Gatwick wants prices based on customer contracts

LONDON (Reuters) - London's Gatwick airport on Thursday published its business plan for the next 10 years, saying it favoured setting prices charged to airlines based on bilateral contracts rather than pure regulation.

Gatwick, which is investing 1 billion pounds over the next five years as it looks to grow to 37 million passengers by 2020, is required to publish the business plan so that aviation regulator the Civil Aviation Authority (CAA) can set price caps for the five years from April 2014.

The airport, owned by Global Infrastructure Partners, said its "contracts and commitments" proposal would see prices rise by the retail price index (RPI) plus 1.3 percent over seven years.

"This option is favoured by Gatwick as it creates long-term certainty over the average price path combined with a legally-binding commitment to maintain and improve service standards," Gatwick, London's second largest airport said.

A less favoured "regulatory basis" proposal would see prices increase by RPI plus 3.3 percent over five years.

Both proposals are stated after a one-off 10.7 percent increase in April 2014.

The CAA is expected to publish its initial proposals by end-April 2013 with a final decision on airport charges in January 2014.

Earlier this week London's Heathrow airport said it wants Britain's Civil Aviation Authority (CAA) to allow it to increase charges for airlines to use the airport between 2014 and 2019.

If approved, the charges would increase from the equivalent of 19.33 pounds per passenger for 2012/13 to an upper limit of 27.30 pounds in 2018/19.

(Reporting by James Davey; editing by Rhys Jones)