Airport shake-up in UK
The Office of Fair Trading in the United Kingdom has published a report in which it criticizes BAA, the owner of several airports in the United Kingdom, for poor service and complacency due to lack of competition in the market. The Office of Fair Trading has the power under the Enterprise Act 2002 to refer the report to the Competition Commission, an independent authority that carries out investigations into mergers, markets and regulated industries in the United Kingdom where it feels that competition is being harmed. The Competition Commission has various powers to issue orders to control markets where it is deemed that competition is being harmed by a company’s or companies’ behavior. In the case of BAA, the company owns seven of the UK’s largest airports, including the major London airports, Heathrow, Gatwick and Stansted. The Competition Commission wants to break up BAA’s monopoly control over the airports in the UK. A report has shown that the service level for passengers and airlines has become increasingly worse as BAA does not face pressure from any viable alternative airport providers. Among the criticisms are long security queues, crumbling infrastructure and cramped conditions. In a ranking by the Airports Council International, Heathrow was ranked 90th out of 101 airports worldwide.
The Competition Commission has issued a consultation paper where it proposes that two of the three London area airports owned by BAA be sold to a competitor and that one of the airports BAA owns in Scotland be sold. In addition, it is seeking certain behavioral undertakings from BAA in respect of the airports which will remain within its ownership to ensure that BAA acts in pro-competitive manner. It is also proposing that the Civil Aviation Authority be granted enhanced regulatory powers that would allow it to grant and revoke operating licenses in order to influence airport owners. BAA has criticized the proposal as it will likely delay the British government’s desired expansion of the airports in order to meet rising demand from airlines and passengers. The Competition Commission is, however, convinced that the only way to break the trend of poor service levels is to introduce more competition in the market.