A possible break-up of the UK airports controlled by BAA moved a step closer when competition regulators released details on the focus of their investigation and a timeline for their conclusions.
BAA has been under scrutiny for some time over its ownership of all three of London's largest airports, Gatwick, Heathrow and Stansted. Following a raft of complaints from airlines, UK consumer protection organisation the Office of Fair Trading (OFT) launched a study in June 2006 to determine whether the current structure of the country's airport market was beneficial to customers. The study led the OFT to question whether the market could benefit from BAA divesting some of its airports, and the Ferrovial-owned operator was consequently referred to the Competition Commission.
Christopher Clarke, the Competition Commission's deputy chairman, says the investigation will centre on how common ownership could affect BAA's incentives to invest in and develop its airports. "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," says Clarke.
Also under examination will be the question of whether BAA has been sufficiently proactive in its attempts to overcome development restrictions.
The Competition Commission will now assess the evidence before publishing early next year a document outlining its "emerging thinking" on the key issues. Provisional findings of the investigation are scheduled to be released next summer.
BAA chief executive Stephen Nelson has defended the common ownership, pointing out that lack of capacity is the "fundamental problem" for passengers, not BAA's structure. He adds that the company's expansion plans for Heathrow and Stansted "amount to nothing less than the transformation of Britain's biggest airports".
But Heathrow's largest user, British Airways, believes common ownership is the "root cause" of the failure to construct a third runway at the congested airport. "The damaging consequences of common ownership are all too apparent today in the fragility of Heathrow's day-to-day operation," says BA chief executive Willie Walsh.
In addition to the three London airports, BAA operates Southampton on England's south coast, as well as Aberdeen, Edinburgh and Glasgow airports in Scotland. Over 60% of UK airline passengers pass through a BAA-operated airport when they take a flight.
Source: Airline Business
