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BAA forced to sell off Gatwick after competition watchdog accuses it of ripping off millions of passengers
Last updated at 00:52am on 24.04.08A massive shake-up of Britain's failing airport system was announced yesterday as a damning report said passengers are being overcharged and forced to wait too long.
Operator BAA's stranglehold on seven major UK airports is against the public interest, competition watchdogs concluded as they signalled a break-up of the troubled empire.
The Competition Commission said Spanish-owned BAA's control of the airports, including Heathrow, Gatwick and Stansted, "may not be serving well the interests of either airlines or passengers".
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Heathrow hell: Passengers have long been forced to endure delays, lost luggage, poor service and cancelled flights, the report concludes
The report said travellers endured long queues at check-in and security, overcrowded and shoddy conditions, and poor service from an airport company accused of putting shops before service.
It paves the way for BAA, which serves 150million passengers a year, being forced to sell off one of its three London airports, most likely Gatwick.
It may also have to sell one of its Scottish airports, which are Glasgow, Edinburgh and Aberdeen. BAA's other UK airport is Southampton.
Ending the operator's monopoly could lead to greater competition, more choice, improved standards and possibly lower air fares for hard-pressed passengers.
The Government used the report as a springboard to announce a wider shake-up of the way in which the aviation industry is regulated following criticism of the "toothless" Civil Aviation Authority.
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Transport Secretary Ruth Kelly said the 22-year-old regulatory system needed updating.
She is to appoint a panel of experts to look at what should replace the current system to boost competition, aid expansion and improve the lot of passengers.
The commission highlighted its concerns that the way BAA is "light-touch" regulated by the Civil Aviation Authority (CAA) may adversely affect competition.
The Department for Transport confirmed that stripping the CAA of its powers for economic regulation had not been ruled out.
BAA, along with British Airways, has been under fire for the shambolic opening of Heathrow's new £4.3billion Terminal 5.
Christopher Clarke, chairman of the Competition Commission's BAA airport inquiry said: "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 levels, quality, scope, location and timing of investment levels and quality of service.
"We have seen evidence that BAA has responded to its quality of service problem largely by increasing costs and passing on these increased costs to the airlines, rather than, for example, by improving efficiency."
BAA was bought by the Spanish construction group Ferrovial in 2006 in a £10.3billion deal but has struggled ever since with £10billion of debt.
BAA chief executive Colin Matthews accepted that performance needed to improve and that the T5 debacle had been "bitterly disappointing", but said Heathrow was a "pretty special case".
The report was welcomed by critics of BAA who have called for an end to what has been condemned as "Heathrow Hell."
Paul Charles, of Virgin Atlantic Airways, said: "It seems the Competition Commission have seen the light. They support the views of every airline and every passenger, that there is no competition at our major airports."
Liberal Democrat transport spokesman Norman Baker said: "BAA should be required to sell some of its airports. In particular it should not be able to operate both Heathrow and Gatwick."
The Competition Commission will set out possible remedies in a further report in August.
Reader views (5)
Let's not blame the Spaniards, they bought BAA for the money, not to improve London's position as a World Centre.
In the first place, years ago, we decided (our Government and Parliament - I think) to sell all our important and vital airports in one package.
We did not have to! we could have have sold them individually.
Mistake number 1.
Once you sell the BAA for the highest bidder, you can't object, if the share holders flog it more Cash.
Mistake number 2.
It was sold to a Company that had no experience of running an Airport... never mind 7 airports in a foreign country. They bought it for the eventual cash profit! Unfortunately they are now in debt and in financial trouble.
Mistake number 3.
We (as a Nation) should buy back BAA for the price they paid in the first place. Once it's ours again (don't tell me we can't force the owners to sell it back to our Nation... if there is A will there is a way!), we should then split BAA in Four separate units.
Heathrow, Gatwick, Stansted and all the other small airports.
Let's agree that we made a mistake years ago, and correct it.
- Paul Epps, Twickenham, England, 23/04/2008 13:17
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This mantra that "Competition Improves Services" is wearing thin! What improvements have come with competition - most of the utilities are now foreign owned with the main aim being profits not good service for the client. Most of the benefits in telecommunications (most improved utility) have come from improvements in technology not competition. We now have dozens of Directory Enquiry services many of which cannot find simple numbers or make mistakes.
The biggest improvement to Heathrow and Stanstead would be an additional runway. But this brings in the question - do we want to improve services or reduce emissions to save the planet? At the end of the day people want to fly from their local airport. Service in Aberdeen and Frankfurt is far better than Heathrow but rather less convenient!
- Michael, London, 23/04/2008 12:49
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It is not whether Gatwick should be sold, surely it is that each terminal in an airport should be run by a different franchise or alliance. So that passengers can choose to fly BA from T5 run by BAA or to fly KLM from T4 run by another company. That way, you remove the monopoly of a company that runs 68m passengers. It is not a real alternative for someone who lives near Heathrow to travel to Gatwick for a flight just because they do not wish to fly through a terminal owned by BAA.
It is only when a passenger has a real choice of carrier and terminal that competition will improve the performance.
- Graham, Reading, England, 23/04/2008 12:34
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Can't they be forced to sell Heathrow instead? Gatwick is for the bucket and spade brigade and who cares who runs that. Heathrow is far more important to UK Plc and needs to be returned to being an airport rather than a very badly run, poorly staffed shopping mall with aircraft.
- Nobby Clark, Perth, Scotland, 23/04/2008 11:45
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Why is the "government" so dumb to give BAA now another once-in-a-lifetime opportunity to profit even more by allowing them an outlandish price for splitting up this monopoly?! I heard BAA would get £3billion for Gatwick? And they have invested nothing!
- Jacqueline, Hampstead, London, 22/04/2008 18:29
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