Gatwick calls for overhaul of charging regulations

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London Gatwick airport has pledged to replace the current regulations that give the Civil Aviation Authority control over its charges. The UK's second largest airport is proposing a market-based system and investment of £1 billion ($1.55 billion) up to 2019.

The call comes after the CAA invited airport operators to submit their investment plans as it sets out the maximum allowable charges for the 2014-19 regulatory period. Earlier this week, London Heathrow airport called for increases in the top rates to support its £3 billion modernisation programme.

Gatwick also foresees an increase of charges in future. But the airport operator claims that the "maximum average price level" would rise at a slower rate than under the current regulatory system, provided that it is allowed to negotiate bilateral contracts with airlines independently.

The airport submitted a seven-year "contracts and commitments" framework whereby charges will initially rise on average by 10.7% in 2013/14. But in the following five years, the company says, maximum charges would rise at a compound rate of the general retail price index (RPI) plus 1.3% - compared with RPI plus 3.3% under the existing system.

Gatwick says that its plan - described as a "radical change" from regulations - would be the "best way to promote competition between airports" and improve service quality for passengers and airlines. The company adds that it could offer carriers "a lower price path over a longer period of time than would be the case if it continues to operate within a regulatory framework".

The airport wants to invest £1 billion between 2014 and 2019. This will include replacing the South Terminal's existing Pier One with a new, two-storey structure; Pier Six is to be extended and have additional stands for the Airbus A380; while the North Terminal will be equipped with a security area in-line with the respective recent installations in the South Terminal.

The CAA will make a preliminary decision on the proposals on 30 April, with the final verdict due to follow in January 2014.