Service quality

The Outcomes Based Regulation (OBR) framework was introduced by the CAA in H7 to incentivise Heathrow to meet the service standards that passengers and airlines expect in return for the airport charges. OBR aims to focus Heathrow’s service quality framework on the themes that matter most to consumers and to create incentives for us to offer a great quality of service. OBR aims to align Heathrow’s service quality framework with the themes that are most important to consumers and encourage Heathrow to provide a high-quality service. 

Within this framework, where performance falls below a certain level, Heathrow must repay a proportion of charges levied back to the airline community. The service quality rebate scheme has been part of our Licence condition since Q6. 

In summary, the scheme has the following key features:

• Provides an incentive to the airport to meet set standards of service quality on the items that are most important to our consumers;  
• Our Economic Licence sets out the Measures, Targets, and Incentives (MTI) scheme, outlining the key metrics on which Heathrow’s service quality performance is assessed, their calculation methodology, targets, and level of rebates. 
• Heathrow is assessed on both measures that include a financial rebate (in instances where the performance is largely within by Heathrow’s control) and reputational measures (in instances where performance is largely determined by other stakeholders within the airport ecosystem). 
• The maximum amount of rebates that could be paid over any year is equivalent to 7% of our that year’s aeronautical revenues. 
• Monthly rebate payments are made to the airline community in instances when Heathrow does not meet the targets set out by the CAA. Rebates are allocated to each airline within a terminal on a pro-rata basis, linked to passenger volumes.  
• Rebates are generally calculated and paid on the basis of an individual terminal’s performance. There are two exceptions to this rule:
  • Control Post (CP) security search (i.e. the security search for catering, flight crews and maintenance equipment), queueing performance is calculated on the basis of the least performing CP group. If the target is not met in one month in at least one CP group, the rebate is paid to the entire airline community irrespective of whether some CPs have met the target.
  • The Runway Operational Resilience term is calculated for the airfield performance as a whole and is paid to the airline community on a pro-rata basis.

The rebate scheme covers the following aspects of Heathrow's performance: 

• Queuing at the security search area for direct / transfer passengers, staff search posts, and CP search.
• Passenger perception of the availability of seating in the departures lounge, the quality of flight information systems, how easy it is to find their way around, and the cleanliness of toilets and concourse areas within the terminal buildings, security processes and Wi-Fi ease of use.
• Proportion of flights which are pier-served, as well as the availability of aircraft stands and jetties.
• Availability of infrastructure and availability of passenger sensitive equipment, which includes lifts, escalators, conveyors, and Terminal 5’s track transit system.
• Availability of other equipment in the scheme, including arrivals baggage reclaim belts, fixed electrical ground power, pre-conditioned air, and stand entry guidance.

The scheme also includes a bonus element on passenger satisfaction measures to reward high performance that benefits passengers. The maximum additional revenue achievable via bonuses at Heathrow is 1.44 % of airport charges and is included in Heathrow’s allowed revenues with a two-year lag.