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Airport Charges Directive

The European Commission published a draft directive on airport charges in January 2007.

The directive is intended to harmonise the regulation of airport charges across all member states. The Commission believes harmonised regulation is necessary to protect air carriers from airport charges being set, it believes, ‘artificially’ high as a result of pressure on publicly and privately-owned airports to maximise profits from public authorities and shareholders respectively. The Commission notes that airport charges account for between 4% and 8% of major carriers’ operational costs.

The UK has considerable experience of economic regulation- and the trend is towards reduction. Four airports are currently subject to price regulation by the Civil Aviation Authority: Heathrow, Gatwick, Stansted and Manchester. These airports are regulated due to the proportion of the national market they serve, and thus the level of market power they have. The regulator has proposed the deregulation of two of the airports, and the Department for Transport is currently carrying out consultation.

The European Parliament and the Council of Ministers agreed versions of a directive on Airport Charges. Some changes are common to both groups: the directive will only apply to airports handing more than 5 million passengers a year, airports will not be required to reach service level agreements with airlines, and pre-financing will continue to be allowed. Additionally, member states with an existing independent regulatory body (including the UK, which has the CAA) will be able to let these existing bodies set the terms under which they will investigate reported breaches of the directive. In its current form the draft directive is considerably more benign than the original proposal, and this reflects the lobbying effort undertaken by ACI and strongly supported by AOA.

Implementation is expected to begin from 2011, two years after a final directive is agreed.