Future of service quality regulation for Heathrow Airport Limited: Consultation on the design principles for a more outcome-based regime

Overview

The current regulatory arrangements that apply to Heathrow Airport Limited (HAL) (referred to as Q6), which include a price cap and minimum standards for service quality, are due to expire on 31 December 2019. Earlier this year we consulted on the strategic themes that should help to shape the H7 review.

In that consultation we set out our initial view that it would be timely to review the Service Quality Rebates and Bonus (SQRB) scheme to consider whether revisions were required to improve value for consumers. We suggested that it may be necessary to consider changes to the SQRB arrangements to ensure that consumers’ interests are at the heart of our approach to the economic regulation of airports. This reflects our primary duty to promote the interests of consumers.

This consultation sets out our latest thinking on how regulation of the quality of airport operation services provided by HAL can be improved by strengthening the link with consumer preferences and priorities.

We would like the regulatory regime to be responsive to the outcomes that consumers’ value. Developing the current output-based approach to service quality regulation such that it appropriately reflects outcome-based regulation (OBR) will contribute to delivering this objective.

The document outlines the existing service quality regime, the reasons for a review of the regime, and what we mean by OBR. It sets out the views on these of HAL and the airline community as we currently understand them, and provides an update to our thinking on some of the main concerns raised by respondents. Finally, the document sets out our initial views on the five principles that might underpin our approach to OBR and discusses how we think these principles could be implemented in practice. These are as follows:

• Principle 1: OBR should be informed by robust consumer research
• Principle 2: The structure of OBR should include outcomes, measures, targets and incentives
• Principle 3: The airlines and Consumer Challenge Board play a key role in the development of OBR
• Principle 4: OBR should build upon the SQRB
• Principle 5: Performance reporting should be comprehensive and targeted at consumers

Click here to read the full consultation document

Why your views matter

We are consulting to seek stakeholder views on the design principles for a more outcome-based regime for service quality regulation.