UK competition regulators believe there is room for competition between BAA’s London airports as well as its Scottish sites, and have accused the operator of being unresponsive to the needs of airlines and passengers.
The Competition Commission, which is carrying out a market investigation of BAA’s common ownership of seven UK airports, has detailed its line of thinking today in an update to the inquiry.
It says that BAA’s ownership of the airports “may not be serving well the interests” of either airlines or passengers, adding that BAA is potentially limiting competition through the manner in which it conducts its business.
“We are particularly concerned by its apparent lack of responsiveness to the differing needs of its airline customers, and hence passengers, and the consequences for the…timing of investment and…quality of service,” says the Commission’s head of the inquiry Christopher Clarke.
He adds that BAA “seems to have taken a sequential approach” to development, notably at its London Heathrow, Gatwick and Stansted airports, and “been prepared to limit development at one airport to concentrate on development elsewhere”.
While BAA has undertaken smaller projects simultaneously, he states, it has limited itself to carrying out only one major project – such as Heathrow Terminal 5 – at a time.
Although the Commission concedes that planning systems constrain the timing of airport development, it points out that other large infrastructure businesses also have to work within these systems.
“Our current view is that there is potential for competition at all BAA’s airports,” it says, adding that the prospect for competition between the London airports is “very real” given passengers’ willingness to switch between them.
It says BAA and other have long argued that competition at the London airports cannot develop until their shortage of capacity has been alleviated.
But the Commission plans to examine whether the shortage of capacity is a consequence of the lack of competition.
It admits that, if the London airports are separated, capacity constraints would limit the intensity of competition, at least for the near future. But it states: “Separate ownership would itself create a greater incentive to expand capacity at the three airports.”
Provisional findings from the inquiry will be published in August once the Commission has been able to consider responses to the initial suggestions put forward today. BAA has yet to comment on today’s statement.
Source: flightglobal.com's sister premium news site Air Transport Intelligence news