Update due on BAA airport inquiry

The problems at Terminal 5 have reinforced criticism of BAA's position

The Competition Commission is due to give an update on its inquiry into the under-fire UK airport operator BAA.

The probe began last year after airlines and passengers complained of delays, poor service and high charges at Heathrow and other BAA airports.

Since then, the disastrous opening of Heathrow's Terminal 5 has increased the pressure on BAA's management.

Critics say ownership of London's three main airports stifles competition and want BAA to sell Gatwick or Stansted.

Keenly awaited

They also argue it currently results in passengers paying more than they should to use BAA's airports.

Tuesday's update will see the competition regulator outline its "emerging thinking" with regard to its current investigation.

Only as we make Heathrow work more effectively will we earn the right to be heard on the wider issues that affect our business Colin Matthews, BAA chief executive

The watchdog's statement has been keenly awaited by the industry and passenger groups as an indication of what the eventual outcome of the probe may be.

But it will not contain any details of what action the regulator may take when it publishes its full report later this year.

Several airlines, including Virgin Atlantic and Ryanair, have called for BAA to be "broken up" with attention focusing on the possible sale of either Gatwick or Stansted.

BAA, owned by the Spanish firm Ferrovial, opposes such a move arguing that its joint ownership of the three airports enables it to keep a lid on airline charges while making it easier to fund massive projects such as the new Terminal 5.

But analysts feel the catalogue of problems which occurred at Terminal 5, for which BAA has admitted partial responsibility, will sharpen calls for its dominant position in London to end.

About 90% of all flights coming in and out of London currently use BAA airports.

"The Competition Commission is likely to indicate it is seriously considering mandating some sort of break-up," Douglas McNeill, an analyst with Blue Oar, told Reuters.

Passenger benefits

In its own investigation last year, the Office of Fair Trading (OFT) found that the current ownership set-up did not deliver "best value" for passengers and that greater competition could bring "significant benefits" for travellers.

WHAT BAA OWNS Heathrow, Gatwick, Stansted, Edinburgh, Glasgow, Southampton, Aberdeen

As well as the situation in London, the Commission is focusing on whether BAA's ownership of both Glasgow and Edinburgh airports is detrimental to competition in Scotland.

Stung by criticism of its handling of Terminal 5's launch, BAA is restructuring its senior management to increase focus on the UK's largest airport.

On Monday, it announced the creation of a new executive committee to provide daily "hands-on leadership" at Heathrow.

"Only as we make Heathrow work more effectively will we earn the right to be heard on the wider issues that affect our business - the need for investment and the need to modernise the regulatory framework," said BAA chief executive Colin Matthews.