Heathrow management criticizes plan to cap tariffs for users of facilities

By Marc Castro

Oct 05, 2013 12:23 PM EDT

The British aviation regulator last Thursday submitted a proposal to place a cap on prices charged by Heathrow. This drew a furious response from the country's busiest airport that warned a long-term hit on its investments.

Heathrow Airport had filed documentation for a plan to the UK's Civil Aviation Authority that sought to raise tariffs on airlines using its facilities by 4.6% above current inflationary values as measured through the retail prices index until April 2019.

In response, the regulator made a counter proposal of not allowing prices to increase above the inflation rate.

In an announcement, CAA Chairman Deirdre Hutton issued a statement at the publication of its final proposals for consultation. He said, "Tacking the upward drift in Heathrow's prices is essential to safeguard its globally competitive position."

Heathrow, whose corporate investors include Ferrovial of Spain, the sovereign wealth funds of China, Qatar and Singapore, vehemently criticized the proposals of CAA. The investors argued that a price cap would limit its returns and make investments in these projects unpalatable for business purposes.

In a statement, the Heathrow ownership group said, "The CAA's proposals risk not only Heathrow's competitive position but the attractiveness of the UK as a center for international investment."

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