Wednesday, October 28, 2009

Airlines May Launch Legal Action Against BAA

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A number of airlines have announced they could launch legal proceedings against airports operator BAA over the increased landing fees now in place at the London airports.

Last month the British Airports Authority was given permission by the UK's civil aviation regulator to increase its landing charges for airlines from April 1st 2008 using three BAA-operated London airports - Heathrow, Gatwick and Stansted.

The low-cost airlines Ryanair and easyJet, usually locked in fierce competition, have both said they will launch judicial reviews to challenge the Civil Aviation Authority (CAA) decision to let BAA increase its charges.

Both airlines are directly affected by the charges - Stansted is the major UK hub for Ryanair, while easyJet is a significant presence at Gatwick.

Ryanair, Easyjet Threat To Withhold Landing Fees

The airlines have threatened they would withhold landing fee payments to BAA while the juidicial review proceeds.

In a letter to BAA seen by The Times newpspaer, Andy Harrison, easyJet's chief executive, writes: "We are determined to address what we consider to be a regulatory decision that we consider to be unlawful and damaging for the airlines, our passengers and the industry as a whole".

The new landing fee charges mean airlines have to pay an increased amount to BAA per passenger over the next five years. At Heathrow, charges will increase by 86% from £10.36 to £19.31 per passenger by 2012, and at Gatwick they will rise by 49% from £5.61 to £8.36 per passenger.

Since the new charges came into effect at the start of the month, airlines using Gatwick have to pay a new total of £6.97 per passenger. Charges at Stansted have increased by 7% since April 1st.

Harrison has asked BAA to accept a deferral of some of the £6.97 fee at Gatwick until the judicial review has been completed.

He wrote: "We will hold back a proportion of the £6.97 you have been permitted to charge for each passenger at Gatwick. We will keep the money in a separate account. To the extent that our challenge fails, we will hand over the money withheld to you along with any interest accrued. If our challenge succeeds, and a lower charge is then set, we will implement a mechanism to return what we have saved to our customers".

Ryanair has written a similar letter to BAA regarding Stansted. A Ryanair statement read: "If BAA Stansted continues to abuse it's monopoly power by imposing these maximum allowed price increases, then Ryanair will launch judicial review proceedings and it will withhold these latest increases (putting them in an escrow account) until the outcome of its judicial review proceedings at Stansted".

BAA Break Up Demanded By Airlines

Both Ryanair and easyJet have repeated their call for BAA to be broken up. Last month, when the charges were announced, the two low-fare carriers joined forces with bmi and Virgin Atlantic to release a joint statement expressing their dispproval of the charges, and said that BAA should be broken up to improve competition and standards in the UK airport sector.

Ryanair's chief executive Michael O'Leary said: "These latest unjustified price hikes by the BAA airport monopoly prove that it is abusing its monopoly power over passengers and airlines at Stansted. They also prove that the CAA is an incompetent and incapable regulator which has yet again put the financial needs of the Spanish-owned BAA airport operator above the interests of airport users and consumers which it is obliged by law to protect".

O'Leary added: "...Stansted doesn't work, the BAA airport monopoly doesn't work in the interests of consumers, and it's now time that the Competition Commission and the Government broke up this foreign-owned, failed, anti-consumer monopoly".

BAA responded to the airlines' latest moves by saying that it would continue to charge the new fees, and that they did not believe the airlines were making a valid complaint.

Source - Airport International's London Reporter

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