BAA may be forced to sell airports

20-08-2008

BAA may be forced to sell airports
BAA may be forced to sell three of its airports as a lack of competition has led to lower levels of service for passengers and airlines, the Competition Commission said.

The Competition Commission (CC) is recommending BAA sell two of its London airports, which include Heathrow, Gatwick and Stansted, and either Edinburgh or Glasgow.

A consultation will now be launched to decide which airports will be sold, although the CC admitted it was unlikely to be Heathrow.

A "lack of responsiveness to the needs of its airline customers and a lack of initiative in planning capacity" has led to under-investment at BAA-operated airports, the Commission said in its report.

Christopher Clarke, chairman of the BAA airports inquiry group, said: "While we accept that constraints on runway capacity in the south-east will limit the scope for the benefits of competition in the short-term, we believe that separate owners would be more active than BAA in exploiting existing opportunities."

There are also problems arising from the planning system, aspects of government policy and the system of regulation, the CC added.

However, BAA has argued the levels of poor service and disruption are a result of a lack of capacity at the sites and wants to expand.

"Just as the government is about to make the decisions that could lead to the first full-length runways being built in the south-east since the second world war, the Commission risks creating uncertainty, delay and confusion at exactly the wrong time.

"In Scotland, the Commission has apparently ignored the evidence presented by BAA, and supported by numerous respected third party organisations, that clearly demonstrates that serve separate markets and therefore do not and would not compete, regardless of ownership."

BAA chairman Sir Nigel Rudd told the BBC on Saturday that selling Gatwick would not be a disaster for the group.

The company has already received "huge expressions of interest" for both Stansted and Gatwick, Sir Nigel said.

German companies Hochtief and Fraport are reported to be interested in buying Gatwick.

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