The economic regulator for UK airports has called for reform in the system for setting price controls at airports

The Civil Aviation Authority, the UK’s aviation regulator, has argued that there is a clear case for reforming the system for setting price controls at UK airports.

But it also said that airport investments and service quality improvements will still need to be paid for.

The CAA was responding to the Competition Commission’s ongoing market inquiry into BAA’s airports in the South East of England and Scotland.

Harry Bush, the CAA’s director of economic regulation, commented: ‘There is now widespread agreement – between airlines, BAA and the regulator – that the current regulatory framework needs modernising. But there is likely to be considerable debate about the best way to do this.’

The CAA argued that the regulatory framework risks not keeping pace with future changes in the UK aviation market and should be modified to bring it into line with best practice regulation.

The authority said that the vast majority of UK airports should continue to operate free of detailed economic regulation as competition, rather than regulation, provides the best way of ensuring that consumers receive the service they demand, offered at fair prices.

The CAA has been attacked for failing to regulate effectively the monopoly that BAA, the airports operator owned by Ferrovial of Spain, holds over London’s airports.

The Competition Commission will be considering issues connected with its market inquiry over the remainder of this year.