Stansted regulation may remain

The company formerly known as BAA is being forced to sell Stansted airport in Essex, England.

With Heathrow and Gatwick, Stansted is one of only three UK airports subject to regulation by the Civil Aviation Authority (CAA) over airline charges.

The CAA’s current regulatory regime goes up to 2014. Launching a consultation process today, the CAA said it was “minded” to rule that Stansted should not be fully de-regulated when the next five-year regulation period starts in 2014.

CAA regulatory policy director Iain Osborne said: “Our core focus is protecting consumers and improving their experience.

“The evidence tends to suggest we cannot be confident competition alone will deliver this. However, this does not mean we would necessarily continue with traditional price controls - we would consult on that next year.

“While we have provisionally found Stansted should be subject to continuing regulation to protect consumers, that view will now be consulted on, and we look forward to engaging with our stakeholders closely throughout the process, especially on their views on the most proportionate form of regulation to reflect the circumstances at Stansted.”

The assessment comes about because of new powers granted to the CAA as part of the Civil Aviation Act 2012, which received Royal Assent yesterday.

The Act gives the CAA the power to be far more flexible in its approach to economic regulation.

Instead of the current situation whereby an airport judged to have market power must face a price control, in future the CAA will be able to grant airports economic licences with varying conditions to ensure consumers are protected.

The Act also gives the CAA a duty to put consumers first when designing its economic regulation. The changes bring the CAA in line with other economic regulators.