Wednesday August 20th saw the publication of the Competition Commission’s long-awaited report on BAA, in which the regulator recommended that the group should have to dispose of two out of its London trio of Heathrow, Stansted and Gatwick airports.
Simultaneously, on the basis of equitable market-share, it thought that the airport operating group should not carry owning both Edinburgh and Glasgow airports.
BAA itself referred to the conclusion drawn up in the Competition Commission report as “flawed”, adding that to sell off the hubs as suggested would not be of benefit.
Heathrow, said the BAA, would definitely not be sold.
The ultimate verdict on the future shape of BAA will be delivered in Spring 2009.
According to the Competition Commission, BAA’s present ownership situation – with seven UK airports under its control – is generating “adverse consequences” both for the airlines and the passengers using the sites.
Stark criticism has been launched in BAA’s direction in respect of the levels of service provided at the seven airports, as well as delays there. In the case of London Heathrow, the criticism has been especially severe.
In the view of the commission, a large number of the issues were related to BAA’s “common ownership” of Stansted, Gatwick and Heathrow which – combined – handle almost 90 per cent of inbound/ outbound flights to/ from London.
Gatwick, Stansted Airport Sales
A consultation into the appropriateness of BAA being made to dispose of two of these sites is now set to go ahead, but it does seem probable that Stansted and Gatwick will be sold.
In the event of these Gatwick/ Stansted sales, the regulator has urged for their future owners to be separate organisations, in order to boost competition.
BAA, said the commission, had displayed a "lack of responsiveness" in respect of airlines’ needs, as well as a “lack of initiative” when it came to capacity growth.
"This has resulted in investment that is not tailored to the requirements of airport users and lower levels and quality of service for both airlines and passengers" Christopher Clarke – the figure at the centre of the report - stated.
BAA, Mr Clarke added, “... has argued that there is no scope for competition to develop so long as there are capacity constraints. We take the opposite view.
“Unless the market is opened up to competition, there is a serious risk that the current capacity constraints will persist."
BAA, said the commission, would probably be permitted to hang on to both Aberdeen and Southampton airports.
Colin Matthews, the Chief Executive of BAA, responded to the report by acknowledging the issues of passenger “frustration” and “poor service”.
While declining to provide information on future plans for BAA’s airports on an individual basis, Mr Matthews affirmed that “no intention” existed to sell Heathrow.
He did highlight, however, how – if BAA was forced to divide up its seven-strong airport collective – efforts to construct additional runway facilities could be jeopardised.
"We will continue to point out to the commission the many areas where we believe its analysis is flawed and its remedies would be disproportionate and counter-productive", he stated.
Easyjet, Virgin Atlantic Responses
As far as a couple of the airlines using BAA airports were concerned, the report was commendable, but additional assessment of how airports are regulated was now needed.
Andrew Harrison, the Chief Executive of Easyjet, referred to it as a “good start”, adding:”We are very pleased that the Competition Commission has recognised what is a fundamental problem for UK airports."
In the opinion of Virgin Atlantic, meanwhile, BAA continued to act “like a monopoly”, and, by concentrating on Heathrow, had failed to implement improvements at London Gatwick.
A spokesman for the airline added that individual terminal structures at particular airports should be the concern of individual companies.
Source – Airport International’s London Reporter