Ryanair Sues Stansted Airport Owner for £175 million Rebate

Ryanair has launched legal action against the owner of Stansted Airport over airline charges. Chief executive Michael O’Leary says that he has told lawyers Nabarro to detail the carrier’s complaint to both the Competition Commission and Civil Aviation Authority (CAA), and they would see the airport operator in High Court if that’s not successful.

The airline boss is claiming a £175 million rebate from the British Airports Association (BAA), who he says has been overcharging carriers at its Stansted Airport by an annual £50 million during the last 5 years. Ryanair has allegedly overpaid £35 million per year.

O’Leary says that 5 years of regulatory accounts for Stansted airport show that the BAA has been playing the regulatory system and accuses the operator of padding their accounts, inflating the regulated asset base (RAB) and squeezing carriers at the airport. The RAB is currently worth £1.35 billion and is at a figure that the CAA allows the operator to make a yearly 6% return. The RAB at the airport would be less than £800 million if the operator hadn’t shifted costs from Heathrow Airport onto it. This explains the 16% increase in costs at Stansted to £180 million from 2007 to 2011, even though there has been a drop in passengers to 18.3 million – a 24% decline. He questions how charges are going up while passenger numbers are falling.

The BAA didn’t pay much heed to the complaint. Chief executive Colin Matthews says that it’s no coincidence that O’Leary is raising such an issue now, as he believes the airline boss wants to depress the value of Stansted airport. This is because the Competition Commission ordered the airport operator last week to sell Stansted and one of Edinburgh or Glasgow airports – which the company plans to judicially review at the Competition Appeal Tribunal.