BA U-turn on airports sell-offs
29.06.08
Willie Walsh, the chief executive of British Airways, has abandoned his call for BAA's grip on Britain's airports to be broken, demanding tougher regulation instead, the Independent reports today.
The airline's lobbying helped lead to the current Competition Commission inquiry in to BAA's UK airport ownership. An emerging thinking report said in April that it was minded to split ownership. However, the airline is reported to have now written to the commission, which is due to present its provisional findings and proposals in August, indicating that it no longer supports a break up, but would like to see better controls put in place.
In its submission to the Commission, BA says: ‘We are concerned that ownership separation may prove counterproductive in so far as it diverts BAA management attention away from expansion of runway capacity or creates uncertainty around the status of government policy, thereby jeopardising construction of a new runway at Heathrow. Reform of the regulatory regime may therefore be preferable in remedying BAA's lack of investment.’
The newspaper reports that BA's recent letter also raises potential problems with a sale, including the suitability of any purchaser. It also argues against splitting ownership of Heathrow's terminals, citing the ‘complex logistical chess game’ affecting 30 airlines when BA moved to Terminal 5. It says: ‘Separate terminal ownership would render this complex arrangement still more difficult and use of capacity would likely become less efficient.'
BAA, owned by Ferrovial, has accused the inquiry of factual mistakes and incorrect analysis. In a letter it said: ‘The commission has presented a one-sided view of the operation and development of BAA's airports, relying heavily on the criticisms it received from airlines. In some cases the 'emerging thinking' appears to be based on no evidence at all. Put simply, separation of ownership of airports would not lead to more competition.’
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