BAA Must Sell Three Airports

By James Ott

Britain’s Competition Commission is requiring BAA to sell its airports--Gatwick, Stansted and either Edinburgh or Glasgow--within two years.

In a final report on its market inquiry issued today, the commission found adverse effects from competition problems for passengers and airlines at all seven of BAA’s U.K. airports.

Inquiry Chairman Christopher Clarke says the commission could find no alternative except divestiture to the “complete absence of competition” between BAA’s southeast airports and between Edinburgh and Glasgow. More stringent regulation or the sale of only one airport would not sufficiently address the competition problems, he said.

Sale of the three airports should provide greater incentive for BAA to “be more responsive to their customers.”

The sale of Gatwick is underway since the commission’s interim report was issued several months ago, though the stable of bidders has dwindled since an original group of six submitted bids.

BAA will continue to operate Heathrow, the U.K.’s only hub airport, and will retain significant market power in southeast England even after selling Gatwick and Stansted, the commission said. The commission recommends that BAA and airline clients improve consultation, information flow and processes. The government last week called for the CAA to be given a stronger hand in regulating airlines and an airport licensing program.

The commission recommends that the government undertake a National Policy Statement on airports, given the coming change in ownership. It will make specific recommendations for regulation and the appeals process.

Aberdeen was singled out in the report as a local monopoly deriving from its isolated geographical position. The report asked BAA to improve consultation with airlines and publish financial and other information.

Photo: British Airways