easyJet, the UK’s largest airline, is pleased that the High Court has approved our application for a Judicial Review of the regulatory process that allowed BAA to impose an exorbitant increase in airport charges at Gatwick Airport last spring.

The legal breakthrough by easyJet will be the first time that the Civil Aviation Authority has been subject to Judicial Review for a regulatory price decision.

easyJet believes the way the CAA has allowed BAA to raise prices at LGW by 21% (from £5.61 to £6.79) this year, and by 31% + RPI by 2013 1 (which is likely to be around 51% assuming the current level of RPI) was wrong, on the following grounds:

1. Unlawful departure from the Competition Commission’s (CC) recommendations. The statutory powers under which the CAA sets the price cap at designated airports (including LGW) requires that the CAA must refer its proposals to the CC, and to “have regard to” its recommendations and to state any reasons for not accepting them. It is our contention that the CAA gave insufficient weight to the recommendations of the CC
2. Unlawful treatment of BAA’s late submission of operating expenditure costs. The CAA failed to adopt a fair and lawful approach to handling a £267 million (subsequently reduced to £218 million) “eleventh hour” operating expenditure submission from BAA. This was submitted on 8th November 2007, following more than two years of discussions; after the referral to the CC; and less than two weeks before the CAA was due to publish its firm proposals for airport charges
3. Unlawfully disregarding the Competition Commission’s public interest finding that there was no justification for BAA to receive “bonus” payments for meeting service levels, for which it would already have been paid. The CAA ignored the CC's public interest finding in relation to the Service Quality Rebate (SQR) scheme, in which it saw no justification for bonuses to be paid to BAA for meeting its targets. Yet, the CAA has incorporated a bonus scheme into the price cap