A £3 billion sale of Gatwick airport came a step closer today following a damning official report into BAA.

The Competition Commission said there was "a very real prospect" it would force BAA to sell one of its "big three" London airports because of a catalogue of failings. Gatwick is seen by aviation experts as the most likely to be offloaded.

The commission's preliminary report came as Transport Secretary Ruth Kelly ordered a major review of the way airports are regulated.

It said BAA had failed dismally to meet passengers' needs and that a lack of competition between Heathrow, Gatwick and Stansted had " consequences for the levels, quality, scope, location and timing of investment, and levels and quality of service".

Although today's document did not make specific recommendations, it seems clear that the full report in August will conclude that a break-up of BAA's 21-year monopoly is unavoidable. A sell-off raises the prospect of rival airport owners cutting queuing times or investing in better terminals to win passengers.

The commission began its inquiry last summer amid chaos at Heathrow when new security rules led to huge queues. The disastrous Terminal 5 launch last month, when the "state of the art" baggage handling system collapsed, heightened concerns about BAA's operational ability.

It has owned Heathrow, Gatwick and Stansted since 1987 and runs Southampton, Edinburgh, Glasgow and Aberdeen airports.

Today's preliminary report states: "The Competition Commission is inclined to the view that common ownership of the BAA airports is a feature of the market that adversely affects competition between airports and/or airlines."

Most airlines welcomed the report, although BA said it did not favour a full break-up of the airports authority.

A spokesman for Ryanair said: "The recent chaos at Terminal 5, the continuing long passport and security queues at Stansted, and the 47 per cent price increases at Gatwick clearly proves that the BAA monopoly over the London airports is bad for consumers, bad for passengers and bad for UK tourism."

Nigel Turner, chief executive of bmi, said: "We strongly believe that to ensure future real intra-airport competition in the UK the only option facing the regulators is the dismantling of BAA's monopolistic grip over the UK's busiest airports in the South-East and in Scotland."

Andy Harrison, easyJet chief executive, said: "It has been crystal clear for a long time that the combination of poor airport regulation and BAA's ownership of adjacent airport monopolies acts against the interests of airport customers and passengers. Changes cannot come soon enough." But Britain's biggest airline, BA, said it favoured a licensing system, whereby BAA's performance was monitored by regulator the Civil Aviation Authority. BAA would receive sanctions for underperformance, with the maximum penalty being the withdrawal of the licence.

BAA chief executive Colin Matthews, conceded today that performance needed to improve, particularly at Heathrow. He went on: "We are quite clear - and that's why we restructured the company yesterday - that we must have performance improvements. The opening of T5 was really a bitterly disappointing moment. "We need to bear in mind that Heathrow is a pretty special case. Recently an American airline paid, I think, £100 million for two pairs of (take off and landing) slots at that airport." The inquiry, which ministers could use to justify raising the cost of flying, will look into the role of the CAA, whether operators could use airport capacity more efficiently and how to draw in sufficient funding for airport expansion, including more runways and terminals such as a third runway and possible sixth terminal at Heathrow.

DAMNING REPORT CONDEMNS SLOPPY AND DISTRACTED MANAGEMENT

THE 168-page report paints a damning picture of sloppy management at the company that controls more than 90 per cent of airport capacity in the South-East.

Its overall conclusion is likely to ring a chord with many passengers who have recently used the overcrowded and ageing facilities at Heathrow or Gatwick in particular. The commission said: "Our current view is that at the South-East airports, BAA currently shows a lack of responsiveness to the interests of airlines and passengers."

One leading aviation expert said: "I've never read anything so damning. It is appalling that such a major company has been able to perform so badly for so long."

Some of the failings identified in the report include:

• A "short-term and reactive" approach to airport expansion. Major decisions about infrastructure have "generally been too late to meet demand". BAA managers have also too easily given commitments not to expand further at an airport and abdicated responsibility to government for strategic planning.

• The "distraction" of Terminal 5 has meant "less meaningful consultation" with other airlines than BA about improvements to Heathrow. In particular BAA "appears to have failed to identify early on, the opportunities and challenges that the sole occupancy of T5 by BA would create." Delays in the construction of Heathrow East Terminal to replace ageing Terminals 1 and 2 were given as an example.

• Excessive costs in airport development and unwillingness to accept alternative plans from airlines, particularly at Stansted, where £50 million was spent on consultants.

• Poor quality of passenger service at Heathrow resulting from BAA's "failure to invest in essential operational processes such as the central search, transfer search, perimeter, control posts and baggage."

It notes that Heathrow ranked 90th in a worldwide league table of 101 airports. On security waiting times Stansted, Heathrow and Gatwick ranked 98th, 97th and 93rd respectively.

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Reader views (7)

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I have worked with the BAA for 20 plus years now, and all I can say its very poorly managed, at high level. They are only interested in the £/$. A Spanish company purchased us and they are so badly in debt now we have to suffer because of greed. They spend £10 to save £1. Its a big joke really. Our customers are second not first. I am sorry for this. Because of bad decisions made now, all Gatwick working staff will loose there final salary pensions if they sell Gatwick, which is just a matter of time now, and this is not because they are going to be told to but for there bad debts. I am sorry to all those who use Gatwick, we all try hard to give you a good service but due to cut backs by high management we are so understaffed. I know what ever happens the top boys will be ok with big payouts as per normal.

- Harry Smith, Crawley

I live in Canada and fly to London twice a year. I always choose an airline that utilizes Gatwick & avoiding Heathrow which is far too busy. While Gatewick seems busy it has never disappointed me for arrival or departure. Speed processing, planes are on time and easy access to Victoria & beyond makes Gatwick my airport of choice.

- Jon, Toronto Canada

Surely the (Spanish!) owners of the BAA will laugh all the way to the bank. They just bought the thing and already they are "forced" by the Nu Labor idiot government to get £3billion?! Sounds slightly like more rewards for their consistent failure to provide the British passengers with airport services!

- Jacqueline, Hampstead, London

It is time this apology for a service company was broken up. There is no reason why airports should not be individually owned and run. We never transit through Heathrow now, and Edinburgh and Glasgow are sinking to the same sad quality of service. Planes always late taking off, astronomic charges, insufficient staff struggling under abysmal management.
We always travel from Newcastle or Manchester now. Not owned by BAA, pleasant, functional and efficient.

- Rod Gray, Berwick upon Tweed

If so many people are always moaning about the shops etc in the terminals.. surely the easy option is to never actually use the shops, restaurants and bars.. I know I have never once bought anything in an airport shop... if more people refrained the stores would soon leave.

- Joanna, london

Which company manages London City Airport, which is an absolute delight to use as a passenger and hence is my favourite London airport?

This company should be awarded the management of LHR and LGW.


"London" Stansted is just too awful to contemplate, even under new management.

- Weddigen, London SW

BAA has proved again and again that is primarily a shopping centre company - with airports as a sideline.

- Jeremy E, London UK

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