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UK rejects Heathrow’s request for a pandemic buffer

LONDON, Apr 27 (Reuters) – Britain’s aviation regulator rejected Heathrow’s request for an increase in its regulatory asset base of 2.6 billion pounds ($ 3.6 billion), offering instead the country’s largest airport an adjustment. 300 million pounds to cover losses caused by the pandemic.

Heathrow’s passenger numbers have plummeted over the past year and have remained more than 80% below previous levels in recent months, a circumstance last seen in the 1970s, raising its losses to about 3 billion pounds.

For this reason, the airport requested from the British Civil Aviation Authority, the CAA, an increase in its regulatory asset base (RAB), part of a financing model established by the regulator that maintains an adequate level risk and reward for investors, while setting the rates that passengers pay.

But the CAA said Tuesday that a RAB adjustment of this magnitude would not benefit consumers.

The CAA agreed to an interim adjustment of £ 300 million and said the issues raised by Heathrow would be considered as part of the next regulatory deal that takes effect from January 2022.

“The decision we announced today will incentivize and enable Heathrow to maintain investment, service quality and be proactive in supporting any potential increase in consumer demand later this year,” the CAA said in a statement.

Heathrow criticized the CAA offer, claiming it would undermine investor confidence in UK regulated companies.

“At the very least, it had to immediately reinstate regulatory depreciation in line with UK regulatory principles – the interim adjustment falls short,” a Heathrow spokesman said in an emailed statement.

Heathrow is owned by Spain’s Ferrovial, Qatar Investment Authority, China Investment Corp and other financial investors.

($ 1 = 0.7204 pounds)

(Reporting by Sarah Young; Edited by Kate Holton; Translated by Darío Fernández)

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