the CAA said - Heathrow Airport

CAP 1027
Chapter 5: Operating Expenditure
• Potential changes to SQR standards - changes to SQR
standards for direct passengers have been discussed throughout
the CE process including reductions in standards that could yield
opex savings. It was subsequently agreed that such changes
would not be made.
• Alignment of transfer and direct passenger SQR standards -
the SQR standard for transfer passengers should be aligned with
the existing Q5 standard for direct passengers. This was estimated
to increase opex by £15 million over Q6. 26 HAL subsequently
altered the harmonisation proposal to be opex and capex neutral
(these proposals are discussed in more detail in chapter 12).
5.3 Notwithstanding the agreements above, there were disagreements
between HAL and the airlines on a number of other issues including.
• Pensions - the potential for reductions to HAL’s pension costs.
• Future opex efficiency targets - The airlines considered the 1.2%
efficiency for underlying opex included in the IBP to be insufficient
and wanted more ambition in HAL’s plans so that the cost base
would remain flat in nominal terms. 27 The airlines also stated that
solutions currently in development should not be considered part of
the 1.2% underlying opex target.
• Terminal related opex - the airlines were concerned about the
level of HAL’s opex projection for Terminal 2 relative to costs in the
other terminals.
• Security - the airlines were keen for HAL to explore the potential
for process efficiency improvements fully. This included: the use of
agency staff to assist with passenger processing in peak times;
apparently low security passenger flow rates in some terminals;
and the potential for improvements to HAL’s security rostering
efficiency.
• Other costs - the airlines questioned HAL’s projected levels of
expenditure on professional fees, insurance, rent, rates and utilities.
26
The FBP includes an alignment using a different passenger standard. This change is not
expected to have any impact on costs.
27
This target has been raised to 1.4% in HAL’s FBP.
April 2013 Page 66