BAA asked to sell three of its airports

BAA, which operates 7 airports in the UK, has been told by a competition commission that it must now sell 3 of those airports.  Of the 7 airports that it owns, 3 of those are in London and include Heathrow, Stansted, and Gatwick.  The commission recommended that BAA sell two of them.  The third airport the commission recommended that BAA sell is in Edinburgh in Scotland.

The BAA inquiry group with the Competition commission which is led by Chairman Christopher Clarke said “We have provisionally found that there are significant competition problems arising from BAA’s common ownership of seven UK airports. This is evident from a large number of factors including its lack of responsiveness to the needs of its airline customers and a lack of initiative in planning capacity.”

“BAA has argued to us that there is no scope for competition to develop so long as there are capacity constraints. We take the opposite view; unless the market is opened up to competition, there is a serious risk that the current capacity constraints will persist, certainly for longer than in a better functioning market,” said Clarke

Colin Matthews, the chief executive officer for BAA was unhappy with the recommendations stating “The Commission’s findings state that the lack of runway capacity is a main reason for what it calls the current poor standards of service and the lack of resilience at times of disruption, which results in regular delays. By calling not just for a fundamental restructure of BAA but also for a review of the government’s Air Transport White Paper, the Commission risks delaying that delivery of new runways and making better customer service less, not more, likely.

www.baa.com

www.competition-commission.org.uk