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Last Updated: Monday, 25 September 2006, 10:31 GMT 11:31 UK
BA fires new shot at airport firm
Passengers queuing up at Heathrow
Recent terror problems increased the pressure on BAA's operations
British Airways wants regulators to cut the charges levied by airport firm BAA, saying that they hamper the efficiency and development of the industry.

The demand is the latest shot in a battle between airlines and BAA.

Earlier this year, British Airways and no-frills rival Ryanair called for BAA, which runs seven UK airports including Heathrow and Gatwick, to be broken up.

BAA has rejected the calls saying that it would hamper, rather than boost, competition in the UK airline industry.

Under pressure

Recently BAA has been criticised for its handling of the recent terror alerts that left thousands of passengers stranded across the UK.

It also has come under fire over its development of the new fifth terminal at Heathrow, and plans to expand Stansted.

Speaking at an industry conference on Monday, British Airways' economic regulation manager, Andrew Cunningham said that there was a need to overhaul how the UK ran its airports and charged airlines for using them.

It does not encourage airports to invest efficiently in new infrastructure or build facilities that airlines want
Andrew Cunningham, BA

"We operate in a highly competitive environment and our customers want good value for money," Mr Cunningham explained.

"We cannot make inefficient investments that drive up our ticket prices to uncompetitive levels.

"Monopoly airport operators are not under similar pressure."

Mr Cunningham added that BAA is currently allowed to make a 7.75% return on its assets, a level that he feels is set too high.

"It does not encourage airports to invest efficiently in new infrastructure or build the facilities that airlines want," he said, adding that the new charge level should be set at 5.6% when the current agreement expires in March 2008.

Rising demand

As well as greater transparency in BAA's investment plans, airlines should also have seats on the boards overseeing development projects, Mr Cunningham said.

And instead of splitting costs across the whole of BAA, airlines should only be asked to pay for the infrastructure that is specifically built at airports.

"This would ensure that there is a credible business case for investment at each airport and that new facilities that airlines need are built in a cost effective way," Mr Cunningham said.

BA also wants the Civil Aviation Authority to carry out an annual review of infrastructure spending.

Air travel has boomed in recent years, and critics complain that spending on infrastructure has lagged, leaving the UK unable to cope with increasing passenger demand.

BAA is set to expand, with the completion of a new terminal at Heathrow scheduled for 2008, as well as a new runway at Stanstead by 2013.

BAA - which also has business interests in the US, Italy and Hungary - was bought by Spanish firm Ferrovial earlier this year in a deal worth more than 10bn.

BAA facing 20m terror alert bill
10 Sep 06 |  Business
BA says terror alert cost it 40m
05 Sep 06 |  Business
BAA rejects demands for break-up
31 Aug 06 |  Business
BA urges break-up of operator BAA
24 Aug 06 |  Business
New BAA owner freshens up board
26 Jun 06 |  Business
BAA agrees to Ferrovial takeover
06 Jun 06 |  Business

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