HL Deb 12 January 1987 vol 483 cc473-4WA
Lord Underhill

asked Her Majesty's Government:

Whether in the light of Lord Brabazon of Tara's Written Answer to a Question by Lord Underhill of 25th November 1986 (H.L. deb., col. 532) they agree that the proposal in the British Airports Authority's restructuring proposals to finance enhanced facilities at BAA airports from the proceeds of a share issue, thereby avoiding financing costs, provides a subsidy for Stansted, assuming that its development is financed in this way.

Lord Brabazon of Tara

No. It is an accepted commercial practice for large capital projects to be financed in the way proposed by BAA plc. However, Section 41 of the Airports Act provides that in assessing whether charges are artificially low and materially harm, or are intended materially to harm, another airport's business, factors to be taken into account by the Civil Aviation Authority include the debt: equity ratio of the airport company, the return on capital employed and the distribution of profits.