1 November 2022, London Marriott Hotel County Hall
21 November 2022, Hilton London Metropole
12 December 2022, etc.venues Monument, London
BAA is facing the prospect of having to sell at least one of its seven UK airports after the Competition Commission reported today (22 April) it believes there is greater scope for competition in the south east and Scotland.
The operator owns London”s main hubs ” Heathrow, Gatwick and Stansted ” as well as Southampton, plus Edinburgh, Glasgow and Aberdeen airports.
”While the three [London] airports are in common ownership they will not compete, and common ownership of the three BAA London airports is therefore a potential feature of the market adversely affecting competition between them,” the report concluded.
The Commission said it saw a real possibility of competition between the three given the willingness of passengers to switch between them, and that ”in the longer term, even if capacity constraints are alleviated, common ownership will continue to prevent competition between BAA”s London airports.
”Separate ownership would itself create a greater incentive to expand capacity at the three airports.”
It also noted BAA”s ownership of the London airports and Southampton has potential for ”adversely affecting competition,” and equally that competition between Edinburgh and Glasgow is prevented through common ownership.
And despite a moment”s respite afforded to the operator with an acknowledgment in the report”s conclusion that ”economic regulation of airports in itself may well be a feature which prevents, restricts or distorts competition,” this then has its legs taken from under it with: ”BAA”s ownership of the designated airports in turn exacerbates the inadequacies of the regulatory system.”
BAA points out in its response that the Commission acknowledged capacity constraints in the south east limit scope for competition, and that the regulatory system is outdated. The Commission has also noted BAA”s argument that there are significant cost savings from joint ownership that benefit competition between airlines and thus customers.
”BAA remains of the view that its ownership is in passengers” interests, both in terms of tackling the shorter term service problems, and in following through with major commitments to investment in new facilities and capacity,” said BAA chief executive Colin Matthews. ”The challenge for us all in addressing the lack of capacity in the South East is how we ensure the timely delivery of investment.”
A ”lack of responsiveness to the interests of airlines” was another criticism levelled at the operator, and the carriers ” united on this issue in recent months - have come out today loudly voicing support for what they see is the first step in a monopoly break-up.
Flybe commercial officer Mike Rutter said: ”Rather than wait for the inevitable forced sell-off, we are today calling for Ferrovial to read the writing on the wall and start to divest itself of at least three airports.
”Over the last year, Flybe have flown more than 75,000 flights from BAA/Ferrovial owned airports, so we are in a very good position to be able to comment on their lack of performance. It”s high time the sell-off began and in a spirit of cooperation, can we suggest they begin by disposing of Southampton, London Gatwick and Glasgow.”
Bmi CEO Nigel Turner said: ”We look forward to remedial action being taken at the earliest opportunity. We strongly believe that to ensure future real intra-airport competition in the UK, the only option facing the regulators is the dismantling of BAA”s monopolistic grip over the UK”s busiest airports in the South-East and in Scotland.”
Stansted Airline Consultative Committee chairman David O'Brien said: "We note the comments today of BAA's Chief Executive who claims that charges "must rise" to increase capacity. This is dishonest monopoly speak. If Tesco were to apply the same arguments as BAA, a pint of milk would now cost ”20.”
No conclusions have yet been reached by the Commission however, and it will publish its findings and ” if required ” possible remedies in August.