News: Time up for BAA "monopoly"?
Flights > News > # 1120 (13/12/2006)
The Office of Fair Trading is planning to refer the British Airports Authority (BAA) to the Competition Commission, a move which could end its ownership of London’s three biggest airports.
The OFT said it will ask the Commission to carry out a more detailed investigation into BAA’s provision of airport services after finding evidence of poor quality and high charges. It said the current structure “does not deliver best value for air travellers in the UK.”
The consumer group will hold an eight-week consultation before the referral, it said in a statement. BAA owns Heathrow, Gatwick, Stansted and Southampton airports in south east England, as well as Edinburgh, Glasgow and Aberdeen in Scotland. BAA’s airports handle more than sixty per cent of all air passengers in the UK.
The OFT's market study found evidence of poor customer satisfaction, the statement said. It added that BAA’s airports in the south east handle ninety per cent of passenger trips, and that under separate ownership they could compete to attract air passengers. The OFT said without competition, planned investment at those airports could be inefficient and costly for consumers.
John Fingleton, the OFT chief executive, said: “We believe that the current market structure does not deliver best value for air travellers in the UK, and that greater competition within the industry could bring significant benefits for passengers. There is evidence of poor quality and high charges - BAA's investment plans, which are of great importance to the UK, have raised significant concerns among its customers. These are signs of a market not working well for consumers and we believe that a full inquiry into BAA's structure is justified.”
British Airways welcomed the OFT's decision. A spokesman said: “Effective regulation is key to preventing abuse of monopoly power, especially at Heathrow and Gatwick.
“Separate ownership of Heathrow and Stansted would ensure decisions about new runways in south east England are not concentrated in the hands of one company.”
Michael O’Leary, chief executive of Ryanair, called for the break-up of “the BAA monopoly.”
Mr O’Leary said: “Heathrow is a shambles, which most passengers if they could, would avoid at all costs. Equally, Stansted where we operate is an over-specified, gold plated Taj Mahal.
“The present ineffective regulatory regime operated by the Civil Aviation Authority encourages the BAA monopoly to waste £4 billion building a second runway and terminal at Stansted, when these facilities could easily be built for less than one quarter of this figure. Competition works. It leads to more choice and better services for consumers.”
According to the OFT market study, BAA’s airports in Scotland, which carry more than 80 per cent of Scottish air passengers, are not price regulated and charges to airlines are higher than Gatwick and Stansted. The study also found evidence that competition between independently owned airports, such as Liverpool and Manchester, delivers better value for travellers.
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