BAA rejects airports sell-off calls

BAA is resisting pressure to offload any of its airports despite the Office of Fair Trading signalling plans to refer the company to the Competition Commission.

The operator of seven UK airports including Heathrow, Gatwick and Stansted said it accepted that the airport sector “deserves study” but claimed that an OFT market study “is a weak basis for reference”.

The comments came as Bmi, Heathrow’s second largest airline, called for the BAA monopoly to be dismantled.

A BAA statement said: “The market study does not set out a compelling case that BAA’s airports can compete more significantly, and serve the consumer interest better, under separate ownership.

“Because of BAA’s strong believe that separate ownership will not address the core problems facing airports in the South East, BAA does not consider it appropriate to offer such undertakings. There is, accordingly, no intention on the part of BAA to sell any of its airports.”

The company’s chief executive Stephen Nelson said he was concerned at the OFT’s “narrow focus” on BAA’s structure.

He said: “The real problem for passengers is lack of capacity, not the structure of BAA.

“This shortfall is the result of a complex interplay of political, planning and environmental issues, all of which need examination.

“There is a great opportunity over the coming years to deliver dramatic improvements for passengers using our airports, but this requires a regulatory system that encourages investment. I do not believe the current regulatory model in the South east fits this purpose.”

But Bmi CEO Nigel Turner said: “We agree that the current BAA joint ownership of airports in the South East (Heathrow, Gatwick and Stansted) and in Scotland (Edinburgh and Glasgow) does prevent, restrict and distort competition. The current regulatory regime in the guise of the CAA’s price control quinquennial reviews also contributes to that distortion of competition.

“We strongly advocate the break up of the BAA monopoly both in the South East and in Scotland and urge the OFT to refer the supply of airport services by BAA to the Competition Commission for further in-depth investigation. In our opinion, this is the only course of action that will remedy the current anti-competitive situation.

“Airlines have had to embrace competition for years, yet our major airports have been protected from it for far too long. This has led to inefficiency, inconsistency of service and inflation-busting price rises. The BAA monopoly must be dismantled as the current regime is inhibiting real intra-airport competition in the UK.

“The UK aviation industry has always prided itself on being at the forefront of innovation and promoting vigorous competition, but if this initiative is not taken now the future outlook for consumers, the industry and the wider UK economy will be bleak.

“Bmi believes there is a very strong consumer case to warrant remedial relief by the Competition Commission following any investigation it may conduct to create greater competition between UK airports, particularly those London and Scottish airports owned by BAA.”

by Phil Davies