In a striking u-turn, British Airways has abadoned its call for airport operator BAA to be broken up.
In a letter to the Competition Commission, BA said breaking up BAA at the present moment could be "counterproductive" for passengers as the group aims to ease the well-known problems of delays, congestion and poor service at Heathrow.
The Competition Commission is currently investigating whether BAA's ownership of seven UK airports restricts competition in the UK's airport industry.
BA's chief executive Willie Walsh wrote that the airline believed the interests of Britain's airports would be best served if BAA were subjected to tougher regulation from the Civil Aviation Authority.
The letter said: "We are concerned that [any] 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".
BA also said that another option open to the Competition Commission - splitting ownership of Heathrow's terminals among private companies beyond BAA - could pose further problems as efforts are made to improve the much-criticised passenger service experience at the busy hub.
The airline said "separate terminal ownership would render this complex arrangement still more difficult and use of capacity would likely become less efficient".
BA's letter was part of BA's submission to the Competition Commission (CC) inquiry, headed up by Christopher Clarke.
BAA has made its own submission to Clarke, saying: "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. Such an approach is an inadequate basis for seeking to conduct a balanced appraisal of the company's performance".
BAA Competition Commission Inquiry
BA dropping its demand for a sell-off of BAA airports represents a dramatic reversal in the airline's policy.
It was British Airways itself which instigated the Competition Commission's inquiry. Two years ago Walsh personally lobbied the Office of Fair Trading to launch an inquiry into BAA, saying that BAA's The result was that in 2007 the OFT referred BAA to the Competition Commission.
During May, the Commission revealed its "emerging thinking" on BAA. It said the company's ownership of four London airports and three major Scottish airports, as well as leading regional hub Southampton, could be "adversely" affecting the airport market.
BA's repositioning to call for reforming BAA puts the flag carrier at odds with many other airlines, which have frequently called for BAA to be broken up. Ryanair's Michael O'Leary has been a particularly severe critic of the airport group, calling it a "failed, anti-consumer monopoly".
It has been widely rumoured by analysts that when the Commission reveals its provisional verdict in August, it will recommend BAA sell of one or more of its airports. Gatwick is apparently a leading candidate for sale.
Source - Airport International's London Reporter