British Airports Authority shaken by market investigation
The United Kingdom’s the Competition Commission (CC) yesterday announced that it is ready to consider responses to its provisional decision forcing the British Airports Authority (BAA) to sell both
The United Kingdom’s the Competition Commission (CC) yesterday announced that it is ready to consider responses to its provisional decision forcing the British Airports Authority (BAA) to sell both Gatwick and Stansted airports as well as Edinburgh airport.
Subject to final consultation, the CC’s findings and recommendations were published Wednesday and made available online at www.competition-commission.org.uk.
Among its many recommendations, the CC is proposing to introduce measures to ensure that investment and levels of service at Heathrow, and possibly Gatwick and Stansted, meet more effectively the needs of airlines, passengers and other airport users. At Aberdeen airport, it is proposing measures to promote investment linked to rebates on charges.
The CC also said it intends to make recommendations to the British government on a more effective, and ultimately more flexible, system of airport regulation and also on aspects of government airports policy.
“Having provisionally identified competition problems at each of BAA’s seven airports, we are proposing remedies which address them directly and comprehensively through a combination of divestment and other measures to improve investment and levels of service,” Christopher Clarke, chairman of the BAA airports inquiry, said. “The most effective way to introduce competition in the South-East and in lowland Scotland is to require the three London airports and the two principal Scottish airports to be separately owned.”
He added: “Hence we are proposing the sale of Gatwick, Stansted and Edinburgh airports to new independent owners with the operating capabilities and financial resources to develop each of them as effective competitors. Under the common ownership of BAA, there is no competition. Under separate ownership, the airport operators, including BAA, will have a much greater incentive to be far more responsive to their customers, both airlines and passengers.”
Mr. Clarke added: “We recognize that current capacity constraints in the South-East will limit the pace of development of competition. Even in the short term, however,we expect benefits from different approaches to airport management as well as greater initiative in longer-term planning and development of new investment which will be critical to sustained effective competition.
“We will also be making recommendations to the government on a more effective, and ultimately more flexible, system of airport regulation as part of the Department for Transport’s current review. However, we recognize that any significant changes to the current system of regulation will take time and will require legislation. We therefore propose to introduce more immediate measures, as soon as possible after we publish our final report early next year, to ensure that at Heathrow, and possibly at Gatwick and Stansted, there is continued and improved focus on the needs of airlines and passengers in terms of investment and the level and quality of service.”
The CC said it expects to publish its final report on BAA’s seven UK airports, and the appropriate remedies, in late February or early March 2009.