Clarifying memorandum
Review of the Economic Regulation of Airports
We have received a number of requests from Stakeholders about the purpose of this review. The following statement is intended to address the questions that we have so far received.
Following the statement by the Secretary of State for Transport on 22nd April to Parliament, along with the terms of reference published on 28th April, a review of the framework for economic regulation for UK airports has been announced.
In these communications it has been stated already that economic regulation should provide the right incentives to deliver timely, efficient and necessary investment and to ensure that the owners of UK airports are able to finance that investment. The Department for Transport supports these principles as essential components for delivering the capacity and investment envisaged under the 2003 Future of Air Transport White Paper.
Any resulting legislation will be put forward only after consultation, and will not make changes to the basis on which the current price caps at Heathrow and Gatwick are set, nor changes to the cap which will take effect at Stansted from 1 April 2009. Consequently any changes to price caps resulting from the review would not take effect until 1 April 2013 at the earliest.
As part of the review, the Department wants to ensure that regulated UK airports maintain a robust financial profile in order to finance future investment. We note that other regulators in the UK have adopted a minimum investment grade threshold for regulated companies in order to preserve the financial flexibility to support required levels of investment.
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