecast Review [Passenger Forecasting], Skylark, October 2021
  • CAP2266E - Estimating Heathrow's beta post Covid-19, Flint, August, 2021
  • CAP2266F - Review of Consumer Acceptability Testing Research, FTI Consulting, October 2021

Responses to the RBP Capital Plan

Responses to CAP2265 H7 Price Control

Responses to CAP2265 2022 Charges 

Close CAP2265 Economic regulation of Heathrow Airport Limited: H7 Initial Proposals, October 2021

News from UK Civil Aviation Authority

  1. Strengthening aviation safety through bilateral arrangements
    • Published on:
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  2. Civil Aviation Authority highlights importance of aerospace industry in Wales
    • Published on:
    • Category: News Item
  3. Regulator proposes changes to Heathrow Airport Limited’s airline charges in response to CMA appeal
    • Published on:
    • Category: News Item