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Date: March 2019 | Client: CAA | Sector: Transport | Aviation | Expertise: Public policy

Efficiency incentives to apply to the economic regulation of Heathrow

The CEPA report focuses on developing detailed descriptions of potential approaches for the implementation of capital efficiency incentives. Under the potential approaches, Heathrow would bear a predetermined share of any capital expenditure under- or over-spend, with the application of ‘ex-ante’ incentives. This differs to the current approach applied at Heathrow, whereby a retrospective (‘ex post’) review is used to assess inefficiency.

The CEPA report discusses two main options, with variants discussed within each option. The CAA is inviting views from stakeholders on the approaches set out in the report and which of the two models provides better incentives on Heathrow to control the overall costs of its capital programme. This is contained in its policy update and consultation.

To find out more, please contact our experts listed below.

Ivan Viehoff
Chief Economist United Kingdom