By Lee Wild
Date: Tuesday 22 Apr 2008
LONDON (ShareCast) - The Competition Commission has warned that Heathrow owner BAA may be forced to sell some of its seven UK airports as it “may not be serving well the interests of either airlines or passengers”.
“We are particularly concerned by its apparent lack of responsiveness to the differing needs of its airline customers, and hence passengers, and the consequences for the levels, quality, scope, location and timing of investment and levels and quality of service,” said chairman of the BAA Airports inquiry Christopher Clarke.
BAA, owned by Spain’s Ferrovial, “dominates the airports markets in the South-East of England and in lowland Scotland,” said the report.
As well as Heathrow, the firm runs Gatwick, Stansted, Edinburgh, Glasgow, Southampton and Aberdeen airports.
The recent chaotic start to business at Heathrow’s Terminal 5, which saw flights cancelled and luggage lost, embarrassed the company and the terminal’s sole user BA.
“One of the principal reasons for structuring the privatized BAA in 1987 to include all three major London airports was to provide adequate airport capacity in the South-East of England,” read the report.
The current shortage of capacity, even if expansion at Stansted and Heathrow goes ahead as planned, is expected to remain until at least 2015, or longer.
The CC, which said no conclusions have yet been reached, expects to publish provisional findings in August.
It will look to answer whether and to what extent the shortage of capacity is a consequence of the lack of competition between the London airports and also whether alleviation of that shortage can reasonably be expected in the absence of competition.
In response, BAA continued with its claim that the London airports do not compete with each other, and that Heathrow competes with the other major airports in Europe and elsewhere.
“BAA remains of the view that its ownership is in passengers' interests, both in terms of tackling the shorter term service problems, and in following through with major commitments to investment in new facilities and capacity,” said BAA chief executive Colin Matthews
Budget airline Ryanair, a long time critic of BAA, welcomed the Competition Commission’s report and renewed its call on the UK government to break up the “BAA monopoly”.
It believes that the three London airports should be spun out into separate ownership and encouraged to compete against each other.
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