Airport market power assessment

The CAA has powers under the Civil Aviation Act 2012 to license airport operators that pass a market power test.

This test consists of three parts:

a) that the airport operator has, or is likely to acquire, substantial market power in a market, either alone or taken with other such persons as the CAA considers appropriate
b) that competition law does not provide sufficient protection against the risk that the airport operator may engage in conduct that results in an abuse of the substantial market power
c) that, for users of air transport services, the benefits of regulating the airport operator by means of a licence are likely to outweigh the adverse effects

Guidance on applying the market power test

We have issued guidance on how we intend to approach the market power test and to make market power determinations.

The guidance and the summary of responses are below:

• CAP 1433 - Market power test guidance (August 2016)
• CAP 1432 - Market power test – summary of responses to the consultation (August 2016)

We consulted on Draft Guidance from December 2015 to February 2016. The draft guidance and consultation document are below:

• CAP 1354 - Market power test guidance: draft for consultation (December 2015)
• CAP 1355 - Draft guidance on the application of the market power test under the Civil Aviation Act 2012 - consultation (December 2015)

Request for a Market Power Determination for Manchester Airport

January 2020 Notice

The Civil Aviation Authority (CAA) has received a request from an interested party for the CAA to undertake a Market Power Determination (MPD) in relation to Manchester Airport, under section 7 of the Civil Aviation Act 2012 (the Act), to decide whether the market power test is or is not met. In the case of large airports where the CAA has not previously carried out an MPD, as is the case with Manchester Airport, the CAA must do so if it receives a request from an interested party.

As per the CAA’s market power test guidance (CAP 1433), the CAA is now at a planning stage. During this period, the CAA may contact the airport operator and other relevant parties to obtain information from them and to seek their views. Interested parties that would like to discuss this with the CAA should email economicregulation@caa.co.uk by 20 February 2020.

If the CAA makes a determination that the market power test is met, the airport operator in question would be subject to economic regulation by means of an economic licence, as set out in Chapter I of the Act. Appeals against MPDs may be made to the Competition Appeal Tribunal.

The CAA’s preparations are at an early stage. The CAA has not reached a view on this matter and no assumption should be made at this point whether the market power test will or will not be met in relation to Manchester Airport. As a result, it would not be appropriate to include any further estimates of the timing of any later steps at this stage. Further details of the CAA’s procedures in relation to MPD is available in our guidance (CAP 1433).

August 2020 Notice

The CAA has decided to postpone further work and the formal commencement of this MPD process until at least August 2021. In reaching this decision, the CAA has considered its prioritisation principles and has taken into account, among other things: the unprecedented impact of Covid-19 on the aviation industry; and a request from the requesting party that we postpone the formal commencement of the MPD process.

The CAA intends to engage with the requesting party, the airport operator and other interested stakeholders before August 2021 to better understand stakeholders’ views on this matter at that time. Interested parties that would like to discuss this matter with the CAA may email economicregulation@caa.co.uk

November 2021 Notice

The CAA has decided that it is appropriate to continue to postpone the formal commencement of this MPD process until at least September 2022.

As in August 2020, in reaching this decision, the CAA has considered its prioritisation principles, and the fact that market conditions are likely still very uncertain to be sufficiently informative to underpin an MPD that would withstand the test of time. Since the last update in August 2020, Covid-19 has continued to have an unprecedented impact on the aviation industry, with Manchester airport passenger numbers in the year to September 2021 running at approximately 13% of the levels seen in the year to September 2019.

We are now disclosing that the International Consolidated Airlines Group S.A. (IAG) is the party which formally requested the MPD. We hope that parties will take this opportunity to constructively engage on the substantive issues underlying the MPD request over the coming months.

The CAA intends to engage with IAG, Manchester Airport, and other interested stakeholders before September 2022 to better understand stakeholders’ views on this matter at that time. Interested parties that would like to discuss this matter with the CAA may email economicregulation@caa.co.uk.

Market power determinations for Heathrow, Gatwick and Stansted

Starting in May 2011, the CAA undertook market power assessments of Heathrow, Gatwick and Stansted airports. In January 2014, the CAA published its findings that Heathrow and Gatwick met the market power tests. The CAA found that Stansted did not meet the tests for services to passenger airlines at the airport. In March 2014, the CAA found that Stansted did not meet the tests for services to cargo airlines at the airport.

The CAA's market power determinations for Heathrow, Gatwick and Stansted are below: