Airport Charges for 2017 Consultation Document

Transcription

1 Heahrow Airpor Airpor Charges for 2017 Consulaion Documen Dae: 05 Augus 2016 Prepared by: Heahrow Airpor Limied 1

2 Conens Execuive Summary... 3 Chaper 1 Inroducion and Consulaion Programme... 4 Chaper 2 Srucural Review of Airpor Charges... 7 Chaper 3 Calculaing he Maximum Allowable Yield... 8 Chaper 4 Bonus Facor Chaper 5 - Developmen Capial Chaper 6 Capial Triggers Chaper 7 - Correcion Facor for Chaper 8 Calculaing he airpor charges ariffs wih he new srucure Chaper 9 Forecas Revenue for Chaper 10 Proposed Airpor Charges Tariffs effecive 1 January Chaper 11 - Financial and Traffic Informaion Appendix A Srucure of Charges - Sep One Appendix B Srucure of Charges - Sep Two Appendix C Airpor Charges Tariffs effecive 1 January

3 Execuive Summary Heahrow s vision "o give passengers he bes airpor service in he world" pus passengers a he hear of all we do. Heahrow coninues o deliver record passenger service, wih he bes ever service qualiy score of 4.16 in he second quarer of % of passengers surveyed raed heir Heahrow experience Excellen or Very Good, wih srong recogniion in areas such as securiy waiing imes and he couresy and helpfulness of Heahrow saff. Heahrow has also been named he Bes Airpor in Wesern Europe for he second consecuive year a he Skyrax World Airpor Awards. The award, voed for globally by passengers, came in addiion o Terminal 5 being voed he world s Bes Airpor Terminal and Heahrow Bes Airpor for Shopping for he fifh and sevenh consecuive years respecively. For he firs ime, Heahrow received he presigious award of Europe s Bes Airpor (wih over 40 million passengers) in he 2016 ASQ Awards and was named ACI Europe s Bes Airpor Award for he hird ime. Heahrow s focus remains on ransforming he service we give o our passengers and airlines, improving puncualiy and resilience all in a safe and secure environmen. Passenger demand remains srong a Heahrow and he exensive improvemens made possible hrough capial expendiure over he pas decade needs o be recovered. Following he unanimous and clear recommendaion of he independen Airpors Commission for Heahrow s Norh Wes runway expansion proposal in July 2015, he UK Governmen agreed wih he Commission in December ha here is a need for more runway capaciy in he souh eas of England by On 11 May 2016, Heahrow announced ha i will mee and, in mos cases, exceed he condiions se in he Airpors Commission's recommendaion for Heahrow expansion, which in paricular included ough environmenal, noise and communiy relaed condiions. This should enable he governmen o make he righ choice for Briain. Heahrow is commied o working wih he Governmen o deliver he hub capaciy ha Briain needs. This documen frames Heahrow s consulaion on he level of airpor charges for Heahrow is proposing o se 2017 prices o recover he maximum allowable yield permied by he regulaory selemen. The forecas maximum allowable yield for 2017 is per passenger, which is a 1.0% reducion compared o he 2016 forecas maximum allowable yield. The proposed charges are in line wih he four year, nine monh price cap (2014 o 2018), which limis he increase in he price cap o RPI plus -1.5%. Publicaion of his consulaion documen iniiaes he consulaion process. Heahrow will be holding a consulaion meeing on 20 Sepember To help inform he consulaion, Heahrow requess wrien responses from he airline communiy by 4 Ocober Heahrow will hen consider all commens received during he consulaion period, wih a view o issuing a decision on 28 Ocober 2016, for implemenaion from 1 January

4 Chaper 1 Inroducion and Consulaion Programme Purpose 1.1 The purpose of his documen is o se ou Heahrow s proposal for he level of airpor charges and invies he airline communiy o provide views on he proposals. 1.2 Heahrow is proposing o se airpor charges for 2017 o recover he forecas maximum allowable yield. 1.3 This consulaion documen ses ou he calculaions for he 2017 forecas maximum allowable yield based on he CAA s Q6 price conrol licence condiion. 1.4 This documen also includes informaion on major capial invesmen projecs subjec o capial riggers, passenger forecass/acuals and financial informaion on revenues and coss. Economic Regulaion 1.5 In December 2012, he Civil Aviaion Ac 2012 (he Ac) came ino force. The Ac allows he CAA o se he maximum yield per passenger ha may be levied by Heahrow hrough he applicaion of he price conrol condiions under a new licence is he fourh year of he sixh regulaory period a Heahrow. The basis of he price conrol regulaion is he applicaion of he RPI-X formula under Single Till regulaion o deermine he maximum airpor charge revenue yield. 1.7 Airpor charges are levied on operaors of aircraf in connecion wih he landing, parking or ake off of aircraf a he airpor (including charges ha are o any exen deermined by reference o he number of passengers on board he aircraf) The CAA also requires Heahrow o (i) mee service qualiy condiions, and (ii) consul on capial invesmen and oher regulaed charges. 1.9 The CAA condiions for service qualiy require Heahrow o make paymens o airlines if i fails o mee he assigned arges. The service qualiy measures include; sea availabiliy; cleanliness; way-finding; fligh informaion; passenger-sensiive equipmen; arrivals reclaim; sands; jeies; pier service; fixed elecrical ground power; pre-condiioned air; cenral securiy queuing; ransfer securiy queuing; saff securiy queuing; conrol pos queuing; sand enry guidance and rack ransi sysem. Furher deails on he service qualiy measures, including arges and penalies, can be found a Deails of Heahrow s capial invesmen plan can be found a 3, a lis of oher regulaed faciliies and services can be found a 1 The Airpor Charges Regulaions hp:// 3 hp:// 4

5 and a lis of propery accommodaion can be found a In addiion, he full schedule of airpor charges is lised in he Condiions of Use, which can be found a Heahrow Expansion 1.11 In July 2015 he Airpors Commission made a unanimous and unambiguous recommendaion for Heahrow expansion. The UK Governmen agreed ha here is a need for more runway capaciy in he souh eas of England, validaing he findings of he Airpors Commission. The Governmen is expeced o make a final decision on Heahrow expansion by he end of If Heahrow is seleced, CAA has proposed ha i will make a modificaion o Heahrow s Licence o allow Caegory B expendiure (planning coss associaed wih delivering he new runway) of up o 10 million per annum o be auomaically added o annual charges during he Q6 period, similar o a provision in Gawick Airpor s Licence 4. If his modificaion is made, recovery of his expendiure would be refleced in fuure airpor charges consulaion proposals. Consulaion Programme 1.13 Heahrow is consuling on he level of charges wih he airline communiy and plans o announce is decision on 28 Ocober The publicaion of his consulaion documen is he sar of our consulaion on he annual seing of 2017 airpor charges The consulaion programme is as follows: Table 1 Dae Milesone 5 Aug 2016 Publicaion of Heahrow consulaion documen 20 Sep 2016 Consulaion meeing 4 Oc 2016 Airline wrien responses submied by close of business 28 Oc 2016 Heahrow announces 2017 prices 1 Jan 2017 Prices applicable from 4 The recovery of coss associaed wih obaining planning permission for new runway capaciy: iniial proposals CAP1435 5

6 1.15 The consulaion meeing will be held on 20 Sepember 2016, which will provide he airline communiy wih he opporuniy o commen on he price proposals. The meeing will be open o all airlines and heir represenaive bodies. Dae: Tuesday 20 Sepember 2016 Time: 15:00 o 17:00 Locaion: The Compass Cenre Meeing room Kew Gardens Nelson Road Hounslow Middlesex TW6 2GW 1.16 Please le us know if you would like o aend he consulaion meeing using he conac deails provided below. How o Respond 1.17 We invie ineresed paries o submi wrien responses o he proposals se ou in his documen by close of business on 4 Ocober Responses should be sen o: airline_relaions@heahrow.com 1.18 Alernaively, commens may be posed o: Airline Business Developmen Heahrow Airpor Limied The Compass Cenre Nelson Road Hounslow Middlesex TW6 2GW UK Or, if you have any quesions on he consulaion documen or consulaion process, please conac Airline Business Developmen on he above address. Please clearly mark any confidenial informaion in responses o his consulaion. 6

7 Chaper 2 Srucural Review of Airpor Charges 2.1 Heahrow commenced he review of is airpor charges srucure in lae One of he key drivers for his review has been our desire o ensure ha he srucure of airpor charges suppors Heahrow's shared vision wih our airline cusomers. We also responded o requess from our airline cusomers for he airpor o underake a horough review of he srucure of charges. 2.2 To help us inform he developmen of our proposals we held a number of informal engagemen sessions wih he airline communiy in lae 2014 and early The proposals and decision was designed o: suppor passenger growh; improve environmenal performance; promoe efficien use of he airpor; and suppor he hub. 2.3 The key feaures of he decision included a 10 passenger discoun o UK roues and a 5 passenger discoun o European roues, compared o he exising European passenger charge. This was suppored wih an increased emphasis on environmenal charges, wih more of he charges recovered hrough environmenal charges, and he inroducion of a quieer noise chaper. 2.4 Heahrow sared he formal consulaion process by issuing is proposals on 2 April 2015, followed by a formal consulaion meeing on 30 April Heahrow invied ineresed paries o submi wrien responses o is proposals and held a second consulaion meeing on 4 June Heahrow received mixed views bu a common heme was a reques o defer he implemenaion of he srucure of charges, providing airlines wih more ime o plan for any necessary changes o respond o he incenives wihin he proposed srucure of charges. 2.6 Heahrow hen issued a noice informing he airline communiy of wo proposed changes from he original proposal, (i) deferred implemenaion of he srucure of charges o 1 January 2017 raher han 1 January 2016, and (ii) an amendmen o he minimum deparure charge. 2.7 Heahrow hen announced is final decision on 5 Augus 2015 ha he srucure of charges is planned o be implemened on 1 January The charges for 2017 reflec he decision from he srucural review of airpor charges. 7

8 Chaper 3 Calculaing he Maximum Allowable Yield Calculaing he Maximum Allowable Yield 3.1 Based on he CAA s Q6 price conrol licence condiion he following price formula has been used for calculaion of he 2017 yield: M D Q RPI 1 X B 2 Y 1 K T Q BR Q Where: M 2017 = maximum revenue yield per passenger using Heahrow airpor in Regulaory Year ( 2017 ) expressed in pounds. RPI -1 = is he percenage change (posiive or negaive) in he Office for Naional Saisics (ONS) CHAW Reail Price Index beween April in year -1 and he immediaely preceding April. For 2017 his would be he change from April 2015 o April X = -1.5% B -2 = bonus facor based on cerain service qualiy performance in Y -1 = specified average revenue yield per passenger for he period -1 (2016). D = cumulaive developmen capex adjusmen. T = reducion in maximum allowable charges when he airpor has no achieved specific rigger daes associaed wih relevan projecs (Triggers). BR = business raes revaluaion facor. K = correcion facor (K Facor) per passenger (wheher posiive or negaive value) for Q = forecas passengers using Heahrow airpor in The relevan year 2017, means he period of welve monhs from 1 January 2017 o 31 December

9 Maximum allowable yield forecas for The combined impac of all he elemens of he formula resuls in a forecas 2017 maximum allowable yield of (passenger only flighs). The full deails of he formula are shown below. Bonus Facor 3.4 The formula includes a bonus facor ha allows he airpor o recover a bonus when performance on cerain service qualiy measures exceed a specified service sandard. The bonus erm in any given year is based on acual service qualiy, based on he wo year period preceding he relevan year i.e No bonus was achieved in Cumulaive developmen capex adjusmen 3.5 The cumulaive developmen capex adjusmen, adjuss he maximum allowable yield o accoun for he cumulaive difference beween he developmen capex allowance in he Q6 selemen and forecas developmen capex spend. Heahrow forecas o ransiion less cumulaive developmen capex up o 31 December 2017 han he CAA s allowance. Furher deail is provided in Chaper 5. Triggers 3.6 Triggers reduce he maximum allowable charges when he airpor has no achieved paricular capial invesmen projec daes. As a 1 June 2016, nine rigger projecs have been agreed wih he airline communiy, and of hese nine rigger projecs, four projecs have a compleion dae ha fall ino 2017, (i) T3 Pier 7 Roof Permanen M&E services o be fully operaional and emporary plan (ii) Bravo Taxiway Open for Code F Operaions, (iii) Replacemen of 12 airbridges on 9 sands across T3 and (iv) Main Tunnel Life Safey Sysems. All four projecs are forecas o be delivered o heir rigger milesone daes. Therefore in seing airpor charges for 2017 here is no forecas rigger paymen. 3.7 Any rigger paymen ha may arise in 2017 due o new riggered projecs or any deviaion in acual compleion daes will be correced hrough he K Facor when seing 2019 airpor charges. Passengers 3.8 Heahrow passenger forecas for 2017 is 75,126k (welve monhs January 2017 o December 2017). This is based on our laes esimae as a May K Facor 3.9 The K Facor in he formula has reduced he 2017 forecas maximum allowable yield o compensae for he unanicipaed over-recovery agains he maximum allowable yield in 2015, ogeher wih an allowance for ineres (wih an addiional 3% poins for an over-recovery) The K Facor calculaion is shown in Chaper 7. 9

10 Applicaion of he Regulaory Pricing Formula 3.11 Based on he regulaory pricing formula, he 2017 forecas maximum allowable is se ou below. M Where : D Q RPI 1 X B 2 Y 1 K T Q BR Q RPI -1 = 1.3% X = -1.5% B -2 = 0% - no bonus was achieved in 2015 Y -1 = D = - 22,371k - his figure is a forecas T = 0 - his figure is a forecas BR = 0 - only applicable in 2018 K = his posiive figure is a forecas Q = 75,126k - his figure is a forecas Hence: M RPI 1 X B 2 Y 1 D Q T Q BR Q K M 2017 ( 22,371) (1 1.3% 1.5% 0%) , , , M 2017 (0.998* ) ( 0.298) M

11 Charges in The forecas maximum allowable yield a Heahrow in 2016 was calculaed a Table 2 Specified yield monhs RPI movemen o April X Bonus erm Trigger paymens Developmen capex Business raes K facor from 2014 over recovery Forecas 2016 maximum allowable yield Proposed pricing for Heahrow is proposing o se prices for 2017 o recover he forecas maximum allowable yield of per passenger (deails of he charges are shown in Chaper 9) The 2017 forecas maximum allowable yield reduces by 1.0% compared o he 2016 forecas maximum allowable yield Full deails of he individual ariffs are shown in chaper 9 and

12 Chaper 4 Bonus Facor 4.1 The price conrol licence condiion for he maximum allowable yield includes a bonus componen for performance of cerain service qualiy measures. A service qualiy bonus can be achieved when performance for cerain measures exceeds he specified arge levels. Full deails of he bonus can be found in he Licence graned o Heahrow Airpor Limied. 4.2 The service qualiy bonus can be recovered from 2014 o 2018 for deparure lounge seaing availabiliy, cleanliness, way-finding and fligh informaion. For he purposes of he 2017 forecas maximum allowable yield he service qualiy bonus can be recovered for he Regulaory Period 2015 from 1 January 2015 o 31 December However, Heahrow did no achieve a service qualiy bonus for 2015 and herefore his is se a zero for he purposes of he 2017 forecas maximum allowable yield. 4.4 Table 3 ses ou he 2015 performance of hese measures for he purposes of he bonus. 12

13 Table 3 Deparure lounge seaing availabiliy (QSM) Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oc-15 Nov-15 Dec-15 Toal Terminal 1 (acual) Terminal 2 (acual) Terminal 3 (acual) Terminal 4 (acual) Terminal 5 (acual) BNS(T1)KJ % % % % % % % % % % % % BNS(T2)KJ % % % % % % % % % % % % BNS(T3)KJ % % % % % % % % % % % % BNS(T4)KJ % % % % % % % % % % % % BNS(T5)KJ % % % % % % % % % % % % Bonus erm = % % % % % % % % % % % % 0.000% Cleanliness (QSM) Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oc-15 Nov-15 Dec-15 Toal Terminal 1 (acual) Terminal 2 (acual) Terminal 3 (acual) Terminal 4 (acual) Terminal 5 (acual) BNS(T1)KJ % % % % % % % % % % % % BNS(T2)KJ % % % % % % % % % % % % BNS(T3)KJ % % % % % % % % % % % % BNS(T4)KJ % % % % % % % % % % % % BNS(T5)KJ % % % % % % % % % % % % Bonus erm = % % % % % % % % % % % % 0.000% Way finding (QSM) Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oc-15 Nov-15 Dec-15 Toal Terminal 1 (acual) Terminal 2 (acual) Terminal 3 (acual) Terminal 4 (acual) Terminal 5 (acual) BNS(T1)KJ % % % % % % % % % % % % BNS(T2)KJ % % % % % % % % % % % % BNS(T3)KJ % % % % % % % % % % % % BNS(T4)KJ % % % % % % % % % % % % BNS(T5)KJ % % % % % % % % % % % % Bonus erm = % % % % % % % % % % % % 0.000% Fligh informaion (QSM) Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oc-15 Nov-15 Dec-15 Toal Terminal 1 (acual) Terminal 2 (acual) Terminal 3 (acual) Terminal 4 (acual) Terminal 5 (acual) BNS(T1)KJ % % % % % % % % % % % % BNS(T2)KJ % % % % % % % % % % % % BNS(T3)KJ % % % % % % % % % % % % BNS(T4)KJ % % % % % % % % % % % % BNS(T5)KJ % % % % % % % % % % % % Bonus erm = % % % % % % % % % % % % 0.000% Bonus erm = % % % % % % % % % % % % % Rounded o 3 decimal places B = 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 13

14 Chaper 5 - Developmen Capial 5.1 Heahrow, he airlines and he CAA have recognised ha agreeing invesmen plans a he ime of he price review for he nex five o six years, does no reflec he need for flexibiliy. Therefore, i was agreed ha a wo ier approach would be adoped, where capial invesmen would be classified as eiher, Developmen or Core, o ensure flexibiliy of he capial invesmen programme hroughou Q Core capial represens firm invesmen commimens where scope and cos esimaes are reasonably cerain. Core capial invesmen is esimaed a a P50 level (where he likelihood of he cos being higher han he esimae is equal o he likelihood being lower). Developmen capial projecs have a lower definiion of scope and cos esimaions han Core projecs (and are esimaed a P80 level). 5.3 Developmen and Core capial invesmen are subjec o he Gaeway process wih airlines. The Gaeway process has a number of Gaeway evens. The firs wo Gaeways are where he scope and cos esimaes are developed, afer which he projec is ransiioned o Core, afer Gaeway 3, when he scope and cos esimaes are well defined. The projec is hen progressed hrough he remaining Gaeways. 5.4 This approach o he wo ier capial invesmen is designed so ha Heahrow does no earn a reurn on any Developmen capial allowance ha has no been used. The mechanism o ake his ino effec is he cumulaive developmen capex adjusmen in he maximum allowable yield, which requires Heahrow o make an esimae (on a cumulaive basis hroughou Q6) of how much Developmen capial allowance will be spen or ransiioned o Core. This adjusmen only applies o Developmen capial invesmen. 5.5 Capial projecs are subjec o he on-going Gaeway process wih he airline communiy and he curren rajecory of projec approvals, as a 1 June 2016, indicaes ha fewer projecs are ransiioning o Core han originally anicipaed in he selemen. Therefore a lower cumulaive capex spend o 2017 han he CAA s Q6 selemen of up o 394m (2017 prices) is now expeced. 5.6 The curren rajecory of projecs ransiioning o Core reflecs Heahrow s curren view of invesing 2.9bn in Q6. The porfolio will coninue o evolve over Q6 o mee he needs of passengers and airlines. Heahrow will inves above 2.9bn in Q6 where srong business cases exis including essenial asse replacemen, resilience projecs, capaciy projecs and projecs which deliver good reurns. We will coninue o work wih all he relevan paries o achieve successful oucomes and coninue o improve passenger experience. 14

15 5.7 Table 4 ses ou he acual and projeced developmen and core capex compared o he selemen in 2017 prices. Table 4 m and in 2017 prices monhs Year o dae Developmen plus ,284.1 core Selemen ,677.9 Difference (134.5) (181.7) (126.2) 48.6 (393.8) 5.8 The lower cumulaive spend ranslaes ino a lower 2017 average RAB of 418m. Applying he cumulaive developmen adjusmen resuls in he 2017 maximum allowable yield reducing by 22.4m, equivalen o 30 pence per passenger. 5.9 Any subsequen change in acual developmen capex ransiioning o core capex will be adjused in he K Facor when seing charges for The formula o calculae he 2017 cumulaive developmen capex adjusmen of 22.4m is se ou below: Year = 9mo Addiional revenue requiremen for 0.5 d 2014 P 1 P 2 d 2014 P 1 P 3 d 2014 P 1 P 4 d 2014 P 1 P 5 d projecs Addiional revenue requiremen for d 2015 P 1 P 2 d 2015 P 1 P 3 d 2015 P 1 P 4 d projecs Addiional revenue requiremen for d 2016 P 1 P 2 d 2016 P 1 P 3 d projecs Addiional revenue requiremen for 2017 projecs Addiional revenue d 2017 P 1 P 2 d 2017 requiremen for d projecs D = Sum Rows x W Sum Rows x W Sum Rows x W Sum Rows x W Sum Rows x W 15

16 Where: W = Weighed Average Cos of Capial of 5.35% d 2014 = Annual developmen capex adjusmen in 2014 d 2015 = Annual developmen capex adjusmen in 2015 d 2016 = Annual developmen capex adjusmen in 2016 d 2017 = Annual developmen capex adjusmen in 2017 P -1 = ONS CHAW Reail Price Index in April 2016 is P -2 = ONS CHAW Reail Price Index in April 2015 is P -3 = ONS CHAW Reail Price Index in April 2014 is P -4 = ONS CHAW Reail Price Index in April 2013 is The annual developmen capex adjusmen for d 2014, d 2015, d 2016 and d 2017 is calculaed as follows: d O V P Where: O = oal capex in Regulaory Period or Regulaory Year associaed wih all developmen capex ha has ransiioned o core projecs including he acual capial spend incurred during developmen sages of projecs (irrespecive of wheher projecs have ransiioned from developmen o core) V = developmen capex allowance in Regulaory Period or Regulaory Year P -1 = Value of he ONS CHAW Reail Price Index in April in Regulaory Period or Regulaory Year -1 16

17 Hence d 2014: d 2014 O 2014 V 2014 P O 2014 = 363,400k V 2014 = 439,100k P -1 = ONS CHAW Reail Price Index in April 2013 is d , , d 2014 = - 128,321k Hence d 2015: d 2015 O 2015 V 2015 P O 2015 = 590,000k V 2015 = 669,000k P -1 = ONS CHAW Reail Price Index in April 2014 is d , , d 2015 = - 177,789k 17

18 Hence d 2016: d 2016 O 2016 V 2016 P O 2016 = 623,000k V 2016 = 645,600k P -1 = ONS CHAW Reail Price Index in April 2015 is d , , d 2016 = - 124,598k Hence d 2017: d 2017 O 2017 V 2017 P O 2017 = 669,000k V 2017 = 528,800k P -1 = ONS CHAW Reail Price Index in April 2016 is d , , d 2017 = 48,586k 18

19 Therefore d 2014, d 2015, d 2016 and d 2017 is applied o he developmen capex adjusmen able in 2017, as follows o deermine he adjusmen: Hence: Year = 2017 Resuls in Addiional revenue requiremen for 2014 projecs Addiional revenue requiremen for 2015 projecs Addiional revenue requiremen for 2016 projecs Addiional revenue requiremen for 2017 projecs Addiional revenue requiremen for 2018 projecs D = , , , , , , ,586 24, ,140 x 5.35% D = - 22,371k 5.11 Therefore for he 2017 forecas maximum allowable yield is adjused o accoun for he - 22,371k cumulaive developmen capex adjusmen. 19

20 Chaper 6 Capial Triggers 6.1 The CAA s maximum allowable yield formula for Q6 includes a rigger elemen which means ha if a rigger projec is no complee by a specified projec rigger dae hen he allowable yield is reduced. 6.2 Q6 riggers are placed around a subse of key projecs. However, unlike Q5, projecs ha riggers will be aached o have no been defined in he CAA s Q6 price conrol licence condiion. In Q6, riggers will be aached o projecs a Gaeway 3 of he projecs process. This means rigger projecs will be developed during he Gaeway Process wih airlines, where riggers for individual projecs will be developed, and hen formally aached o applicable key projecs a Gaeway As a 1 June 2016, nine capial rigger projecs have been agreed wih he airline communiy. Table 5 ses ou he agreed rigger projecs. Table 5 Projec Trigger dae Compleion dae Acual/ Forecas Norhern Runway Reurned o Ca III Sep-14 Sep-14 Acual Operaions Reconfigure Sand 410 o handle Code F Dec-14 Nov-14 Acual Aircraf T3IB cu-ins compleed and baggage sysem Jan-16 Jul-16 Forecas operaional Access via new Souh escalaor from May-16 Mar-16 Acual ransfer arrivals (from level 10 o level 30) Main Tunnel Life Safey Sysems Dec-16 Dec-16 Forecas T3 Pier 7 Roof - Permanen M&E services o Mar-17 Mar-17 Forecas be fully operaional and emporary plan Bravo axiway open for code F operaions May-17 May-17 Forecas Replacemen of 12 airbridges on 9 sands Nov-17 Nov-17 Forecas across T3 To deliver a new Permanen FCC o T3 and demolish he inerim Faciliy on Sand 323 Jul-18 Jul-18 Forecas 6.4 Four projecs have a compleion dae ha fall ino 2017, (i) T3 Pier 7 Roof Permanen M&E services o be fully operaional and emporary plan; (ii) Bravo Taxiway Open for Code F Operaions; (iii) Replacemen of 12 airbridges on 9 sands across T3; and (iv) Main Tunnel Life Safey Sysems. 6.5 All four projecs are forecas o be delivered o heir rigger milesone daes. Therefore in seing airpor charges for 2017 here is no forecas rigger paymen. 6.6 Any riggers ha are aached o projecs ha have rigger daes for 2017, which are finalised afer 1 June 2016, will be accouned hrough he K Facor when seing 2019 airpor charges. 20

