UK competition regulators expect their inquiry into BAA’s airports market to take around a year to reach its preliminary conclusions.
The Competition Commission opened an investigation into BAA’s ownership of seven UK airports after the matter was referred by the UK’s consumer-protection agency, the Office of Fair Trading, in March. It is gathering information to determine whether BAA should relinquish its hold on the airport market.
“We have already collected evidence from a wide range of parties,” says the commission’s inquiry group chairman Christopher Clarke.
“We are well aware of the concerns expressed in the media and elsewhere over the operations of BAA’s airports, especially London Heathrow, Stansted and Gatwick.”
In a statement the commission says it has identified the key issues which are to be addressed in its inquiry, which include geographic market definition, development restrictions, capacity constraints, and regulation.
“Some may be short-term but, given the nature of airports, others involve much longer timescales stretching over the next 10 or 15 years,” says Clarke.
“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.”
The Competition Commission says it expects to publish a consultation document early next year, setting out its “emerging thinking” on the issues, and reach provisional findings around this time next year.
British Airways has underlined its belief that separate ownership, and competition between BAA’s airports, would improve customer service levels and increase investment in infrastructure.
“Common ownership is the root cause of the failure to expand Heathrow’s runway capacity,” claims BA chief Willie Walsh. “A more competitive London airports market would encourage the building of new facilities which would benefit both customers and the UK.
“The damaging consequences of common ownership are all too apparent today in the fragility of Heathrow’s day-to-day operation”.
In parallel with the airports market inquiry, the commission is also carrying out its statutory regulatory review of proposed price controls at Heathrow and Gatwick.
British Airways is pressing for strong regulation at the two airports, and suggests that regulators should consider introducing a licence to operate London airports which would be conditional on service, price and quality performance.
Walsh says: “The current airport regulation system is all ‘carrot’ and no ‘stick’. There is no regulatory comeback over poor customer standards or falling investment levels, so little incentive for the airport operator to regard these issues as priorities.”
BAA says it is “confident” that it will be able to demonstrate that its airport ownership is in the interests of passengers. Chief executive Stephen Nelson says: “Many of the issues identified by the Commission today have complex and deep-seated causes that require careful consideration.
“We accept that the experience of too many passengers using London airports is unsatisfactory. But the problems of congestion and delay which affect passengers have their roots in lack of terminal and runway capacity, not the ownership structure of BAA.”
Nelson stresses that BAA has laid out investment plans aimed at overhauling infrastructure at its airports and says that the company is “willing to spend heavily” to carry them out.
“What London airports do not need are structural changes that will seriously delay the delivery of investment that is urgently needed to improve the passenger experience and increase capacity.”
Source: Air Transport Intelligence news
Source: FlightGlobal.com
