The CAA must set price controls, service performance targets and milestones for capital investment in a way that is best calculated to further the interests of airport users and to promote efficient, economic and profitable operation of the airports. They must also ensure the price caps are set at a level that encourages investment in new facilities in advance of expected future demand.
In concrete terms, the CAA reviews three major aspects of our business before setting the price caps:
- Annual revenues generated from airport charges and other sources (under what is known as the “single till” approach), and operational expenditure associated with this revenue;
- The capital expenditure programme both in the previous period and for the following 5 year period - this determines the Regulated Asset Base (RAB) for the airport on which we are permitted to make a return;
- The service performance targets against which Heathrow is measured, and on which rebates or additional payments are made in respect to under- or over-performance.
To enable the CAA to undertake this review, Heathrow is running a Q6 programme to:
- Develop our Plans for the Q6 period;
- Consults with the Airline Community on all aspects of Q6 from Vision and Service Proposition to Capital Investment Plan and Operating Cost Efficiencies;
- Produce Business Plan setting out our approach to Q6, initially for consultation with the Airline community and subsequently for the CAA;
- Respond to the CAA's consultations on their Initial and Final Proposals;
Information on Q6 is shared with the Airline Community, using the Q6 Extranet site. Key public documents are available below.
Q6 Full Business Plan - January 2013 (17.8MB PDF): This document sets out our proposed plan for the Q6 period.
Q6 Revised Business Plan - June 2013 (3MB PDF): This document was produced in response to the CAA's Initial Proposals which proposed an unacceptable cost of capital and unrealistic cost reduction targets.
Q6 Alternative Business Plan - July 2013 (1MB PDF): This document updates our January Full Business Plan, with a revised capital investment plan, conditional upon a Q6 Settlement that incentivises investment.