21 Chaper 7 - Correcion Facor for 2015 The Correcion facor 7.1 The K Facor ses ou he level of over recovery or under recovery on a per passenger basis. This over recovery is when Heahrow exceeds he maximum allowable yield on a per passenger basis. The under recovery is when Heahrow does no achieve he maximum allowable yield on a per passenger basis. This over/under recovery generally reflecs a change in mix of acual passengers and movemens compared o he forecass used o se he airpor charges for ha relevan year, rigger compleion daes and recovery of acual service qualiy bonus. 7.2 The K Facor formula has a componen o calculae he acual allowable yield, he K Facor formula is shown below: K R 2 Q Q 2 M 2 2 I Formula for 2015 acual maximum allowable yield 7.3 The combined impac of all he elemens of he formula resuls in 2015 acual maximum allowable yield of (passenger only flighs) is he Regulaory Period from January 2015 o December The secion below presens he componens of he formula. 7.4 M 2 relaes o 2015 and is calculaion is shown below: M Where: RPI 1 X B2 Y 1 K D Q M 2015 = maximum revenue yield per passenger using Heahrow airpor in Regulaory Year ( 2015 ) expressed in pounds. T Q BR Q RPI -1 = is he percenage change (posiive or negaive) in he Office for Naional Saisics (ONS) CHAW Reail Price Index beween April in year -1 and he immediaely preceding April. For 2015 his would be he change from April 2013 o April X = -1.5% B -2 = The formula includes a bonus facor ha allows he airpor o recover a bonus when performance on cerain service qualiy measures exceed a specified service sandard. The bonus erm in any given year is based on acual service qualiy, based on he wo year period preceding he relevan year. The 21

22 CAA has se ou ha he bonus for acual Q5 performance will coninue o be recovered hrough he K Facor. Y -1 = specified average revenue yield per passenger for he period -1 (2014). D = cumulaive developmen capex adjusmen. T = reducion in maximum allowable charges when he airpor has no achieved specific rigger daes associaed wih relevan projecs (Triggers). BR = business raes revaluaion facor. K = correcion facor (K Facor) per passenger (wheher posiive or negaive value) for 2013/14. Q = acual passengers using Heahrow airpor in Applicaion of he Regulaory Pricing Formula Where : RPI -1 = 2.5% X = -1.5% B -2 = 0% - recovered hrough he K Facor Y -1 = D = - 11,792k - his figure is an acual BR = 0 - only applicable in 2018 T = 0 - his figure is an acual Q = 74,999k - his figure is an acual K = his figure is an acual Hence: M RPI 1 X B 2 Y 1 D Q T Q BR Q K M 2015 ( 11,792) (1 2.5% 1.5% 0%) , , ,999 ( 0.141) M 2015 (1.010* ) ( 0.157) 0 0 ( 0.141) M

23 7.5 The acual maximum allowable yield for 2015 is The componens of he formula are explained in he following secions. 23

24 Bonus erm (2013/14) 7.7 The regulaory pricing formula includes a bonus componen for performance of cerain service qualiy measures. 7.8 The CAA has decided hrough is Q6 price conrol licence condiion o formalise he recovery of he bonus on acual performance based on wo year lag. The recovery of he acual bonus for 2012/13 and 2013/14 will be recovered hrough he K Facor when seing charges for 2014 and 2015, respecively. The acual bonus for hese wo periods, 2012/13 and 2013/14, shall be calculaed by reference o he condiions as o airpor charges imposed o he Airpor under he Airpors Ac 1986 in force a 31 March The acual bonus for he period 2014 o 2018 shall be calculaed by reference o he Licence Condiions ha came ino force 1 April Therefore he 2013/14 acual performance was capured a he ime of seing he 2015 charges. Cumulaive developmen capex adjusmen 7.11 The cumulaive developmen capex adjusmen, adjuss he acual maximum allowable yield o accoun for he acual difference beween he developmen capex allowance and acual developmen capex spend. Heahrow has used less han he developmen capex allowance on a cumulaive basis o The below ses ou he formula o calculae he cumulaive developmen capex adjusmen. And he 2015 formula is used: Year = 9mo Addiional revenue requiremen for 2014 projecs 0.5 d 2014 P 1 P 2 d 2014 P 1 P 3 d 2014 P 1 P 4 d 2014 P 1 P 5 d 2014 Addiional revenue requiremen for 2015 projecs d 2015 P 1 P 2 d 2015 P 1 P 3 d 2015 P 1 P 4 d 2015 Addiional revenue requiremen for 2016 projecs d 2016 P 1 P 2 d 2016 P 1 P 3 d 2016 Addiional revenue requiremen for 2017 projecs d 2017 P 1 P 2 d 2017 Addiional revenue requiremen for 2018 projecs D = Sum Rows x W d 2018 Sum Rows x W Sum Rows x W Sum Rows x W Sum Rows x W 5 Economic regulaion a Heahrow from April 2014: Noice graning he licence, page

25 Where: W = Weighed Average Cos of Capial which shall have a value of 5.35% d 2014 = Annual developmen capex adjusmen in 2014 d 2015 = Annual developmen capex adjusmen in 2015 P -1 = ONS CHAW Reail Price Index in April in 2014 is P -2 = ONS CHAW Reail Price Index in April in 2013 is D 2014: Annual developmen capex adjusmen is calculaed as follows: d 2014 Where: O 2014 V 2014 P O 2014 = oal capex in 2014 (9 monhs) associaed wih developmen capex ha has ransiioned o core projecs including he acual capial spend incurred during developmen sages of projecs (irrespecive of wheher projecs have ransiioned from developmen o core) V 2014 = developmen capex allowance in 2014 P -1 = Value of he ONS CHAW Reail Price Index in April 2013 Hence: O 2014 = 363,400k V 2014 = 439,100k P -1 = ONS CHAW Reail Price Index in April 2013 is d , , d 2014 = - 128,321k 25

26 D 2015: Annual developmen capex adjusmen is calculaed as follows: d 2015 Where: O 2015 V 2015 P O 2015 = oal capex in 2015 associaed wih developmen capex ha has ransiioned o core projecs including he acual capial spend incurred during developmen sages of projecs (irrespecive of wheher projecs have ransiioned from developmen o core) V 2015 = developmen capex allowance in 2015 P -1 = Value of he ONS CHAW Reail Price Index in April 2014 Hence: O 2015 = 590,000k V 2015 = 669,000k P -1 = ONS CHAW Reail Price Index in April 2014 is d , , d 2015 = - 177,789k 7.13 Therefore d 2014 and d 2015 is applied o he developmen capex adjusmen able, as follows o deermine he adjusmen: 26

27 Therefore: Year = 2015 Resuls in Addiional revenue requiremen for 2014 projecs , ,510 Addiional revenue requiremen for 2015 projecs Addiional revenue requiremen for ,789-88, projecs Addiional revenue requiremen for projecs Addiional revenue requiremen for projecs D = -220,404 x 5.35% D = - 11,792k Triggers 7.14 The K Facor for 2015 adjuss he compleion daes for rigger projecs ha have rigger compleion daes in A he ime of seing he 2015 charges, only one projec had a rigger falling in 2015, Reconfigure Sand 410, which was forecas o be delivered o is rigger dae and has since been deliver o is rigger dae Therefore here is no rigger paymen in Table 6 Trigger Monh Acual Compleion Dae Reconfigure Sand 410 Dec-14 Nov-14 27

