BAA faces airport ownership probeOFT refers it to Competition Commission

30 March 2007

Airport sign directing travellers to the terminal.

BAA's ownership of London's main airports was under threat today after the operator was referred for a full-blown competition inquiry.

The Office of Fair Trading said it had decided the supply of airport services by BAA merited further investigation by the Competition Commission (CC).

BAA runs seven UK airports, operating at Stansted, Southampton, Glasgow, Edinburgh and Aberdeen, as well as at Heathrow and Gatwick.

The move by the OFT comes after it said in December that it was minded to refer the company to the Commission. A subsequent consultation process drew more than 60 responses from parties including airlines and consumers.

It said today: ‘Having considered the points made by respondents to the consultation, the majority of whom supported referral, the OFT is of the view that the competition concerns it identified prior to the consultation exercise remain valid and that an investigation by the CC is now warranted.’

Air Passengers

In December, the OFT said it believed the current market structure did not ‘deliver best value for air travellers in the UK’ and added that greater competition could bring significant benefits for passengers.

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

The OFT's study of the market also found that BAA's Scottish airports, which carry more than 80 per cent of the country's air passengers, were not price-regulated and charges faced by airlines were higher than at Gatwick and Stansted.

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

Security measures

BAA's major airline customers have long pushed for a full investigation, with relations further strained in the summer by arguments over the implementation of enhanced security measures at London's main airports.

The operator's investment plans have also been criticised, with Ryanair boss Michael O'Leary recently angry at BAA's plans for a ‘£4 billion gold-plated Taj Mahal’ at Stansted, which he believed could be built for £1 billion.

BAA is owned by Spanish construction firm Ferrovial after a takeover last year.

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