EasyJet, Ryanair to Withhold Increased London Airport Fees

April 15 (Bloomberg) -- EasyJet Plc and Ryanair Holdings Plc, Europe's two biggest discount airlines, plan to withhold part of an increase in fees at BAA Ltd.'s London Gatwick and Stansted airports pending the outcome of legal challenges.

EasyJet objects to a 21 percent increase in landing charges that took effect at Gatwick on April 1, the Luton, England-based carrier said today in a statement. Dublin-based Ryanair also plans to withhold the fee increase if BAA continues to charge the maximum allowable fees at Stansted, it said in a separate statement.

The fees BAA may charge at its three London airports are capped by the U.K.'s Civil Aviation Authority with input from the Competition Commission. BAA, the world's biggest airport operator, has been criticized by passengers, airlines and politicians for the levels of service it provides and for high charges at Gatwick, Stansted and London Heathrow.

``We are determined to address what we consider to be a regulatory decision that we consider to be unlawful and damaging for the airlines, our passengers and the industry as a whole,'' EasyJet Chief Executive Officer Andy Harrison wrote in an open letter to BAA CEO Colin Matthews and distributed today. BAA is a unit of Spanish builder Grupo Ferrovial SA.

The CAA said last month it would allow BAA to raise the maximum fees it can charge airlines at Stansted, Gatwick and Heathrow from April 1, 2008, to March 31, 2013. The decision sparked protests from airlines including Ryanair, EasyJet, BMI and Virgin Atlantic Airways Ltd.

`Unjustified'

``These latest unjustified price hikes by the BAA airport monopoly prove that it is abusing its monopoly power over passengers and airlines,'' Ryanair Chief Executive Officer Michael O'Leary said in the statement. ``They also prove that the CAA is an incompetent and incapable regulator which has yet again put the financial needs of the Spanish-owned BAA airport operator above the interests of airport users and consumers.''

EasyJet said the proposal amounts to a 49 percent increase at Gatwick over five years, to 8.36 pounds ($16.41) per passenger from 5.61 pounds. Discount airlines are often disproportionately affected by increases in landing charges since their average fares are generally lower than network airlines.

The company said it will hold back a portion of the 6.79 pounds it's now charged per passenger pending the outcome of a judicial review. The airline has given BAA a deadline of April 16 to agree to a different payment arrangement.

``BAA is aware that EasyJet has indicated an intention to legally challenge the U.K. Civil Aviation Authority price decision for Gatwick Airport,'' the London-based airport operator said today in a statement on its Web site. ``BAA will continue to charge in accordance with the CAA's decision.''

A Civil Aviation Authority spokesman, Jason Wakeford, said in an e-mailed response to questions that the agency has ``not formally received any papers from EasyJet but would vigorously defend any action they might bring. We stand firmly by our price cap decision of last month.''

To contact the reporter on this story: Tracy Alloway in London at talloway@bloomberg.net

To contact the editor responsible for this story: Chris Jasper at cjasper@bloomberg.net.