Airlines respond to Competition Commission report

Heathrow’s second largest airline Bmi welcomed today’s Competition Commission’s ‘emerging thinking’ report into BAA’s “monopolistic ownership” of airports in the South East of England and Scotland.

CEO Nigel Turner said: “We welcome the findings of the commission’s report and look forward to remedial action being taken at the earliest opportunity.

“We identified last year that BAA’s high market share for air passengers appears to prevent, restrict or distort airport competition within the UK and strongly believe that to ensure future real intra-airport competition in the UK, the only option facing the regulators is the dismantling of BAA’s monopolistic grip over the UK’s busiest airports in the South-East (Heathrow, Gatwick and Stansted) and in Scotland (Edinburgh and Glasgow).

“Only with separate airport ownership can the UK guarantee a healthy and competitive aviation industry to serve the wider consumer interest.”

Flybe says BAA’s Spanish owner Ferrovial should “read the writing on the wall” and dispose of at least three airports – Gatwick, Glasgow and Southampton.

The regional airline’s commercial officer Mike Rutter said: “We have been saying for years that the BAA monopoly of airports in south-east England and the Scottish lowlands is bad for the consumer and at last, the Competition Commission have come to the same conclusion.

“Rather than wait for the inevitable forced sell-off, we are today calling for Ferrovial to read the writing on the wall and start to divest itself of at least three airports in order to improve customer focus, allow for investment and bring real competition to aviation in the UK.

“Over the last year, Flybe have flown more than 75,000 flights from BAA/Ferrovial owned airports, so we are in a very good position to be able to comment on their lack of performance.

“It’s high time the sell-off began and in a spirit of cooperation, can we suggest they begin by disposing of Southampton, London Gatwick and Glasgow.”

EasyJet chief executive Andy Harrison said: “We welcome the Competition Commission’s initial report as a major step in the right direction. It raises the right questions and the UK’s air passengers deserve answers which put their interests first.

“Breaking up BAA alone is not enough or even the first step. We need a fundamental overhaul of UK airport regulation which will introduce more competition and tougher regulation.

“Transferring ownership of our major airports from one highly indebted monopolist to another will benefit no one apart from the City deal-makers”

“It has been crystal clear for a long time that the combination of poor airport regulation and BAA’s ownership of adjacent airport monopolies acts against the interests of airport customers and passengers.

“But changes cannot come soon enough. In particular, the UK needs to introduce as much competition into the system as possible by separating the ownership of airport terminals from runways; allowing differential pricing within airports so that efficient airlines do not cross-subsidise the high-cost airlines; breaking BAA’s monopoly on airport investment; and developing a much more effective, customer-orientated regulatory framework to encourage higher levels of operational and capital efficiency from the airport operator.

“Only once these issues have been successfully resolved should we consider breaking-up BAA.

“The combination of awful service, massive price increases and antiquated infrastructure makes it obvious to millions of passengers that the UK’s major airports are a shameful mess.
 
“This is due to a combination of poor airport regulation, an airport operator that is unresponsive to the needs of its major customers, poor long-term planning of infrastructure requirements, and BAA’s monopoly control of London and Scottish airports.”

Ryanair wants the three BAA London airports to be spun out into separate ownership and encouraged to compete against each other.

A similar solution would improve competition, services and passenger charges at Glasgow and Edinburgh airports also, according to the leading no-frills carrier.

A spokesman said: “Ryanair welcomes the Competition Commission’s report into its emerging thinking.

“We fully support the Competition Commission’s view that:

“The BAA’s monopoly ownership of Edinburgh and Glasgow airports has adversely affected competition.

“The BAA’s monopoly ownership of Heathrow, Gatwick and Stansted airports has adversely affected competition.

“The way the BAA monopoly has conducted its business has adversely affected competition.

“The inadequate regulatory regime operated by the CAA has adversely affected competition.

“The recent chaos at Heathrow’s Terminal 5, the continuing long passport and security queues at Stansted, and the 47% price increases at Gatwick airport clearly proves that the BAA monopoly over the London airports is bad for consumers, bad for passengers and bad for UK tourism.

“The CAA’s recent decision to reward the BAA’s incompetence with double digit price increases proves again that the CAA is incapable of regulating the BAA monopoly in the interests of users.

“Monopolies don’t work. Competition does. Ryanair had long called for the break up of the BAA monopoly, because we believe that competition between the three London airports (Heathrow, Gatwick and Stansted) would lead to faster delivery of additional capacity at each of these airports, would lead to real competition between the airports and this competition will result in better facilities, improved passenger service (and let’s face it passenger service at the London airports couldn’t be any worse) and lower costs for UK consumers and visitors.

“The BAA airport monopoly has failed. The CAA regulatory regime has failed. The Competition Commission has correctly identified this failure and we again call on the UK Government to break up this failed airport monopoly and allow competition to put the interests of British consumers/users first. Competition works, monopolies don’t.”

by:Phil Davies