Gatwick Airport Puts Forward New Deal

Gatwick Airport has today put forward a new deal that would allow Gatwick and its airline customers to develop bilateral, tailored contracts through a legally-binding Contracts & Commitments framework.

The new framework – designed to replace the current system of regulation – would deliver better outcomes for airlines and passengers in terms of quality of airport facilities, service levels and price.

The new deal at Gatwick would mark a radical change from regulation to match the radical change in Gatwick's ownership and would be the best way to promote competition between airports and further the interests of passengers.

By removing wasted costs of regulation, improving incentives and speeding up investment, Gatwick can offer airlines a lower price path over a longer period of time than would be the case if it continues to operate within a regulatory framework.


Under Gatwick's new deal it has been calculated that, following a one-off price adjustment, the maximum average price level under its proposed Contracts & Commitments framework would increase by RPI+1.3% over a seven year period. This equates to an increase in the per passenger fee from £8.80 in 2014 to a maximum per passenger fee of £10.68 in 2020/21. This outcome would ensure Gatwick's prices remain highly competitive when compared to other London airports. However, charges to airlines with contracts may well be at prices lower than these levels.

Stewart Wingate, Gatwick's Chief Executive Officer, said: "Competition is by far the best mechanism for promoting the interests of passengers. It is the very reason why the Competition Commission took the decision to break up the BAA monopoly and why Gatwick is now thriving under separate ownership.

"Our proposed new deal for Gatwick moves that competition judgement on further and is a better deal for airlines and their passengers than a regulatory outcome. Free from regulation, we would be able to respond more quickly to the changing needs of airlines and their passengers and we would be able to step up the pace of improvement in the passenger experience. The deal means airlines and passengers win on price, service and the quality of facilities.

"A decision to allow competition, rather than regulation, to protect the interests of passengers would be, in my view, the most important step the CAA could take when it considers this plan."

(CD/GK)