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Comment: break up BAA
Evening Standard22 Apr 2008
Today's announcement from the Competition Commission argues that BAA's ownership of seven airports, including Heathrow, Gatwick and Stansted, is not serving airlines or customers well. The Commission also asks whether the fact that BAA controls so many airports is the reason why there is a shortage of capacity. A break-up of BAA's near-monopoly could ultimately follow this report.
The statement caps a disastrous year for the airport operator. Its parent company, Ferrovial, has huge debts and BAA has lost a slew of senior executives, accelerated yesterday following the fiasco of Terminal 5's opening earlier this month.
BAA's privatisation has not led to significant competition or increased choice or better service for consumers. To most passengers, at Heathrow especially, investment appears to have gone largely on adding shops rather than reducing queues for security and improving comfort.
So breaking up BAA makes sense. However, given the strong local opposition to expanding Heathrow and the many west London marginal constituencies involved, competition must be introduced in a way that addresses the shortage of capacity. A break-up could create incentives for air traffic to redistribute itself around London's five airports. Heathrow might focus on business travellers, currently little more than a third of its traffic, and lose leisure travellers to Gatwick and Stansted or to rail. Getting the Civil Aviation Authority's policy for landing slots right will be crucial. Such changes will not suit BA but there is more at stake here than one company's profits.
London must have decent modern airports to maintain its international business leadership, but as the Competition Commission points out, there are big uncertainties over the planning process for airport expansion. Ministers should now have the courage to endorse today's recommendation and think more boldly about the future of London's airports.
