BAA humbug, says the Competition Commission

The regulator has delighted (almost) everyone by suggesting that BAA is bad news for our airline industry...

Last Updated: 06 Nov 2012

The Competition Commission said today that ‘BAA’s common ownership of seven airports in the UK may not be serving well the interests of either airlines or passengers’. This less-than-radical conclusion about the airport operator’s wretched service provision in the UK was contained in an interim ‘emerging thinking’ report (which basically means the commission hasn’t completely made up its mind yet but wants to dip its toe into the water).

Based on its assessment of BAA’s UK airports (Heathrow, Gatwick, Stansted. Edinburgh, Glasgow, Southampton and Aberdeen), the commission said it was ‘inclined to the view that common ownership of the BAA airports is a feature of the market that adversely affects competition between airports and/or airlines’. If it goes on to confirm these findings, we could end up seeing the break-up of the much-maligned BAA monopoly – an outcome that will delight airlines, passengers, potential competitors, commentators, and just about everyone else in the known universe. Apart from Spanish owners Ferrovial, of course.

According to today’s report, one of the main problems with having a single owner for all seven sites is that it slows down the airport development process, because it can only commit to one such project at a time. And judging by the chaos at Terminal Five recently, that’s still no guarantee of getting it right.

The regulator also said it was ‘concerned by [BAA’s] apparent lack of responsiveness to the differing needs of its airline customers and hence passengers’. Long-term BAA foe Ryanair spoke for many of those in the industry this morning (and it’s not often we get to write that) when it said: ‘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.’

To be fair, today’s report recognised that not all of the problems are BAA’s fault. Shortage of airport capacity was also a big factor, it said, and this was partly due to government policy – something BAA can’t control. It also suggested the regulatory framework of the Civil Aviation Authority might be stifling competition too – a suggestion that Ryanair would certainly endorse (it seems to hate the CAA almost as much as BAA).

All eyes will now be on the CC’s next report, due out in August. Unless BAA comes up with something radical, it looks likely to have its wings severely clipped – and with several billions of pounds of debt still to refinance, that’s the last thing it needs...

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