Inquiry urged into UK airportsConsumer watchdog wants greater competition

12 December 2006

Airport sign directing travellers to the terminal.

BAA's ownership of London's main airports looked under threat today after Britain’s consumer watchdog called for a full inquiry into its supply of airport services.

BAA owns Heathrow, Gatwick, Stansted and Southampton in the South East and Edinburgh, Glasgow and Aberdeen in Scotland.

These airports have an annual turnover of £2 billion and handle over 60 per cent of all air passengers in the UK.

But the Office of Fair Trading (OFT) believes the current market structure ‘does not deliver best value for air travellers in the UK’.

Greater competition

It says that greater competition could bring significant benefits for passengers and is recommending a full investigation by the Competition Commission, but will hold an eight-week consultation before it makes the referral.

The OFT said it found that BAA's airports in the South East handle nearly 90 per cent of passenger trips, adding that these airports could, under separate ownership, compete to attract air passengers.

The study also found evidence that competition between independently-owned airports - such as Liverpool and Manchester - led to improved value for air travellers.

The OFT said significant investment at airports in the South East was planned, but without competition it pointed out that investment could be inefficient as well as costly for air passengers and for the UK.

Full inquiry

OFT Chief Executive John Fingleton said: ‘'We believe that the current market structure does not deliver best value for air travellers in the UK, and that greater competition within the industry could bring significant benefits for passengers.

‘There is evidence of poor quality and high charges - BAA's investment plans, which are of great importance to the UK, have raised significant concerns among its customers. These are signs of a market not working well for consumers and we believe that a full inquiry into BAA's structure is justified.’

BAA was recently sold to a Spanish construction company in a £10 billion deal.