I am today publishing my decisions on whether Manchester and Stansted airports should remain designated for the purposes of price control under Section 40 of the Airports Act 1986. My decisions follow advice from the independent aviation regulator, the Civil Aviation Authority (CAA), on these airports and two public consultations. My Department’s analysis has also been peer reviewed by Professor Martin Cave, Director of the Centre for Management Under Regulation, at Warwick Business School, whose comments I am publishing alongside my decisions. My predecessor previously consulted on and announced new criteria for deciding whether an airport should be designated or not.
At Manchester, having carefully considered the responses from the consultation, I have concluded that Manchester airport does not have, and is not likely to acquire substantial market power. Therefore I intend to de-designate Manchester airport, and will introduce the necessary legislative changes.
At Stansted, the decision is more finely balanced. After careful consideration, I have concluded that Stansted meets all of the criteria for designation, and should continue to be designated.
The airports in the south-east are now operating at almost full capacity. This is bad for passengers in terms of delays, congestion, lack of choice, and it is also damaging to the UK’s productivity and growth. This is why we support a second runway at Stansted and are consulting on adding capacity at Heathrow, whilst satisfying strict local environmental conditions on noise and air quality. I am therefore asking the CAA to continue to protect passengers by setting price caps at Stansted until new capacity is delivered, or until further evidence emerges from the ongoing Competition Commission review.
In making my decision on Stansted, I am aware of the comments made by a number of the respondents on the costs of the current approach to price controls at Stansted. The structure of price controls is a matter for the regulator, but my decision is not intended to constrain the CAA from adopting other approaches which meet their statutory duties while avoiding some of the costs of the current system that respondents have identified.
I have today published on my Department’s website, decision letters setting out in full the rationale for my decisions, and Professor Cave’s peer review comments. Copies of these documents have been placed in the Libraries of the House.