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Comment: BAA break-up is good for London
Evening Standard20 Aug 2008
The Competition Commission has, as expected, said that the BAA airports monopoly must be broken. But in an unexpectedly robust provisional ruling, it says it must sell two of its London airports, which means, inevitably, Stansted and Gatwick. The ruling will be good for London. Competition should motivate all the airports to perform better, assuming suitable new owners of Stansted and Gatwick can be found and are committed to long-term investment. Certainly, the upshot would be far better performance at heathrow if the owner of BAA, the Spanish group, Ferrovial, is obliged to concentrate its energies there. That can only benefit the capital's economy, which relies on heathrow functioning efficiently. A slimmer BAA could better focus on establishing heathrow's pre-eminence as a premier business destination for flights directly to London. The Civil Aviation Authority may well relax the cap on what BAA charges airlines for its landing slots, which may mean higher charges for business travellers. That, however, is almost certainly a price that passengers are willing to pay in return for greater efficiency and fewer delays.
The sell-off would allow BAA and the potential new owners of Stansted and Gatwick to take stock of their real position at a time when increased fuel costs and public concern about the environmental impact of aviation mean the future of air travel looks very different than it did a decade ago. Certainly these factors should make the Government think again about the case for airport expansion across the board: better airports do not necessarily mean bigger airports. In particular, BAA's case for a third runway at heathrow is far less compelling than it once was, given that about a third of passengers are merely transferring through it to other destinations, adding little to the economy.
BAA should focus its energies on making heathrow work effectively for passengers whose destination is London. There will be no excuse for any repeat of the debacle that attended the opening of T5. Competition and greater focus should make all airports raise their game.
