BAA airport ownership under fire

Nicole Mezzasalma

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The company’s ownership of seven UK airports may not be in the best interests of passengers and airlines, according to the UK Competition Commission

The UK Competition Commission has suggested that BAA’s ownership of seven of the country’s main airports may not be in the best interests of passengers and airlines in its interim report of the company’s airport services. The full conclusions of the Commission, due to be published in August, could require BAA to sell one or more of the airports it manages if competition problems are identified.

BAA Airports inquiry chairman Christopher Clarke said there is little or no competition between BAA’s airports in London and from non-BAA airports in the area, based on the argument that competition cannot be developed while there is a shortage of capacity in the region. However, he added that the Commission was particularly concerned “by [BAA’s] apparent lack of responsiveness to the differing needs of its airline customers, and hence passengers, and the consequences for the levels, quality, scope, location and timing of investment, and levels and quality of service”.

Clarke said that BAA seems to have taken a sequential approach to development, limiting works at one airport to concentrate on projects elsewhere, such as London Heathrow airport terminal five. He also said the Commission is concerned that the economic regulation system implemented by the Civil Aviation Authority may “adversely affect competition, though it is not yet clear to us whether it is a feature in itself or whether it facilitates or exacerbates other features of the airport services market which themselves limit competition”.

He concluded: “Overall, our current view is that there is potential for competition at all BAA’s airports... While we are purposely setting out our current thinking in some detail, we have reached no conclusions. By being as explicit as possible at this stage, however, we are providing all interested parties with the opportunity to respond and provide further evidence which we will consider before we reach our provisional findings in late summer. It is possible, therefore, that our lines of argument set out in today’s report may change between now and then.”

The full interim report is available on the Competition Commission's website.