April 1, 2014 / 6:17 AM / 5 years ago

Heathrow to accept new regulatory price cap

A passenger aircraft is seen from the village of Longford as it descends to land at Heathrow Airport in west London December 17, 2013. REUTERS/Toby Melville

LONDON (Reuters) - London’s Heathrow said on Tuesday it would accept a decision by the regulator to impose a cap on the prices Britain’s biggest airport can charge airlines, adding it did not expect other parties to appeal the ruling either.

Heathrow had warned in January that it could struggle to grow its business after the Civil Aviation Authority (CAA) ruled prices must be set at 1.5 percent below inflation from April 2014 after finding that the airport - Europe’s busiest - had too much market power.

“We are focussed on delivering our business plan for the period from 2014-18 and further improving Heathrow for passengers,” the airport said in a brief statement.

Heathrow, which has expanded in recent years with Terminal 5 and the redevelopment of Terminal 2, had said it might appeal the cap, which was much lower than expected for the next five years.

The airport said it would result in a rate of return on capital investment of an “unsustainable” level of 5.35 percent compared with the 6.7 percent it was seeking.

Heathrow had said the lower prices would result in a cut to operational expenditure of more than 600 million pounds and the need to increase commercial revenue targets by more than 100 million pounds by increasing retail and car park charges.

Airlines, however, had said the move did not go far enough as the hub still had some of the most expensive charges in the world.

Reporting by Lavinia De Luca, Editing by Paul Sandle

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