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Last Updated: Tuesday, 12 December 2006, 16:04 GMT
Airport competition probe urged
BAA is the dominant airport operator in the UK
The prospect of a break-up of BAA's ownership of seven UK airports has arisen after the Office of Fair Trading called for a competition inquiry.

It said it planned to refer BAA to the Competition Commission after uncovering "poor quality and high charges".

BAA owns Heathrow, Gatwick, Stansted and Southampton airports in the south-east of England and Edinburgh, Glasgow and Aberdeen in Scotland.

It said it had not abused its monopoly and a number of factors were to blame.

BAA was bought by Spanish infrastructure company Ferrovial earlier this year.

Its seven airports handle more than 60% of all air passengers in the UK.

'Significant concerns'

The OFT's market study found that in the South East, BAA's airports handled 90% of passenger trips, and noted that under separate ownership they could compete to attract custom.

It also said BAA's Scottish airports, which carry more than 80% of Scottish air passengers, are not price regulated and charges to airlines are higher than Gatwick and Stansted.

The OFT is to hold an eight-week consultation period before it makes the referral to the Competition Commission.

"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," said OFT chief executive John Fingleton.

"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."

BAA's chief executive, Stephen Nelson, said it was right that the company's ownership was subjected to regular public scrutiny, but he rejected the suggestion that its structure was at fault.

'Lack of capacity'

"Our belief is that BAA's structure has benefited both passengers and airlines and BAA has not abused its monopoly," Mr Nelson said.

"The main issue facing the UK is a lack of terminal and runway capacity in the South-East of England, which results in delay and congestion.

"This problem has not arisen because of BAA's structure, but instead is the result of the UK's complex planning laws, an antiquated regulatory system and inflexible slot allocation."

British Airways has called for the ownership of BAA's airports to be broken up to encourage competition.

And Ryanair boss Michael O'Leary has been strongly critical of BAA's plans for new investment at Stansted, which he described as a "4bn gold-plated Taj Mahal".

Mr Nelson accused both airlines of wanting to weaken BAA in order to achieve greater control over prices and investment at the airports, adding: "This should not be confused with acting in the passenger interest."

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