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NEWS Last modified on December 20, 2012

London Stansted Airport: Regulators rule airport should not be deregulated

London Stansted Airport should not be fully deregulated, UK regulators have ruled.

London Stansted Airport should not be fully deregulated, UK regulators have ruled.

The UK Civil Aviation Authority (CAA) said today that the airport was likely to gain substantial power in the low-cost carrier market between 2014 and 2019 as airport capacity constraints continue to tighten in the London region.

The CAA’s consultation was based around whether the airport should be subject to economic regulation and did not cover the type of regulation that any licence would contain.

The report added that Stansted already had a substantial degree of power in the cargo market.

The regulator said it would be better to “remedy possible abuse” of Stansted’s market power with economic regulation and general competition law.

The CAA added that benefits to consumers of continued economic constraints were “likely to outweigh the possible adverse impacts of regulation on the airport”.

Iain Osborne, CAA’s director of regulatory policy, 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 CAA’s report today was prompted by new powers granted to the CAA as part of the Civil Aviation Act 2012.

The new law 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. 

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