BAA London and Scotland airport ownership criticised
22.04.08
BAA's ownership of seven UK airports ‘may not be serving well the interests of either airlines or passengers’, the Competition Commission said today. The Commission is investigating whether problems faced by airline travellers through Britain are caused or exacerbated by BAA's monopoly. Its ‘emerging thinking’ report issued today said that BAA ‘dominates the airports markets in the south-east of England and in lowland Scotland’. Its next report in August may call on BAA to sell one or more airports.
The Commission said that the the lack of competition had ‘consequences for the levels, quality, scope, location and timing of investment, and levels and quality of service’. However, it stressed that it had not yet reached any conclusions but added that it would set out its remedies to any competition problems in August, ‘whether requiring the sale of one or more of BAA's airports or otherwise’.
Christopher Clarke, chairman of the BAA airports inquiry, said: ‘We are particularly concerned by its (BAA's) apparent lack of responsiveness to the differing needs of its airline customers, and hence passengers.' He said that he was also worried that having so many airports owned by BAA meant that big development projects were being carried out one at a time.
The Commission said that the point of giving BAA ownership of Heathrow, Gatwick and Stansted after privatisation in 1987 was to make sure there would be adequate airport capacity in the south-east of England, but that there was still a shortage of capacity. The regulator suggested that having airports separately owned could help to encourage growth in capacity.
Mr Clarke said: ‘There is no competition between BAA's three London airports, and only very limited competition from non-BAA airports (London City and Luton). Similarly, there is no competition between their two airports in lowland Scotland.'
He said that there was potential for competition between Heathrow and Gatwick airports and Southampton (which sounds unlikely). In Scotland, he said there was potential for competition between Edinburgh and Glasgow airports, although the ownership of Aberdeen airport was less of an issue.
BAA welcomed the Competition Commission's report, but its chief executive Colin Matthews, who took over on 1 April, disputed the suggestion that the sale of some of BAA's airports would improve capacity. He said: ‘The case that they need to make is that some different ownership structure is going to deliver that new capacity and new investment more effectively. I'm not convinced that's the case.'
He added that BAA recognises the concerns of airlines, and was doing everything to address them. A number of UK airlines did not agree, and there was immediate speculation that Gatwick Airport would be sold. The next report is expected in August, with a final report likely by the end of the year.
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