THE new Spanish owner of BAA, Ferrovial, has received an unwanted welcoming gift from British Airways, which has urged regulators to cut the airport group’s revenues.

The call comes in a report submitted by BA to the Civil Aviation Authority, the government agency that puts limits on the prices the airports operator can charge airlines for using BAA’s airports at Heathrow, Gatwick and Stansted.

The CAA is at present deciding what BAA should be able to charge between 2008 and 2013.

The report, prepared by Cambridge Economic Policy Associates (Cepa), a consultancy, said the CAA should cut the rate of return BAA is allowed to make on its assets.

The CAA allows a 7.75% rate of return for BAA on its capital investments. Cepa said that should be cut to just 5.6%.

Cepa said its analysis was in line with that used by other regulators of utility companies, and that the reduced return should still allow BAA to retain an investment-grade credit rating if it is efficiently run.

The consultancy also notes that its argument has been borne out by Ferrovial’s hefty bid for BAA. A Ferrovial-led consortium bought the UK airports company earlier this year for £10.3 billion.

“The fact that Ferrovial was willing to pay a substantial premium for the BAA business is consistent with the view that the true cost of capital is lower than the regulator has allowed historically,” Cepa said.

BAA has already asked the CAA to continue with the status quo, and to let it continue to earn the higher rate of return. But Cepa said: “We see no obligation on the CAA to set the same (rate of return). We believe that the markets are fully aware of this.”

The Ferrovial consortium is also facing an Office of Fair Trading inquiry into BAA’s ownership of the three main London airports.

Some transport bankers believe that the Spanish group may be willing to break up BAA by selling either Gatwick or Stansted. The consortium is reviewing BAA’s plans for construction of a new runway at Stansted.

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