News

BAA must sell three UK airports

19 Mar 2009 by Mark Caswell

The Competition Commission (CC) has published its final report on BAA’s ownership of seven UK airports, ordering the operator to sell its facilities at Gatwick, Stansted, and one of either Glasgow or Edinburgh.

This follows its provisional findings last year of competition problems at all seven of BAA’s UK airports, which it found has led to adverse consequences for passengers and airlines (see online news December 18).

The latest report orders BAA to first sell Gatwick airport (a process which is already underway), followed by Stansted. BAA then has the choice between selling its facilities at Edinburgh or Glasgow airport as it sees fit. These sales must be completed within two years.

Christopher Clarke, chairman of the BAA Airports Inquiry, said that this course of action is ‘the only way to address comprehensively the detriment to passengers and airlines from the complete absence of competition between BAA’s south-east airports and between Edinburgh and Glasgow.’ Clarke goes on to say:

“We are confident that the sale of these airports will bring substantial benefits to passengers and airlines. We expect that the new airport owners, with the operating capabilities and financial resources to develop them as effective competitors, will have a much greater incentive than BAA to be more responsive to their customers. We also expect further benefits from BAA’s own response to the action taken by these new competitors.

“Such action can take a number of forms, including lower prices, improved levels of service and more efficient investment in response to customers’ needs. As a result, airlines and their passengers, as well as freight companies, will benefit from airport operators being more customer focused.”

David O’Brien, chairman of the Stansted Airline Consultative Committee, which represents airlines at Stansted, welcomed the decision:

“Passenger numbers at Stansted are in freefall, driven downwards by high airport charges and BAA monopoly indifference. The airlines can reverse this trend if new owners deliver what airlines and their passengers need – efficient facilities and lower costs.

Under the discredited CAA regulatory regime of Dr Harry Bush, BAA produced unwanted and overpriced facilities with the inevitable consequences of collapsing traffic and loss of business. Prospective new owners should take note.”

BAA is also required to improve consultation with airlines at Aberdeen airport and publish certain financial information. The CC is making recommendations to the Civil Aviation Authority (CAA) regarding Heathrow, and to the Government on shortcomings in current policy. The CC wants government legislation amended to allow for terminals to be developed and operated separately from runway facilities. This will allow the new owner of Gatwick Airport to consider a second runway after 2019.

Even after these changes, the report concludes that BAA will continue to wield substantial power at Heathrow. The CC has therefore asked the CAA to introduce annual independent audits at Heathrow and strengthen the consultation process between the BAA and airlines.

BAA has published a statement on its website following today’s decision:

“BAA will consider the Competition Commission report carefully before deciding how to respond.

“We accept the need to change and, having reorganised to improve customer service and having initiated the sale of Gatwick, BAA is already changing.

“However, we believe the Commission’s analysis is flawed and its remedies may be impractical in current economic conditions.”

For more information visit competition-commission.org.uk, baa.com.

Report by Holly Willis

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