Travel industry welcomes BAA break-up plan

The travel industry has given a broad welcome to the Competition Commission’s announcement that BAA may be forced to sell off Gatwick, Stansted and a third airport in Scotland.

But how long the break-up may take and how passengers will benefit remains unclear.

Existing regulations on the landing charges at Gatwick and Stansted allow increases above the rate of inflation and will remain in place for five years. Airlines will inevitably pass these on in fares.

The Commission recommended the break-up in a preliminary report of its findings following an inquiry into BAA’s control of airports in London and Scotland. It concluded the common ownership of Heathrow, Gatwick and Stansted contributed to the problems that have beset the airports.

Inquiry chairman Christopher Clarke accused BAA of a “lack of responsiveness to the needs of airline customers and lack of initiative in planning capacity”.

He said investment had “not been tailored to the requirements of airport users” and this had resulted in “lower levels and quality of service”.

Of BAA’s airports in Scotland, the Commission said: “Common ownership of Edinburgh and Glasgow prevents competition between the two.” It ruled BAA should sell one or the other.

The report remains subject to a consultation and the Commission’s final decision will be announced early next year.

Leading competition lawyer Ian Giles of Norton Rose said a sale would be difficult in the current financial climate. However, the Manchester Airport Group immediately declared an interest, as did several private equity consortia.

Airlines greeted the report warmly. But easyJet chief executive Andy Harrison said: “Let’s not kid ourselves the break-up will automatically result in a better deal for the public. Gatwick will be sold to the highest bidder, who will probably be highly indebted and expect UK consumers to pick up the bill.”

BAA chief executive Colin Matthews described the Commission’s report as “flawed” and said: “Its remedies would be counterproductive. The Commission risks delaying the delivery of new runways and making better customer service less likely.”

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