Heathrow is reported to be demanding a 20-year deal on landing charges from the Civil Aviation Authority in return for building a third runway.
The airport has argued that it needs a fundamental review of the regulatory regime, where prices are reviewed every five years, if it is to bear the risk of the £15 billion capital outlay that a new runway would require.
The request, part of its 400-page submission to the Airports Commission, is likely to infuriate airline customers, who have been complaining bitterly about its high passenger charges, The Sunday Times reported.
The commission will begin to assess the three shortlisted proposals to build a new runway in south-east England next month, after deciding that the plan for a Thames Estuary airport was too costly and too difficult to carry out. Its recommendations will be given to the government next summer.
Heathrow said a deal on regulation needs to cover a period “from the point of committing the first significant investment, for at least 15 years,” the newspaper reported.
It wants the government to guarantee that all “efficiently incurred” expenditure is included in the company’s regulated asset base in future — with safeguards to prevent write-downs. The larger a company’s asset base, the more money it can make when price controls are set by the regulator.
Any deal should also include “a longer visibility horizon” for Heathrow’s cost of capital, which is usually set by the regulator and can go up or down every five years depending on the likely cost of borrowing money for construction.
Emma Gilthorpe, director of strategy at Heathrow, conceded that charges for airlines would go up for a period but said the question of how long “depends on when we start the investment cycle”.