the CAA said - Heathrow Airport

CAP 1027
Chapter 5: Operating Expenditure
5.85 The IDS study estimated that pension costs will be equivalent to 33%
of pensionable pay in 2013. This is significantly higher than the 25%
cap and comparative benchmarks.
5.86 On the basis that a clear expectation was created by the CAA in Q5,
the CAA considers that it would not be appropriate to use a glide path
for the full range of identified staff cost efficiencies. Pensions have
therefore been capped at benchmark levels from the first year of Q6.
The CAA estimates that this will reduce staff costs by around
£10 million over the course of Q6 taking account of HAL's existing
pension efficiency savings.
5.87 HAL has argued that pension deficit costs should be allowable in the
settlement. The CAA will consider further the appropriate level of this
allowance based on HAL's relatively high pension costs over Q5
relative to the 25% limit set in Q5.
5.88 Based on the profile applied to catch-up efficiency, the overall
efficiency target falls from £288 million to £217 million over Q6.
Based on this projection, opex costs will fall by 1.8% per year from
2013/14 to the end of Q6. In comparison, the FBP projection
assumes a decline of 0.2% per year. The CAA regards this as a
challenging but achievable target for HAL.
CAA initial projections
5.89 The CAA assumes that opex will fall from £1,050 million in 2013/14 to
£957 million in 2018/19. It forecasts total cumulative opex over Q6 at
£5,017 million, 4.2% lower than the FBP (figure 5.10). Based on
these projections, opex per passenger would fall from £15.26 to
£13.41. Figure 5.11 sets out the resulting profiling of opex for Q6.
April 2013 Page 90