UK competition authority lists BAA issues

Nicole Mezzasalma

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UK Competition Commission publishes statement detailing issues to be investigated

The UK Competition Commission (CC) has published a statement describing issues it will be looking at in its investigation of the BAA's ownership of UK airports. The matter was first referred to the Commission by the Office of Fair Trading (OFT) in March this year and, after an information-gathering period, the CC will now determine whether the company is in breach of market competition regulation.

BAA has been heavily criticised due to lost luggage, overcrowding and delays affecting passengers, all of which were mentioned in the statement, which also cited problems with the availability of facilities such as lifts, escalators, travelators and signage.

Inquiry group chairman and CC deputy chairman Christopher Clarke said: “Our task is to seek and assess the evidence on all aspects of the seven airports relevant to a competition inquiry. We are therefore looking carefully at a wide range of issues, many of which are complex and interrelated as will be readily apparent from today’s detailed statement. Some may be short-term but given the nature of airports, others involve much longer timescales stretching over the next 10 or 15 years.

 “We are looking at how common ownership could affect BAA’s incentives both to invest in and develop its airports, and operate them. We are particularly assessing how the quantity, specification, quality, location and timeliness of capital expenditure, ranging from capacity to security, might be affected by common ownership. Similarly, in terms of operations, we are examining how it might affect incentives to improve operating efficiencies as well as levels of service, including recently, and most notably, security.

“We are also considering the consequences of the airports’ regulatory regime which is very different from most other regulated industries,” added Clarke. “In addition, we are assessing the impact of restrictions on airport development and constraints on capacity in terms of runways, terminals, other facilities, and airspace for planning or other reasons.”

Clarke also said that the CC has “no preconceived ideas” and would analyse and assess the evidence it uncovered. A report detailing the Commission’s “emerging thinking” is due to be published in early 2008, and full provisional findings should be revealed “around this time next year”.

BAA had UK revenues of £2.27bn ($4.6bn) in 2005/06 and catered for over 60% of all of Britain’s air travellers in 2005 across its seven airports. The company was bought by Spanish group Ferrovial in June 2006.