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Gatwick Funding Limited
3 October 2013
Issuer: Gatwick Funding Limited
Date: 3 October 2013
Gatwick Funding Limited (the "Issuer")
a company incorporated in Jersey (registered number 107376)
London Gatwick responds to the CAA's final proposal for the regulation of Gatwick Airport after April 2014
The issuer today publishes its response to the CAA's final proposal for the regulation of Gatwick Airport after April 2014
Gatwick Airport Ltd responds to the CAA's final proposal for the regulation of Gatwick Airport after April 2014
(Gatwick Airport Limited ("the Company") is the owner and operator of Gatwick Airport ("Gatwick"))
· London Gatwick cautiously welcomes the CAA's endorsement of Gatwick's proposed Commitments framework as a way to deliver better service levels, facilities and prices for passengers and airlines
· London Gatwick looks forward to working with its airline partners and to competing strongly for business
· By working more efficiently, a price of RPI + 0.5% over seven years would enable Gatwick to continue to invest and improve the airport experience
London Gatwick today cautiously welcomes the Civil Aviation Authority's (CAA) endorsement of the airport's proposed Commitments framework. It would mark a step in the right direction to creating a more competitive operating environment for the airport and its airline partners.
This new framework demonstrates our willingness to offer a good deal for airlines. It will allow further competition amongst airports by spurring innovation and will deliver a significantly improved outcome for passengers in terms of service and price.
Gatwick confirms that if the CAA eventually finds that it does not have Substantial Market Power, Gatwick will still deliver on its Commitments which will be included in the Airport's Conditions of Use as legally enforceable contractual obligations.
Stewart Wingate, CEO of London Gatwick, said: "The CAA's proposal to take forward our Commitments framework would deliver an improved future outcome for passengers in terms of service quality, facilities and price."
"We will now re-double our efforts to work with our airlines partners to make this work in the best interests of all parties, and in particular for air passengers."
The CAA's recommended price level of RPI + 0.5 % over seven years equates to an increase in per passenger price from £8.80 by April 2014 to £9.11 in 2020/21, ensuring Gatwick's prices remain highly competitive. Furthermore, the Commitments framework allows for the negotiation of individual airline contracts at lower prices.
Gatwick will now review the CAA's final decision in more detail and respond fully in due course.
Notes to editors
About London Gatwick's Commitments framework
A Commitments framework would deliver:
· Greater flexibility to anticipate and react to the changing demands of a rapidly evolving aviation sector, as both airlines and airports seek to differentiate their offerings through service innovations and price, whilst improving efficiency and reducing costs;
· Improved ability to serve the increasingly varied requirements of different airlines through tailored agreements that address more precisely their specific needs;
· More certainty for the airlines over an extended timeframe of seven rather than five years, with Gatwick accepting more risk whilst having greater incentives to grow traffic, develop non-aeronautical revenues and drive efficiency improvements;
· Closer alignment of interests on capital expenditure with stronger incentives to manage it more efficiently, while providing more flexibility to adjust to changing requirements compared with the current system which predetermines capital expenditure over too long a period in too much detail; and
· Reduced regulatory costs and less bureaucracy and, above all, better alignment of incentives for Gatwick and its airline customers to work together on a partnership basis to deliver better service and improved choice for passengers
The price per passenger at Gatwick today stands at £8.28.
The indicative core airport charge increase is from £8.80 per passenger in 2013/14 to £12.25 in 2018/19 under Gatwick's RAB-based price presented in January 2013
The indicative core airport charge increase is from £8.80 per passenger in 2013/14 to £9.11 in 2020/21 under Gatwick's Commitments framework
Note: Numbers presented in 2013/14 real prices
For further information please contact
Sarah Baranowski - Head of External Affairs
Jeff Naested - Investor Relations Manager
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