28 K facor for 2015 Acual passengers 000s 74,999 Acual airpor charges 000s 1,692,000 Acual yield Acual maximum allowable yield Under/Over Recovery Over Recovery Toal revenue from airpor charges (passenger only flighs) a Heahrow in 2015 Acual ( 000s) R -2 1,692,000 Passengers using Heahrow Airpor in 2015 Acual (000s) Q -2 74,999 Maximum allowable revenue yield a Heahrow in 2015 Acual ( ) M Ineres rae from weekly Treasury Bill Discoun rae* 2015 Acual % I Forecas Passengers using Heahrow in 2017 Forecas (000s) Q 75,126 Correcion amoun K=(R-2-(Q-2xM-2))/Qx((1+I-2/100)^2) Forecas ( ) K *Table 7. Noe ha 3% poins have been added o he Ineres Rae o he posiive K Facor. 28

29 Table 7 Tender Dae Mauriy dae Size ( mn) Cover Avg Yield (%) 08-May Aug-15 1, May Aug-15 1, May Aug-15 1, May Sep-15 1, Jun Sep-15 1, Jun Sep-15 1, Jun Sep-15 1, Jun Sep-15 1, Jul Oc-15 1, Jul Oc-15 1, Jul Oc-15 1, Jul Oc-15 1, Jul Nov-15 1, Aug Nov-15 1, Aug Nov-15 1, Aug Nov Aug Nov Sep Dec-15 1, Sep Dec-15 1, Sep Dec Sep Dec Oc Jan-16 1, Oc Jan-16 2, Oc Jan-16 2, Oc Jan-16 2, Oc Feb-16 2, Nov Feb-16 2, Nov Feb-16 2, Nov Feb-16 2, Nov Feb-16 2, Dec Mar-16 2, Dec Mar-16 2, Dec Mar-16 2, Dec Mar-16 1, Dec Apr Jan Apr-16 2, Jan Apr-16 2, Jan Apr-16 1, Jan May-16 2, Feb May-16 2, Feb May-16 2, Feb May-16 2, Feb May-16 2, Mar Jun-16 1, Mar Jun-16 1, Mar Jun-16 1, Mar Jun-16 1, Apr Jul-16 1, Apr Jul-16 1, Apr Jul-16 1, Apr Jul-16 1, Average

30 Applicaion of he Regulaory Pricing Formula 7.17 The acual maximum allowable yield for 2015 is compared o he acual yield recovered , which resuls in an over recover of (aking ino accoun ineres rae). This over recovery is included in he K Facor for 2015 in seing airpor charges in 2017, hence lowering he maximum allowable yield The 2015 over recovery is primarily driven by he reducion in he acual maximum allowable yield reflecing he cumulaive developmen adjusmen. 30

31 Chaper 8 Calculaing he airpor charges ariffs wih he new srucure 8.1 The applicaion of he srucure of charges effecive 1 January 2017 used o calculae he proposed ariffs requires a number of seps. 8.2 The srucure of charges effecive 1 January 2017 includes he following changes; 1) 5 passenger discoun o European roues, compared o he exising European passenger; 2) 10 passenger discoun o UK roues ( 5 discoun on European roues and 5 UK conneciviy discoun), compared o he exising European passenger; 3) Commimen for 2017 charges ha he Non-European deparing passenger charge will no increase beyond he 2016 level; 4) Remoe sand rebae se a 4.00 per passenger; 5) Environmenal charge proporion of oal airpor charges deviaes o ac as he balancing facor o ensure Heahrow recovers he regulaed price cap wih he inroducion of he proposed passenger charge discouns; 6) The revenue allocaed o he ANS charge rolled ino he environmenal charges, herefore here is no separae ANS charge; 7) Rebalancing of environmenal charges so ha 80% of he oal environmenal charge is recovered hrough noise charges and 20% of he oal environmenal charge is recovered hrough NOx charges; 8) Inroducion of new noise chaper and increased NOx emissions charge; and 9) No change o overall proporion of he parking charge. 8.3 The above changes have been applied hrough hree sages o come o he final proposed ariffs for 1 January The firs sep is o calculae he ariffs based on he exising srucure wihou any of he new changes aking effec. The calculaion of hese ariffs akes accoun of he proposed 2017 forecas maximum allowable yield and he 2017 forecas daa. This ses a baseline o apply he new changes. The firs sep is presened in Appendix A. 8.5 The second sep is o apply he passenger discouns and revised remoe sand rebae. Wih our commimen o 2017 charges he Non-European passenger charge does no exceed he level in The second sep akes accoun number 1 o 4 from he lis in paragraph 8.2. The second sep is presened in Appendix B. 8.6 The hird sep, which is he final sep recovers he shorfall in revenue of 86m from he passenger discouns o recover he 2017 forecas maximum allowable yield. This sep also inroduces a new noise chaper, Chaper 14 and increasing NOx emissions Charge. Finally, here is no change o he parking charge proporion. The hird sep akes accoun number 5 o 9 from he lis in paragraph 8.2. This final sep ranslaes ino he proposed ariffs for 2017 and are shown in Chaper 9. 31

32 Chaper 9 Forecas Revenue for 2017 Traffic Volume Unis Traffic Volume Proposed Charge Forecas Revenue Noise Charge Landing Charge Peak Chaper , ,379,192 Chaper 4 High 37,687 2, ,439,165 Chaper 4 Base 58,470 2, ,885,488 Chaper 14 High 24,791 1, ,184,049 Chaper 14 Base 87,159 1, ,423,741 Chaper 14 Low 26, ,075,544 Toal 235, ,387,179 check -177 Super Nigh Peak Chaper 3 [Landings] 0 20, Chaper 4 High [Landings] 0 5, Chaper 4 Base [Landings] 0 5, Chaper 14 High [Landings] 0 4, Chaper 14 Base [Landings] 0 2, Chaper 14 Low [Landings] 0 1, Toal [Landings] 0 0 check -26 Emissions Charge Toal kg Nox raing [kg] 6,207, ,094,747 Average kg Nox per landing [kg] ,094,747 Toal Landing Revenue (a) 480,481,926 Deparing Passenger Charge Deparing OD Passenger Charge European charge wih dual discoun [Dep Pax] 1,398, ,762,507 (wih EU load facor and UK conneciviy discoun) European charge wih single discoun [Dep Pax] 11,022, ,979,730 (wih EU load facor discoun) Oher [Dep Pax] 14,012, ,108,142 Toal [Dep Pax] 26,434, ,850,379 Deparing Transfer Passenger Charge European charge wih dual discoun [Dep Pax] 996, ,294,896 (wih EU load facor and UK conneciviy discoun) European charge wih single discoun [Dep Pax] 3,373, ,053,382 (wih EU load facor discoun) Oher [Dep Pax] 5,687, ,506,122 Toal [Dep Pax] 10,057, ,854,400 Deparing Transi Passenger Charge European charge wih dual discoun [Dep Pax] (wih EU load facor and UK conneciviy discoun) European charge wih single discoun [Dep Pax] (wih EU load facor discoun) Oher [Dep Pax] 35, ,098,835 Toal [Dep Pax] 35,816 1,098,835 Remoe Sand Rebae Remoe Sand Rebae [Dep Pax + Arr Pax] 3,986, ,944,000 Toal Deparing Passenger Charge Revenue (b) 36,527,222 1,100,859,614 Parking Charge Narrow bodied Chargeable Period [Unis of 15 minues] 656, ,330,569 Wide bodied Chargeable Period [Unis of 15 minues] 922, ,298,337 Toal Parking Charge (c) 62,628,906 Terminal Pax Flighs: Toal Revenue 1,643,970,446 Non-Terminal Pax Flighs (GA, Troops ec) Non-Terminal Pax Flighs Landing Revenue (d) 622,002 Deparing Passenger Revenue (e) 451,422 Parking Revenue (f) 706,717 Toal Non-Terminal Pax Flighs Revenue 1,780,142 Toal Regulaed Revenue (Pax Only Flighs) Toal Regulaed Revenue Landing Revenue (a) + (d) 481,103,928 Deparing Passenger Revenue (b) + (e) 1,101,311,036 Parking Revenue (c) + (f) 63,335,623 Toal Regulaed Revenue 1,645,750,588 Toal Passengers 75,125,625 Toal Regulaed Yield Shorfall in revenue o Toal Regulaed Yield 0 32

