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NEWS Last modified on August 1, 2011

Cash back for airlines as London airports fail customer service targets

The UK government was forced Gatwick, Heathrow and Stansted to give more than €600,000 back to the airlines in June for failing to meet operational targets set to improve customer service standards.

The UK government ordered Gatwick, Heathrow and Stansted to give more than €600,000 back to the airlines in June for failing to meet operational targets set to improve customer service standards.

Heathrow was the biggest offender, being told to pay out €495,909 in rebates after it missed targets for providing sufficient departure seating at Terminal 3 and failed to achieve 95% pier service at Terminal 5.

Gatwick incurred a €69,021 rebate because of a technical fault with one of its shuttles while Stansted was ‘fined’ €36,554 for failing to provide sufficient passenger sensitive equipment, such as lifts, escalators and travelators at its terminal and achieving a little over half of its 99% target for jetty service.

Nevertheless, across most service areas, all three airports consistently met their targets, in June Gatwick actually accrued bonuses totaling €170,753 for its provision of services. Heathrow’s terminals 1 and 4 also hit all their targets.

Under the service quality rebate (SQR) scheme, which was introduced by the Civil Aviation Authority (CAA) in 2003, Heathrow and Gatwick must meet a set of customer service and equipment targets each month, such as security queuing times, operation of jetties, cleanliness and arrival of arrivals baggage reclaim. Stansted has since been added to the scheme.

A maximum of 7% of the annual charges each airport levies on its airlines can be refunded to them through the scheme.

In 2008, a bonus element was introduced for Heathrow and Gatwick allowing them to earn a monthly 2.25% bonus on aeronautical income for exceeding specific SQR targets at all their terminals. Bonuses are not paid straightaway; instead the airports receive them through a higher price cap on future airport charges.

Over the last 12 months since July 2010 Gatwick has been fined several times for wayfinding and cleanliness problems at its South Terminal, although the airport now says these have been rectified. The North Terminal has consistently achieved its targets.

A spokesperson for Gatwick Airport said: "Gatwick's priority under new ownership, and through the delivery of the £1 billion investment programme, is to create a more passenger-focused airport with a reputation for excellent customer service.”

"In April this year we hit, for the first time in over two years, the wayfinding target in the South Terminal. This follows an 18 month campaign of reviewing, through the eyes of a passenger, the many thousands of signs displayed across the airport campus and de-cluttering the space, putting in place bigger, clearer signage.

“In May we met every single service target and are now earning more bonuses than we are paying rebates. This has been achieved precisely because Gatwick, under separate ownership, is putting the passenger at the centre of its business."

At Heathrow, Terminal 3 failed to meet its departure lounge seat availability over the last 12 months, while Terminal 5’s pier service consistently fell below target. Terminals 1 and 4 consistently achieved or exceeded their targets.

Key areas below target at Stansted were its departure lounge seat availability and jetties, in most areas it hit target.

In the 12 months since July 2010, Heathrow has been fined €4.02 million, Stansted €233,277 and Gatwick €1.374 million.

In a November 2010 letter to CAA group director Dr Harry Bush, the then BAA COO Nick Cullen, stated that there was sufficient seating at Heathrow’s T3 but that signage to them needed to improved, wayfinding also needed to more intuitive. An improvement programme was due to be completed by May 2011.

Improvement of pier service at T5 is dependent on additional infrastructure, which was due to be completed by summer 2011, Cullen added.

SQR and competition

In what could be seen as an indication of the benefits of breaking up BAA’s UK airport ownership monopoly, quality service fines incurred by Gatwick were much higher in the 12 months before a consortium headed by Global Infrastructure Partners (GIP) took over the airport in December 2009, than during the 12 months following.

Between December 2008 and November 2009, Gatwick was fined €3.98 million for missing its SQR targets. Between December 2009 and November 2010 the figure had been reduced to €1.04 million and stood at €610,000 between December 2010 and June 2011.

These differences could also be down to a number of factors, including improvements resulting from a BAA instigated €1.36 billion capital improvement scheme which is underway at Gatwick.

A CAA spokesperson said: “The CAA’s Service Quality Rebate scheme is designed to incentivise Heathrow, Gatwick and Stansted to focus on improving their service delivery. There is a broad consensus that it has helped to achieve this and that passengers, airlines and the airports themselves have benefited as a result.”

"In 2010/11 £4.4m was paid by the three airports to their airline customers following missed targets. We are committed to working with stakeholders to improve the passenger experience and services for airlines. We have already begun discussions with airports and airlines on designing a new generation of service quality incentives for the period after March 2014”.

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