Page last updated at 13:15 GMT, Wednesday, 20 August 2008 14:15 UK

Travellers face long wait for change

Analysis
By Nils Blythe
Business correspondent, BBC News

Passngers at Heathrow
Would a break-up of BAA bring any gains for passengers?

The words are cautious and carefully chosen. But this is a damning report.

The Competition Commission finds that BAA has shown a "lack of responsiveness" to its airline customers. And its "lack of initiative" in planning new airport capacity has harmed passengers.

BAA is not alone in attracting criticism. The regulatory system operated by the Civil Aviation Authority is also attacked. And the commission concludes that government decisions have contributed to the problems at London's airports.

Its provisional recommendations are for a review of regulation and the sale of two out of three of BAA's London airports (Heathrow, Gatwick and Stansted) plus either Glasgow or Edinburgh.

But, how much difference would these changes make to the travelling public?

The short answer is that they won't make any immediate difference at all.

The government has made it clear that the charges to airlines recently approved by the CAA will stand for the next five years. So even if there are major reforms to the way that airport charges are regulated - which many airlines want to see - it will take many years.

Selling off airports will also take time. First of all the Competition Commission will hold further consultations before reaching its final conclusions, perhaps later this year but possibly not until early next year. Then - assuming that the commission is not persuaded to change its view - the sale process will begin.

Limited options

In a recent BBC interview, BAA chairman Sir Nigel Rudd indicated that his company had already had expressions of interest from potential buyers.

Passengers shouldn't expect to see major change for many years to come

Manchester Airport Group has publicly indicated its interest and a number of investment funds are believed to be looking at the potential of Gatwick and Stansted.

But the negotiations are likely to be lengthy - BAA will argue that it must not be forced into a "fire sale" of assets. And even when the transactions are complete the scope for change is limited.

A new owner would aspire to improve day-to-day management which might raise standards for customers. But the prospects for real competition between airports is quite limited.

Heathrow with its two existing runways and network of international connections is the dominant "hub" airport in the south-east of England, with a large proportion of passengers using it to make connections from one flight to another.

Gatwick also operates as an international hub, but on a much smaller scale. To be a real competitor for Heathrow it needs a much bigger network. But a long-standing government commitment to local residents prevents a second runway from being built, at least until 2019.

Stansted is already applying for planning permission to expand its capacity and build a second runway. But even if it is successful the earliest a new runway would be operating is 2015. And the airport's existing network of flights is almost entirely within Europe.

So prospects for a real competitor to Heathrow are somewhere between distant and non-existent.

Under new ownership Gatwick and Stansted could compete to some extent for leisure traffic, although they are so far apart that many passengers have little real choice. And the incentives for new owners to compete vigorously are limited when both airports are extremely busy already.

The Competition Commission recommendations are a partial blueprint for the long-term future. But passengers shouldn't expect to see major change for many years to come.




SEE ALSO
BAA 'should sell three airports'
20 Aug 08 |  Business
Q&A: Future of British airports
20 Aug 08 |  Business
In quotes: BAA break-up threat
20 Aug 08 |  Business
BAA expects forced airport sales
16 Aug 08 |  Business
Leading Questions: Sir Nigel Rudd
16 Aug 08 |  Business

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