Airport Expansion Questioned

Expansion of Heathrow and Gatwick might not be necessary if a proper charging structure were in place claims influential senior economist.

In his evidence to the Competition Commission enquiry into BAA's London Airports, published by the Institute of Economic Affairs, Professor Stephen Littlechild suggests that there is a serious problem of under pricing at Heathrow and Gatwick Airports, which artificially increases demand for the use of those airports and distorts investment decisions.

Professor Littlechild suggests that there is an urgent need to raise prices for take-off and landing as current prices are below those that would equate supply and demand. The level of prices that would "clear the market" is much higher than at that now charged, he claims. Furthermore the two main London airports are significantly under-priced relative to the cost of expanding capacity and by international standards. Charges at both are less than half the level reported for the two main New York airports.

Under-pricing