Consultation on whether Stansted should be subject to economic regulation or be fully de-regulated from 2014 is launched today by the Civil Aviation Authority.
But the regulator says “it is minded” that the Essex airport, which is in the process of being sold by Heathrow Holdings – the former BAA – should not be fully de-regulated at this time.
The Stansted ‘minded to’ summary has been brought forward in order to clarify the CAA’s views on the airport’s regulatory regime for bidders currently involved in the airport’s sale.
In terms of services to low cost and charter carriers, the airport has a level of market power that may be substantial and it is likely to be become substantial between 2014 and 2019 as airport capacity constraints continue to tighten in the London region, the authority said.
Publishing the consultation, it said: “The CAA has provisionally concluded that it would be better to remedy possible abuse of Stansted’s market power both with economic regulation and also general competition law.
“The CAA has also provisionally concluded that the benefits to consumers of continuing economic regulation at the airport are likely to outweigh the possible adverse impacts of regulation on the airport.”
Director of regulatory policy 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.
“Whilst 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 gives the regulator 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.
Similar consultations relating to Heathrow and Gatwick will be published in April 2013. The CAA’s final decisions on market power at each airport will be made later next year.
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