The Civil Aviation Authority (CAA) has today announced its final price proposals on how much Heathrow and Gatwick can charge customers in the period 2014-19 (the ‘Q6’ period).

The CAA has proposed that Heathrow charges for the five-year period starting in April next year do not rise by more than the RPI rate of inflation. British Airways had requested RPI -9.8 per cent for the charges.

For Gatwick the CAA has proposed moving away from a normal price cap approach. Instead they propose to accept a set of commitments made by the airport under which airport charges would increase by RPI +1.5 per cent per year over seven years. However, individual airlines would be able to opt out of the commitments if they can negotiate bilateral contractural agreements at lower prices with the airport. Gatwick would need to negotiate some discounts because airport income would be capped at RPI +0.5 per cent.

Willie Walsh, IAG chief executive officer, said: “It is a bad day for our customers who have been let down by the CAA. With this settlement, Heathrow will continue to levy charges well above other major hub airports.

“As the only hub airport in the UK, Heathrow exerts monopoly power over its users. Like other airlines at Heathrow, we cannot move to a better-run UK hub that offers customers real value for money. No such alternative exists today but these excessive charges combined with a complacent management team at Heathrow make an alternative hub look more attractive and more realistic.

“We want a Heathrow that is efficiently run, fairly rewarded and priced comparably with other airports. We will carefully consider our next steps.”

The airline will also be calling on the CAA to reconsider its approach to Gatwick’s charges, arguing that there is compelling evidence for much lower prices and a need for a regulated settlement rather than the ‘commitments’ approach that has been proposed.

The CAA will make its final decision on licence conditions in January 2014. These will come into effect from April 1, 2014