At a glance
- The UK Civil Aviation Authority has published its Method Statement and Business Planning Guidance on the economic regulation of Heathrow Airport for the next price control period (H8).
- The regulator will set incentives for Heathrow Airport to invest efficiently and provide a high level of service quality for passengers.
- The Civil Aviation Authority will also review the regulatory model that applies to Heathrow as part of its capacity expansion work.
The UK Civil Aviation Authority has set out its approach to the economic regulation of Heathrow Airport Limited from 2027 to 2031, which includes how the regulator will set charges for the airport and ensure that consumers and airlines face airport charges that are no higher than necessary.
This document provides a clear ‘line of sight’ on the Civil Aviation Authority’s H8 review process of how Heathrow is expected to take consumer and environmental considerations into account when developing its future business plan.
The review will allow for efficient investment that will deliver benefits for consumers, by incentivising efficiency and setting targets for quality of service. As part of its review, the regulator will also carefully consider the rules on resilience after the closure of Heathrow Airport on 21 March 2025.
Today the Civil Aviation Authority has also written to industry to set out how it will undertake a separate review of the framework for economic regulation in the context of capacity expansion and the development of a third runway at Heathrow.
This review will look at options to ensure the regulatory model provides strong incentives for the efficient delivery of the substantial costs involved in expansion and how to best protect the interests of consumers. This work will be carried out in a coordinated way with the H8 review and will ensure that the framework for the economic regulation of Heathrow is consistent with the efficient and sustainable growth of the airport.
This will allow work on capacity expansion to proceed on a more flexible basis and timetable, in support of the Government’s work on capacity expansion.
The UK Civil Aviation Authority expects constructive engagement between Heathrow and airlines to continue alongside broader discussions on capacity expansion. Heathrow is expected to deliver its H8 business plan by July 2025, which the regulator will assess against the business plan incentive and the guidance published today.
Separate to its reviews, the Civil Aviation Authority remains in close contact with Heathrow relating to Friday’s incident and the closure of the airport. The regulator will support the National System Energy Operator’s review and will take into account its outcomes, alongside the results of Heathrow’s own investigation, in considering whether it should take further steps under Heathrow’s licence.
ENDS
Notes for editors:
- The full document can be found on our website