ATW: UK airlines push for BAA breakup

ATW: UK airlines push for BAA breakup: UK airlines push for BAA breakup
Friday August 25, 2006
British Airways, Ryanair and easyJet yesterday called on the UK Office of Fair Trading to refer its study on the UK airports market to the Competition Commission, citing monopolistic conditions in the market and calling for the breakup of the airports operator.OFT in June launched a consultation to determine whether the current market structure benefitted consumers after research showed that about two-thirds of UK air travelers--and nine out of 10 London passengers--fly through a BAA airport (ATWOnline, July 3). Interestingly, the UK House of Commons Transport Committee called for the breakup of BAA as far back as 1996, stating that Heathrow, Gatwick and Stansted should not be run by the same company.

British Airways said in its submission to OFT that the Competition Commission should consider breaking up BAA. "Separate ownership of London Heathrow and London Stansted would make infrastructure developments at the airports more responsive to airlines' and their customers' needs and expansion at one airport would not be held back to suit the commercial needs of a monopoly owner," BA CEO Willie Walsh said.

The airline believes that decisions on new runway construction in southeast England should not be concentrated in the hands of one company. In the event of a BAA breakup, BA said there still will be a need for "strong" regulation to protect users against monopoly power, particularly at LHR and LGW.

Ryanair also called for dissolution of the BAA monopoly. "The CAA as regulator of the London airports has failed to prevent BAA from developing gold-plated facilities that do not meet the requirements of the airlines and their passengers and have led to inflated airport charges for consumers," Head of Regulatory Affairs and Secretary Jim Callaghan said. "[We] are calling on the OFT to recommend a breakup of this monopoly as the most effective means of introducing competition into this important market."

EasyJet said UK consumers must not pick up the bill for Ferrovial's acquisition of BAA (ATWOnline, June 9). "Consumers need better protection from the airport operators who behave like local monopolists, pushing up prices to hide their own inefficiencies. So, whilst easyJet supports the breakup of BAA, the primary focus must be on tougher regulation. The issue of ownership is secondary to providing the right regulatory regime," CEO Andy Harrison argued.