Morning:
12°c
EasyJet loses airport charges battle
26.06.09
Low-cost airline easyJet today lost its High Court battle over what it described as an "exorbitant" increase in airport charges at Gatwick.
A judge rejected the airline's accusation that the price decision made last year by the Civil Aviation Authority (CAA) was unfair and unlawful.
The CAA, whose functions include the economic regulation of UK airports, is required to set a maximum airport charge - the price per passenger to be paid by airlines - at certain designated airports, including Gatwick, for five-year periods.
It was claimed by easyJet, a major user of Gatwick, that the way in which the CAA recently allowed airport operator BAA to raise prices - from £5.61 to £6.79 last year - was flawed and there was a failure to follow the recommendations of the Competition Commission.
Mr Justice Collins, sitting in London, rejected the accusations. The airline now faces having to pay the CAA's and Gatwick Airport Ltd's legal costs in successfully opposing its challenge, which could run into hundreds of thousands of pounds.
A key complaint was that consultations were "one-sided". After they formally ended on January 31, 2008, the CAA - without telling easyJet - sought and received further information from Gatwick Airport Ltd which assisted it in reaching its final decision, the court was told.
Charles Bear QC, representing easyJet, said this had led to the CAA's substantial acceptance of a very large and hotly contested claim over additional security costs.
"The impact was very great, almost doubling the increase in the price from the previous five-year period," he said.
"The total sums involved are immense: over 2008-2013, the total forecast charge as determined by the CAA was about £1,300 million.
"Since easyJet has one-quarter of Gatwick's passenger traffic, its share would be about £325 million.
"The total amount allowed in respect of extra security costs and the disputed departures from the Competition Commission's recommendations was about £185 million - therefore about £46 million extra for easyJet to pay over the five-year period."
Dismissing the challenge, the judge ruled: "It is understandable that the claimant has felt that what was done was unfair.
"However, in the circumstances I do not think the CAA's actions were in reality so unfair as to require the court to intervene."
The judge said easyJet had not been faced with a figure that was "unfairly reached or erroneous", and he was "not persuaded" that the airline was prejudiced "by the manner in which the CAA chose to carry out its functions".
The judge gave easyJet permission to appeal, saying he was not encouraging further legal action but it would be wrong, because of the issues involved, to deny permission.
The judge had heard that easyJet accounted for 25% of all Gatwick's estimated 35 million passengers per year.
Airlines pay the airport charge for each flight of each passenger and the airport operator, BAA, receives it.
The CAA has argued that higher airport charges are paying for the modernisation of Gatwick, which will benefit passengers.
