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On 9th August 2024, the UK Civil Aviation Authority (CAA) released an initial assessment regarding Gatwick Airport Limited's (LON:73DR) proposal to extend its commitments to airlines for an additional four years. This consultation follows a previous industry consultation held last summer (CAP2554) and aims to evaluate whether GAL’s proposed extension aligns with consumer interests.
Framework for Assessment
The CAA's current consultation seeks feedback from industry stakeholders on the proposed framework and initial assessment. This framework is designed to evaluate whether the proposed extension of GAL's commitments serves the best interests of consumers. The insights gathered will guide future decisions concerning the economic regulation of GAL.
Consultation Details
The consultation period is scheduled to end on 20th September. During this time, industry feedback will be collected to refine the approach to GAL’s economic regulation.
Commitments Under Review
Gatwick Airport Limited currently operates under a set of legally binding commitments with its airline customers. These commitments, introduced on 1 April 2021, are set to expire on 31 March 2025. The proposed extension would extend these commitments until 31 March 2029.
Key Aspects of the Proposal
The proposed extension includes several key elements:
- Revised Price Cap: The proposal suggests a price cap adjustment for the extension period, including two years set at Consumer Prices Index (CPI) -1% and two years at CPI +0%.
- Review of Service Quality Targets: There will be a process to reassess the current service quality targets and corresponding rebates.
- Investment Commitment: GAL proposes to continue the existing commitment to invest a minimum of £120 million annually (adjusted to 2018/19 prices) over a ten-year period from 2019/20 to 2028/29.