Page last updated at 11:14 GMT, Tuesday, 22 April 2008 12:14 UK

BAA airport ownership criticised

BAA chief executive: 'We need to get better'

BAA's ownership of seven UK airports "may not be serving well the interests of either airlines or passengers", the Competition Commission has said.

Its report said that BAA, "dominates the airports markets in the south-east of England and in lowland Scotland".

BAA owns Heathrow, Gatwick, Stansted, Edinburgh, Glasgow, Southampton and Aberdeen airports and may end up being forced to sell one or more of them.

The government said it would review the economic regulation of the industry.

Transport Secretary Ruth Kelly told Parliament that: "I am today announcing a review of the economic regulation of the UK airport system, supported by a panel of experts."

'Lack of responsiveness'

BAA is itself owned by the Spanish company Ferrovial.

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The Competition Commission stressed that it had not yet reached any conclusions but added that it would set out its remedies to any competition problems in August, "whether requiring the sale of one or more of BAA's airports or otherwise".

"We are particularly concerned by its (BAA's) apparent lack of responsiveness to the differing needs of its airline customers, and hence passengers," said Christopher Clarke, chairman of the BAA airports inquiry.

Mr Clarke was also worried that having so many airports owned by BAA meant that big development projects were being carried out one at a time.

BAA responds

BAA welcomed the Competition Commission's report.

Map showing BAA airports

But its chief executive Colin Matthews, who took over on 1 April, disputed the suggestion that the sale of some of BAA's airports would improve capacity.

"The case that they need to make is that some different ownership structure is going to deliver that new capacity and new investment more effectively," he told the BBC.

"I'm not convinced that's the case," he added.

Mr Matthews yesterday restructured his management team to concentrate more on the operational performance of Heathrow.

"We can improve Heathrow operations and we must improve Heathrow operations, and that's exactly why I've restructured the business to focus on exactly that issue being our top priority," he said.

"My own view is that if we don't operate Heathrow effectively then, as it were, we won't have a leg to stand on in these important strategic long-term issues."

Airport capacity

The Competition Commission said that the point of giving BAA ownership of Heathrow, Gatwick and Stansted after privatisation in 1987 was to make sure there would be adequate airport capacity in the south-east of England, but that there was still a shortage of capacity.

Maybe a spot of competition would reduce the disgraceful costs charged by BAA
Roger, UK

The regulator conceded that competition in the south-east of England was unlikely in the short term because of the lack of capacity, but suggested that having airports separately owned could help to encourage growth in capacity.

It also said that there was potential for competition between Heathrow and Gatwick airports and Southampton.

In Scotland, the report said there was potential for competition between Edinburgh and Glasgow airports, although the ownership of Aberdeen airport was less of an issue.

Problem or solution?

"The case for breaking up BAA gets stronger by the day," said Shadow Transport Secretary Theresa Villiers.

It seems the Competition Commission has seen the light
Paul Charles, Virgin Atlantic

"BAA's monopolistic grip on so many of the UK's major airports has not been serving passengers or airlines well - as can be seen from the debacle at Terminal 5 and the yearly Heathrow hassle during the summer months," she added.

Liberal Democrat transport spokesman Norman Baker said: "BAA is part of the problem not part of solution."

"It has become complacent and concentrated on lobbying the Government rather than serving the needs of passengers. BAA should be required to sell some of its airports."

A British Airways spokeswoman said: "We believe that the current regulatory framework governing BAA London airports needs to be strengthened."

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