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NEWS Last modified on June 15, 2012

New UK aviation Bill must protect BAA – House of Lords

Concerns have been raised in the House of Lords that reforms to the way airport charges are levied at Heathrow Airport could put BAA’s ability to secure private funding at risk.

Concerns have been raised in the House of Lords that reforms to the way airport charges are levied at Heathrow Airport could put BAA’s ability to secure private funding at risk.

Speaking during the first Lords reading of the draft Civil Aviation Bill, Conservative Lord Jenkin of Roding said the bill’s wording made it unclear whether airlines can appeal against certain airport charges that are to be ring fenced for funding capital projects.

While he said he was in favour of a new licence-appeal regime to replace the periodic price review of airport charges by the Competition Commission, Lord Jenkin said BAA must be given an exemption from any right of appeal by airlines to avoid putting investor confidence in BAA in jeopardy.

“What it has concerns with are specific aspects of the ring-fence, which the Government's policy states could be derogated from in practice and would now be subject to appeal, as the noble Lord, Lord Davies, said, perhaps by airlines or by the CAA itself," he said.

"BAA is having to raise very large sums of money on the markets. Any uncertainty of that kind would immediately imperil its fundraising operations."

His comments echoed those made by BAA, which said minor amendments to the bill would help to clarify these legal points without diminishing the main thrust of the reforms.

The bill will now go to its second reading and committee stage in the Lords and is expected to become law later this year.

BAA declined to comment further on the matter.

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