BAA rejects airport break-up calls

31-08-2006

Airports operator BAA has rejected airline calls for the breakup of its UK airports, arguing that a more fragmented structure would "undermine vitally needed investment in airport capacity".

BAA, which operates seven airports across the country, has been accused of market domination by airlines including British Airways (BA) and Ryanair, who argue that the firm should be broken up into separate airport companies.

The airlines have called on the Office of Fair Trading (OFT), which is currently investigating airport ownership in the UK, to refer the matter to the Competition Commission due to concerns over existing airport regulation and concentrated ownership.

BA, which criticised BAA over its implementation of extra security measures in the wake of this month's foiled alleged transatlantic bomb plot, said the UK's competition authorities should consider separate ownership for London's Heathrow and Stansted airports in order to make infrastructure developments at the sites "more responsive to airlines and their customers' needs".

But BAA, which was acquired by Spanish building group Ferrovial earlier this year in a £10.3 billion deal, stressed that any move to break up the company would put development projects such as Heathrow's Terminal 5 and Stansted's second runway under threat.

In a submission to the OFT, BAA chief executive Stephen Nelson claimed the "have-it-both-ways proposal" put forward by airlines to break-up the company and impose heavier price regulation would be a "poisonous cocktail for consumers".

"I fully understand why airlines like British Airways and Ryanair want to weaken airport operators and achieve greater control over prices and investment at the airports where they hold such powerful positions themselves, but the job of the competition authorities is to protect the longer term interests of all consumers," said Mr Nelson.

"The biggest problem facing UK air travellers is the shortage of airport capacity, especially in south-east England. Failure to build new runway capacity will lead to gridlock, disappointed customers and significant loss to the national economy," he warned.


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