33 Chaper 10 Proposed Airpor Charges Tariffs effecive 1 January 2017 Proposed 2017 GBP Charges on Landing Peak Chaper 3 8, Chaper 4 High 2, Chaper 4 Base 2, Chaper 14 High 1, Chaper 14 Base 1, Chaper 14 Low Super Nigh Peak Chaper 3 20, Chaper 4 High 5, Chaper 4 Base 5, Chaper 14 High 4, Chaper 14 Base 2, Chaper 14 Low 1, Emissions charge Charges on Deparing Passengers Origin and Desinaion European charge wih dual discoun (wih EU load facor and UK conneciviy discoun) European charge wih single discoun (wih EU load facor discoun) Oher Transfer and Transi European charge wih dual discoun (wih EU load facor and UK conneciviy discoun) European charge wih single discoun (wih EU load facor discoun) Oher Remoe Sand Rebae Minimum charge 1, Charges on aircraf parking Narrow bodied Wide bodied

34 Chaper 11 - Financial and Traffic Informaion Traffic saisics and charging parameers 11.1 The acual raffic saisics from 2008/09 o 2015 are se ou o provide more deailed daa on hose elemens of he raffic mix a Heahrow airpor which affec he airpor charges yield per passenger. Regulaory accouning informaion 11.2 Heahrow is a privaely owned company and a summary of is regulaory accouns are presened for he 12 monh period o 31 December These accouns compare he airpor s financial performance for he year ended 31 December 2015 o he CAA forecas for revenues and operaing coss underpinning he Q6 price cap The regulaory accouns include revenue and cos comparisons, and calculaions of he Regulaed Asse Base The full regulaory accouns and annual repors are available from hp:// 34

35 Passenger only flighs - acual and forecas Acual Forecas 2008/ / / / / / Apr - Dec Jan - Dec Jan - Dec Jan - Dec Arriving Passengers 33,055,283 33,167,916 33,282,772 35,092,421 35,305,114 36,597,073 28,931,264 37,099,981 38,007,791 38,218,446 Deparing passengers Origin and desinaion Europe 14,688,784 14,661,948 14,743,673 11,716,309 11,661,207 12,079,601 9,626,253 12,265,144 12,624,009 12,625,257 Oher 18,185,232 18,302,809 18,084,452 14,213,133 13,699,869 14,069,905 11,034,173 14,113,855 14,531,642 14,705,946 Transfer passengers Europe Transfer passengers no separaely 3,856,432 4,028,131 4,081,838 3,307,956 4,220,781 4,299,434 4,284,602 Oher idenified 5,172,212 5,579,652 5,585,627 4,439,514 5,675,064 5,496,182 5,427,024 Transi passengers Europe 1,859 2,834 1, ,462 1, , Oher 160, ,384 96,303 47,738 47,004 34,106 25,337 32,467 30,625 39,745 Deparing passengers 33,036,734 33,086,975 32,926,051 35,006,470 35,017,325 35,852,370 28,433,932 36,308,414 36,982,241 37,082,739 Toal erminal passengers 66,092,017 66,254,891 66,208,823 70,098,891 70,322,439 72,449,443 57,365,196 73,408,395 74,990,032 75,301,185 PATMs 467, , , , , , , , , ,717 UK (deparing - origin and desinaion) Transfer passengers no separaely 1,363,803 1,370,661 1,508,293 1,212,869 1,558,413 1,480,713 1,385,318 UK (deparing - ransfers) idenified 949, ,181 1,031, ,890 1,067,349 1,089, ,336 UK (deparing - oal) 2,741,311 2,573,120 2,460,251 2,313,017 2,345,842 2,539,659 2,053,759 2,625,762 2,570,462 2,378,654 35

36 Heahrow Airpor 2015 Regulaory Performance m (nominal) 2015 Acual 2015 Selemen Var Var % Terminal passengers (000's) 74,999 72,000 2, % Revenue Airpor charges 1,699 1, % Reail % Propery % Oher regulaed charges % Rail % Oher % Toal revenue 2,745 2, % Expendiure Saff coss % Mainenance & equipmen coss % Ren and raes % Uiliy coss % Oher coss % Transfer of excepional coss included in CAA forecas Depreciaion % Toal expendiure 1,864 1, % Regulaory operaing profi (before excepional operaing coss) % Excepional operaing coss Regulaory operaing profi % Capial expendiure % Opening RAB 14,860 14, Closing RAB 14,921 15, Weighed average RAB 14,891 15, Reurn on weighed average RAB 5.92% 5.08% 0.84% Noe: Negaive indicaes adverse 36

