Page last updated at 12:30 GMT, Tuesday, 22 April 2008 13:30 UK

UK to review how airports are run

View of Heathrow Airport
The government wants travellers to have a better experience

The government will review the economic regulation of the UK's airport system after a report said that operator BAA may be failing airlines and consumers.

Transport Secretary Ruth Kelly said the review would look at how to improve customer service, boost investment and deal with environmental concerns.

Earlier the Competition Commission said BAA dominated airports in south-east England and parts of Scotland.

BAA's seven airports include Heathrow, Gatwick, Stansted and Edinburgh.

Map showing BAA airports

The company, which is owned by Spain's Ferrovial, also controls airports at Glasgow, Southampton and Aberdeen.

"It has been over 20 years since the Airports Act 1986 put in place the current regime of economic regulation and as such it is one of the oldest economic regulatory systems in the country," Ms Kelly said.

"Much has changed since then, and there is an urgent need to consider how the framework needs to be updated to reflect today's realities."

The transport secretary said that the government's review would recognise the points made by the Competition Commission, the aviation industry and key stakeholders about the potential shortcomings of the current regulatory system.

The regulator said that the regulatory system may adversely affect competition between airports.

Slow response?

BAA has come under increasing pressure from politicians and airlines and is fighting off attempts to break up its control of UK airports.

In its report, the Competition Commission stressed that it had not yet reached any conclusions over the fate of BAA.

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

However, it 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.

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.

BAA chief executive: 'We need to get better'

"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.

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.

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

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.

"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."

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Sign in

BBC navigation

Copyright © 2017 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific