Gatwick Airport Seeks Fee Increase to Finance Rebuilding

Gatwick Airport wants to increase passenger fees by 11 percent in the seven years to 2021 as London’s second-busiest airport narrowed full-year losses and added international carriers like Air China Ltd.

The full-year loss for the year ended March 31 narrowed to 29.1 million pounds ($44.9 million), from 45.7 million pounds a year earlier, the Crawley, England-based company said in a statement today. Sales rose 4.2 percent to 538.9 million pounds.

The airport has asked the U.K.’s Civil Aviation Authority to approve a per-passenger price increase to 9.76 pounds in fiscal year 2021, compared with 8.80 pounds for the year ended March 2014. The U.K. regulator sets the maximum London’s three largest airports can charge airlines and must approve the spending plans of Heathrow, Gatwick and Stansted. While fees drive up passenger ticket prices, they also underpin investment.

“London as a system of airports has changed significantly,” Chief Financial Officer Nick Dunn said in an interview today. “It’s competition that should come to the fore in making sure passengers and airline’s interests are safeguarded.”

Gatwick invested 226.7 million pounds during the year on projects including runway and taxiways resurfacing as well as upgrading dining and shopping facilities in the North Terminal. Total investment over the past five years was 938.5 million pounds, Gatwick said.

Air China

The airport boosted passenger traffic to 34.2 million people in fiscal year 2013 and wants to increase the number of travelers to 37 million by 2019, Dunn said. Air China began flights connecting Gatwick with Beijing earlier this year and Turk Hava Yollari AO, known as Turkish Airlines, has boosted frequencies to Istanbul, Dunn said.

The CAA proposed a price cap of the U.K.’s retail price index plus 1 percent for the five-year period starting March 2014 for Gatwick earlier this year. Today’s price commitment by Gatwick equates to RPI plus 1.5 percent over seven years.

“We hope that the CAA will feel sufficiently confident to endorse our deal as the preferred way forward for Gatwick in its October final proposals,” Gatwick Chief Executive Officer Stewart Wingate said in the statement.