OFT to probe UK airports

The Office of Fair Trading is ‘considering’ a probe into the UK airports market.

The move, which was welcomed by easyJet, Flybe and the European Low Fares Airline Association, comes against the background of the European Commission clearing a proposed takeover of UK airports operator BAA, owner of Heathrow, Gatwick and Stansted. BAA has rejected an $8.7 billion bid by Spanish group Ferrovial.

The OFT plans to make a detailed announcement about the scope of the review by the end of next month. It could lead to a possible referral to the Competition Commission.

OFT chief executive John Fingleton said: “OFT constantly looks proactively at whether markets work well for consumers.

“BAA currently owns and operates airports which handle 63% of air passengers beginning or ending their journeys in the UK, with 86% of passenger journeys in Scotland undertaken through Scottish airports operates by BAA.

“Competition in air transport is an extremely important part of the UK economy, with a significant impact on UK consumers and business alike.

“For these and other reasons, we have decided to look more closely at how the airport markets work with the aim of establishing whether the current market structure delivers the best value for consumers.”

EasyJet planning director Andrew Barker said: “We have been asking for this review for a long time and look forward to providing overwhelming evidence that BAA is not acting in anything like the interests of the travelling public. No company should control over 90% of London airport capacity and a similar amount in Scotland.

“BAA is a dominant player and operates in a near-monopoly environment. As a consequence, BAA can bank high profits which have to be paid for by passengers without the healthy pressure of competition. 

“The fact that BAA is already regulated indicates that the Government recognises its dominant position. However, these regulations do not go far enough to ensure that the interests of airlines and the flying public are adequately represented.”

Flybe chief commercial officer Mike Rutter said: “We have been lobbying for an enquiry into the current airports marketplace for some time and are pleased that the OFT are considering an enquiry into the impact of joint onwership on consumers.

“Due to the lack of healthy competition, BAA is enjoying high profits and the UK’s consumers have to pay the price through increased fares.

“We believe that joint airports ownership is not in the best interests of the UK’s consumers and have been actively involved in lobbying against Belfast International’s bid to purchase Belfast City Airport in Northern Ireland and Bristol Airport’s recent bid for Exeter Airport in the South-West.”

Report by Phil Davies