In a major statement concerning Gatwick, Heathrow and Stansted airports, the Office of Fair Trading (OFT) chief executive John Fingleton said: ”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. 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. These are signs of a market not working well for consumers and we believe that a full inquiry into BAA's structure is justified.”
The decision to call in the Competition Commission to investigate the group, which is now owned by the Spanish group Ferrovial, had been widely expected. BAA owns Heathrow, Gatwick, Stansted and Southampton airports in England, and Edinburgh, Glasgow and Aberdeen in Scotland. These airports have an annual turnover of ”2bn ($3.9bn) and handle over 60% all air passengers in the UK. The OFT points out that BAA airports handle 90% of passenger movements in south east England.
BAA quickly defended itself against the OFT charges, denying that it had abused its monopoly position. At some juncture it will undoubtedly point out that in other major capitals the same status quo exists, typically, A”roports de Paris for Charles de Gaulle and Orly, and the Port of New York and New Jersey for Kennedy, LaGuardia and Newark. For the most part the airlines have quickly approved the move, some pointing out that they have argued the point for 20 years.
The referral of BAA to the Competition Commission is provisional and there will now be a consultation period of eight weeks.
BAA is now owned by a conglomerate led by Grupo Ferrovial SA who paid just over ”10bn ($19.6bn) for BAA plc. London City Airport, with a current throughput of 2m passengers, was recently sold to a group of investors for a figure said to be around ”650m ($1.3bn). At around 35m passengers Gatwick has been valued at between ”2.5bn and ”4bn ($4.7bn-7.9bn).