The long-awaited Competition Commission (CC) report has sharply criticised BAA for its monopoly of airports in Scotland and the south-east of England.
Though careful to avoid directly calling for the dissolution of the Spanish-owned regulator, the CC asserted that BAA’s ownership of key airports is a direct hindrance to competition.
Department for Transport secretary Ruth Kelly responded by immediately announcing a review of the economic regulation of the UK’s airport system.
The commission stated that it “is inclined to the view that common ownership of the BAA airports is a feature of the market that adversely affects competition between airports and/or airlines”.
Christopher Clarke, chairman of the inquiry, added: “We are particularly concerned by its (BAA’s) apparent lack of responsiveness to the differing needs of its airline customers, and hence passengers.”
BAA currently operates a number of airports around the UK, including Heathrow, Gatwick, Stansted, Southampton, Edinburgh, Glasgow and Aberdeen.
Its stewardship has come in for repeated criticism following the bungled launch of Heathrow Terminal 5, where critical errors with the baggage handling system led to long delays, dozens of flight cancellations and the loss of thousands of pieces of luggage.
Commenting on the CC’s findings, transport secretary Kelly noted that more than two decades have passed since the Airports Act 1986 put the current regime of economic regulation in place.
“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,” she said.
The CC acknowledged that ongoing capacity constraints have an adverse effect on the scope for competition, but it insisted there is still room for greater competition between Edinburgh and Glasgow, as well as all three London airports and potentially even Southampton.
BAA was further criticised for its role in slowing the expansion of existing airports by implementing “sequential” planning procedures, though the report accepted that government policy had also contributed to this.
Passengers continue to bear the brunt of limited capacity and stifled competition, the commission concluded.
Newly-appointed BAA chief executive Colin Matthews welcomed the publication of the report but rejected the notion that selling some of the operator’s sites 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.”
Mr Matthews added: “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.”
