The UK Office of Fair Trading (OFT) is proposing to refer airports operator BAA to the UK's Competition Commission.
The proposal was unveiled in mid-December following an OFT study into the UK airports market that began in June. "We believe that the current market structure does not deliver best value for air travellers in the UK, and that greater competition within the industry could bring significant benefits for passengers," says OFT chief executive John Fingleton. "There is evidence of poor quality and high charges - BAA's investment plans, which are of great importance to the UK, have raised significant concerns among its customers."
The OFT will undergo public consultation and plans to finalise its proposal in February. If it is adopted, the Competition Commission will launch a detailed investigation of BAA which could take up to two years and result in the break-up of the airport group.
Several carriers including easyJet and Ryanair are supporting the OFT proposal. BAA chief executive Stephen Nelson rejects it, claiming "BAA has not abused its monopoly". BAA, which owns Heathrow, Gatwick, Stansted and Southampton airports, handles 90% of traffic in the south east of England. It also runs the main Scottish airports.
The UK CAA already reviews airport pricing on an annual basis. In December it proposed further increases in charges for Heathrow at 4-8% above inflation. British Airways and Virgin Atlantic complain the proposed increase is too high. For Gatwick, if the proposal is accepted, charges will increase at the rate of inflation plus or minus 2%. Nelson says the proposals "are unsatisfactory and give cause for significant concern".
Meanwhile, the UK government has reaffirmed its strategy of pursuing additional runways for Heathrow and Stansted despite stiff local opposition. In November a local council rejected BAA's proposal to increase the airport's annual passenger cap from 25 to 35 million passengers.
Source: Airline Business
