Common airports ownership ‘root cause’ of Heathrow’s problems

Common ownership of Heathrow and Stansted is the “root cause” of the failure to expand runway capacity at London’s main airport hub, according British Airways.

Welcoming the Competition Commission’s statement on BAA airports (see separate TravelMole story), the Heathrow-based airline said competition between airports will improve customer service levels and lead to more investment in new infrastructure.

Chief executive Willie Walsh said: “Common ownership is the root cause of the failure to expand Heathrow’s runway capacity.

“There is huge unsatisfied demand for extra runway capacity at Heathrow from customers and airlines and less demand at Stansted.

“At both airports, as long as environmental conditions are respected, new runway developments should be market-led not left to a common owner’s interests to dictate timescales.

“A more competitive London airports market would encourage the building of new facilities which would benefit both customers and the UK.

“The damaging consequences of common ownership are all too apparent today in the fragility of Heathrow’s day-to-day operation”.

The airline urged the Competition Commission to ensure that strong economic regulation at Heathrow and Gatwick continues, even if BAA was broken up, to protect users against local monopoly power.

BA also called for any new structure to be put in place swiftly to avoid a prolonged transition period and more delays in tackling service quality and “investment deficit” issues.

The airline believes that the introduction of a licence for London airports should be considered, as is common practice for regulated utility companies.

This would enable the Civil Aviation Authority, as regulator, to set performance conditions to ensure effective price and service quality levels for both passengers and airlines.

It would also establish a financial structure to guarantee market-led investment in facilities and allow the CAA to apply tough sanctions in the event of serious performance failures.

The ultimate sanction would be the withdrawal of the licence.

Walsh said: “The current airport regulation system is all carrot and no stick.

“There is no regulatory comeback over poor customer standards or falling investment levels, so little incentive for the airport operator to regard these issues as priorities.”

EasyJet chief executive Andy Harrison said: “Congestion and planning constraints mean that the major airports in the UK are effective local monopolies.

“We desperately need a fundamental review of the current ineffective price regulatory regime to deliver better value and acceptable service standards for passengers.

“Simply breaking up BAA, without a fundamental review of price regulation will create a number of mini monopolies and new opportunities for the new owners to profit at the expense of the consumer.”

Ryanair’s head of regulatory affairs and company secretary Jim Callaghan said: “BAA needs to be broken up urgently in the best interests of British consumers, visitors to the UK and airline users.

“The situation has now reached crisis levels. BAA have doubled passenger charges in Stansted airport and passenger numbers have fallen for the first time since Ryanair began operating to Stansted in 1991. 

“As a result, routes have been cancelled and frequencies reduced. Passenger queues at security and immigration have also reached crisis levels with passengers being forced to wait in excess of one hour. 

“We are therefore calling on the Competition Commission to expedite its investigation of the BAA and to force a break up of this abusive monopoly as soon as possible in the interest of consumers.  It is clear that the situation will continue to deteriorate until competition is introduced in the London airports market.”

*See linked story

by Phil Davies