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Last Updated: Saturday, 15 March 2008, 08:55 GMT
MPs call for BAA to be broken up
Heathrow's Terminal 5 [Pic: BAA]
Terminal 5 will increase Heathrow's annual passenger capacity by 30m
A committee of MPs has called for the break-up of airport operator BAA, saying that its dominance has proved stifling for competition.

BAA, owned by the Spanish company Ferrovial, runs London's Heathrow, Gatwick and Stansted airports, Glasgow, Edinburgh, Aberdeen and Southampton.

MPs said BAA's dominance is "bad for passengers" and the aviation industry.

BAA said a break-up would only delay "the provision of extra runway and terminal capacity".

The company serves almost 150m passengers a year and opened Heathrow's new Terminal 5 on Friday.

Expansion supported

But the report by the House of Commons Transport Committee said BAA had "mismanaged resources" and competition was being "stifled by common ownership of several major airports".

This, it said, resulted in the natural development of the market being "held back".

Ending BAA's common ownership will encourage airports to compete for traffic
Gwyneth Dunwoody MP

The report said: "BAA may feel as though it is taking a lot of the flak for things that are not part of its day-to-day responsibility, but this does not detract from the serious questions raised over mismanagement of resources and failure to plan adequately for contingencies which were far from unexpected, let alone inconceivable.

"With the ever-present possibility of extraordinary circumstances such as strikes or terrorist incidents, queues at airports are almost inevitable from time to time.

"Our criticism of BAA is that it should have predicted the predictable and planned accordingly.

"BAA's monopoly position in the UK airports sector is unnecessary. Indeed, it is bad for passengers and bad for the aviation industry.

"We do not agree that the status quo is a necessary condition of sustained investment and development."

'Huge benefits'

The committee's chairman, Gwyneth Dunwoody MP, said there was room for more competition, particularly between London airports.

"BAA airports account for such a large proportion of air travel, and the company's future is of central importance to the UK's transport infrastructure," she said.

"Ending BAA's common ownership will encourage airports to compete for traffic. The committee firmly believes that increased competition is possible and could have huge benefits for both airlines and passengers."

The committee did add its support for the government's proposals to expand Heathrow, which could lead to a third runway and a sixth terminal.

BAA, which runs seven UK airports in total, said breaking up the company would only bring delays to improvements for the country's aviation.

It said: "We firmly believe that a break-up would only delay not just the much-needed investment, but also what the government, and the committee itself in this latest report, have consistently identified as the overwhelming priority in the south east of England since the 2003 (aviation) White Paper - the provision of extra runway and terminal capacity."

Another member of the Transport Select Committee, Graham Stringer, said passengers were getting a bad deal because of BAA's monopoly. He said the company had grown lazy.

"When you talk to the airlines, when you talk to passengers: they're getting very poor quality service because BAA don't have to compete with anybody.

"So that's bad on that side of the equation, but where BAA do have to compete with international airports like Charles de Gaulle, Schiphol, Copenhagen, they are losing ground to them", Mr Stringer said.

Criticism rejected

BAA's director of corporate and public affairs, Tom Kelly, defended its customer service record.

He told the BBC that BAA needed to be able to expand services in order to improve them.

"The key problem is not lack of competition. The key problem, as the Committee itself acknowledges, is lack of capacity", Mr Kelly said.

"This week we have opened T5 [Heathrow Terminal 5]. We have also... lodged an application for a new runway at Stansted. Nobody else is prepared to make that kind of long-term commitment.

"I defy anybody who looked at the pictures of Terminal 5 yesterday to suggest that we don't value quality of service", Mr Kelly said.

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