U.K. To Cease Regulating Non-U.S. Long-Haul Fares

The U.K. Civil Aviation Authority today said that next month it would stop regulating long-haul airfares from the United Kingdom—apart from those to the United States—ending more than 30 years of fare regulation amid what it said was greater competition in the airline market. Any move to stop regulation of flights to the United States "will be deferred until other pricing restrictions in the U.K.-U.S.A. market are removed," CAA said in a statement. The U.K. authority said the move to stop regulating fares for long-haul flights on all other routes, beginning in December, will liberalize airfare markets, avail travelers of cheaper fares for "travel via an intermediate stop," increase competition among carriers and broaden the range of fares and products airlines offer. "This is a historic step. The CAA has regulated fares for more than 30 years," said Harry Bush, CAA group director of economic regulation.

"Airline competition has now reached the point where it is simply no longer appropriate for a regulator to dictate fare levels." CAA noted that in 1993, fares within the European Union similarly were deregulated upon the creation of "the single E.U. aviation market," but long-haul fares remained under CAA domain—albeit a diminishing one. CAA said such markets to begin deregulation next month include routes to Israel, Russia, Egypt, Ghana, Mauritius, Nigeria, South Africa, Bangladesh, India, Pakistan, Japan, Thailand, Mexico and Brazil. CAA said it regulated about 40 long-haul routes this year. "Regulation on such routes was confined to the fully flexible economy fares, i.e. those applying to last-minute, changeable, refundable economy tickets, where airlines generally have the least incentive to compete on price. Available data suggests that in recent years fewer passengers have been buying such fares in any case, and they now form only a tiny proportion of the hundreds of thousands of fares available in the market."

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