Move Opens Up Market, Provides Incentives For Better Service

Britain's Competition Commission (CC) has spoken... and this week, issued a provisional ruling that, if confirmed, would require BAA to sell three of the seven airports it now operates -- Gatwick, Stansted, and Edinburgh.

The CC's ruling also proposes measures to ensure that investment and levels of service at Heathrow, and possibly Gatwick and Stansted, meet more effectively the needs of airlines, passengers and other airport users. At Aberdeen airport, it is proposing measures to promote investment linked to rebates on charges.

"Having provisionally identified competition problems at each of BAA's seven airports, we are proposing remedies which address them directly and comprehensively through a combination of divestment and other measures to improve investment and levels of service," said Christopher Clarke, Chairman of the BAA Airports inquiry. "The most effective way to introduce competition in the South-East and in lowland Scotland is to require the three London airports and the two principal Scottish airports to be separately owned. Hence we are proposing the sale of Gatwick, Stansted and Edinburgh airports to new independent owners with the operating capabilities and financial resources to develop each of them as effective competitors.

"Under the common ownership of BAA, there is no competition," he added. "Under separate ownership, the airport operators, including BAA, will have a much greater incentive to be far more responsive to their customers, both airlines and passengers."

The CC had earlier "recommended" BAA sell off at least two of its airports. Selling the airports may not only provide new service incentives for passengers to enjoy... but the revenue may also help BAA owner Grupo Ferrovial recoup some of the reportedly massive losses it has incurred since the Spanish concern bought the British airport operator in 2006.

As ANN reported, BAA announced in September it would sell off Gatwick.

The CC adds it also intends to make recommendations to the Government on a more effective, and ultimately more flexible, system of airport regulation and also on aspects of government airports policy.

Next, the Competition Commission will consider responses to its provisional decision document. It expects to publish its final report on BAA's seven UK airports, and the appropriate remedies, in late February or early March 2009.

FMI: www.competition-commission.org.uk, www.baa.com