Ex-Ofcom boss examines Heathrow break-up plan

A firm set up by the former boss of Britain’s media regulator is to advise on a possible break-up of the monopoly hold on Heathrow’s terminals enjoyed by the airport’s owner.Sky News has learnt that the Civil Aviation Authority (CAA) has appointed Flint Global to examine the potential for opening up terminal design, construction and operations to third parties.
It represents the first time that the regulator has floated the prospect of competition at London’s busiest airport, under which terminals could be owned by different operators in the manner of New York’s John F Kennedy hub.Flint Global, a consultancy which advises Uber Technologies on its London licensing discussions, was set up by Ed Richards, the former Ofcom chief executive, and Sir Simon Fraser, former permanent secretary at the Foreign Office.

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Heathrow’s expansion has been the source of political controversy for many years

Its role as independent assessor, which will conclude with a report to the CAA next spring, will come during a critical period in the debate about Britain’s future aviation capacity.

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News of the CAA’s decision to commission an independent assessment of the shake-up comes days after The Sunday Times reported that the watchdog would penalise Heathrow if its £14bn third runway is not built efficiently.
Both Heathrow Airport Ltd and Heathrow West, a venture formed by Surinder Arora, the hotel tycoon, are proposing rival schemes to expand the airport.

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Mr Arora has pledged to deliver a third runway for about half the price outlined by the airport’s current owner.Heathrow’s expansion has been the source of political controversy for many years, and has been opposed by airlines bosses including Willie Walsh, chief executive of British Airways’ parent, over the potential for soaring costs.A spokesman for the regulator said: “The CAA commissions technical advice on a range of issues as part of our role in considering the regulatory framework for Heathrow airport.”This includes a short initial study looking at different forms of third party involvement in designing, building and potentially operating a terminal at Heathrow airport, and what the implications for our regulatory framework might be.”

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Heathrow said it welcomed the CAA’s decision to undertake the review

Heathrow said it welcomed the CAA’s decision to undertake the review but maintained its opposition to a JFK-style operating model.”We know that different terminal operators significantly worsen passenger service and this isn’t something that we should accept at Britain’s front door,” a spokesperson for the airport said on Thursday.”However, the regulator is there to work on the side of consumers and so commissioning work that will independently verify this is understandable.”Fragmented airport operations typically have higher operating costs and lower passenger experience and we are confident that the regulator will come to the same conclusion following this piece of work.”Heathrow West said the CAA’s independent assessment represented “a big step in the right direction [because it] recognises that Heathrow Airport Limited is inefficient and that they cannot be trusted to manage costs which are already increasingly out of control”.It added: “This is precisely the reason why competition is urgently required for expansion at Heathrow – Heathrow West is a viable and credible alternative to HAL’s own plans which should be given equal hearing.”
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