Regulator hits Heathrow with lower price cap

LONDON Fri Jan 10, 2014 2:18am EST

LONDON Jan 10 (Reuters) - Heathrow Airport will have to cap the prices it can charge airlines from April 2014, at a lower than expected 1.5 percent below inflation, under a final ruling from the industry's regulator.

London's Heathrow airport had submitted a plan to the UK's Civil Aviation Authority (CAA) seeking to raise tariffs for airlines by 4.6 percent above inflation, as measured by the retail prices index (RPI), for the five years from April 2014.

Instead the regulator in October proposed not allowing prices to rise by more than inflation. On Friday it said it had decided to lower this even further, to 1.5 percent below RPI.

Heathrow, Britain's busiest airport whose owners include Spain's Ferrovial and the sovereign wealth funds of Qatar, China and Singapore, described the price cap as draconian.