37 Appendix A Srucure of Charges - Sep One Traffic Volume Unis Landing Charge Traffic Volume Proposed Charge Forecas Revenue Noise Charge Peak Chaper , ,071 Chaper 3 High 0 8, Chaper 3 Base 1,401 2, ,105,616 Chaper 4 High 39,743 1, ,297,485 Chaper 4 Base 77,074 1, ,108,687 Chaper 4 Minus 117, ,042,119 Toal 235, ,098,978 check -176 Super Nigh Peak Chaper 2 [Landings] 0 21, Chaper 3 High [Landings] 0 21, Chaper 3 Base [Landings] 0 7, Chaper 4 High [Landings] 0 4, Chaper 4 Base [Landings] 0 3, Chaper 4 Minus [Landings] 0 2, Toal [Landings] 0 0 Emissions Charge Toal kg Nox raing [kg] 6,207, ,723,445 Average kg Nox per landing [kg] ,723,445 Revenue exc ANS Charges 331,822,423 ANS Charge Per ATM Charge [Landings] 235, ,617,088 Per Meric Tonne 37,554, ,811,627 Toal 0 62,428,715 Average Weigh (Tonnes) Toal Landing Revenue (a) 394,251,138 Deparing Passenger Charge Deparing OD Passenger Charge Europe [Dep Pax] 12,337, ,399,036 Oher [Dep Pax] 14,096, ,543,742 Toal [Dep Pax] 26,434, ,942,778 Deparing Transfer Passenger Charge Europe [Dep Pax] 4,333, ,682,059 Oher [Dep Pax] 5,723, ,610,602 Toal [Dep Pax] 10,057, ,292,661 Deparing Transi Passenger Charge Europe [Dep Pax] Oher [Dep Pax] 35, ,098,835 Toal [Dep Pax] 35,816 1,098,835 Remoe Sand Rebae Remoe Sand Rebae [Dep Pax + Arr Pax] 3,986, ,209,020 Toal Deparing Passenger Charge Revenue (b) 36,527,222 1,187,125,254 Parking Charge Narrow bodied Chargeable Period [Unis of 15 minues] 656, ,330,569 Wide bodied Chargeable Period [Unis of 15 minues] 922, ,298,337 Toal Parking Charge (c) 62,628,906 Terminal Pax Flighs: Toal Revenue 1,644,005,298 Non-Terminal Pax Flighs (GA, Troops ec) Non-Terminal Pax Flighs Landing Revenue (d) 622,002 Deparing Passenger Revenue (e) 451,422 Parking Revenue (f) 706,717 Toal Non-Terminal Pax Flighs Revenue 1,780,142 Toal Regulaed Revenue (Pax Only Flighs) Toal Regulaed Revenue Landing Revenue (a) + (d) 394,873,140 Deparing Passenger Revenue (b) + (e) 1,187,576,676 Parking Revenue (c) + (f) 63,335,623 Toal Regulaed Revenue 1,645,785,440 Toal Passengers 75,125,625 Toal Regulaed Yield

38 Appendix B Srucure of Charges - Sep Two Traffic Volume Unis Traffic Volume Proposed Charge Forecas Revenue Noise Charge Landing Charge Peak Chaper , ,071 Chaper 3 High 0 8, Chaper 3 Base 1,401 2, ,105,616 Chaper 4 High 39,743 1, ,297,485 Chaper 4 Base 77,074 1, ,108,687 Chaper 4 Minus 117, ,042,119 Toal 235, ,098,978 check -176 Super Nigh Peak Chaper 2 [Landings] 0 21, Chaper 3 High [Landings] 0 21, Chaper 3 Base [Landings] 0 7, Chaper 4 High [Landings] 0 4, Chaper 4 Base [Landings] 0 3, Chaper 4 Minus [Landings] 0 2, Toal [Landings] 0 0 Emissions Charge Toal kg Nox raing [kg] 6,207, ,723,445 Average kg Nox per landing [kg] ,723,445 Revenue exc ANS Charges 331,822,423 ANS Charge Per ATM Charge [Landings] 235, ,617,088 Per Meric Tonne 37,554, ,811,627 Toal 0 62,428,715 Average Weigh (Tonnes) Toal Landing Revenue (a) 394,251,138 Deparing Passenger Charge Deparing OD Passenger Charge European charge wih dual discoun [Dep Pax] 1,398, ,762,507 (wih EU load facor and UK conneciviy discoun) European charge wih single discoun [Dep Pax] 11,022, ,979,730 (wih EU load facor discoun) Oher [Dep Pax] 14,012, ,108,142 Toal [Dep Pax] 26,434, ,850,379 Deparing Transfer Passenger Charge. European charge wih dual discoun [Dep Pax] 996, ,294,896 (wih EU load facor and UK conneciviy discoun) European charge wih single discoun [Dep Pax] 3,373, ,053,382 (wih EU load facor discoun) Oher [Dep Pax] 5,687, ,506,122 Toal [Dep Pax] 10,057, ,854,400 Deparing Transi Passenger Charge European charge wih dual discoun [Dep Pax] (wih EU load facor and UK conneciviy discoun) European charge wih single discoun [Dep Pax] (wih EU load facor discoun) Oher [Dep Pax] 35, ,098,835 Toal [Dep Pax] 35,816 1,098,835 Remoe Sand Rebae Remoe Sand Rebae [Dep Pax + Arr Pax] 3,986, ,944,000 Toal Deparing Passenger Charge Revenue (b) 36,527,222 1,100,859,614 Parking Charge Narrow bodied Chargeable Period [Unis of 15 minues] 656, ,330,569 Wide bodied Chargeable Period [Unis of 15 minues] 922, ,298,337 Toal Parking Charge (c) 62,628,906 Terminal Pax Flighs: Toal Revenue 1,557,739,658 Non-Terminal Pax Flighs (GA, Troops ec) Non-Terminal Pax Flighs Landing Revenue (d) 622,002 Deparing Passenger Revenue (e) 451,422 Parking Revenue (f) 706,717 Toal Non-Terminal Pax Flighs Revenue 1,780,142 Toal Regulaed Revenue (Pax Only Flighs) Toal Regulaed Revenue Landing Revenue (a) + (d) 394,873,140 Deparing Passenger Revenue (b) + (e) 1,101,311,036 Parking Revenue (c) + (f) 63,335,623 Toal Regulaed Revenue 1,559,519,800 Toal Passengers 75,125,625 Toal Regulaed Yield Shorfall in revenue o Toal Regulaed Yield - 86,257,257 38

39 Appendix C Airpor Charges Tariffs effecive 1 January 2016 Charges on Landing HEATHROW AIRPORT AIRPORT CHARGES 2016 Final 2016 GBP Peak Chaper 2 8, Chaper 3 high 8, Chaper 3 base 2, Chaper 4 high 1, Chaper 4 base (equivalen) 1, Chaper 4 minus Super Nigh Peak Chaper 2 22, Chaper 3 high 22, Chaper 3 base 7, Chaper 4 high 4, Chaper 4 base (equivalen) 3, Chaper 4 minus 2, Emissions charge (per kg) 8.15 ANS charge per ATM Per Meric onne 1.11 Charge on deparing passengers Europe - Desinaion Oher - Desinaion Europe - Transfer Oher - Transfer Europe - Transi Oher - Transi Remoe Sand Rebae (All paxs) Minimum charge 1, Charges on aircraf parking Narrow bodied Wide bodied

40 heahrowairpor.com 2016 Heahrow Airpor Limied 40