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Overbearing airport operator urged to sell

Latest update : 2008-08-20

Airport operator BAA, owned by Spain's Ferrovial, received a tougher-than-expected ruling from Britain's competition regulator, which said it should sell two of its three London airports because of its near monopoly in the region.

Read Owen Fairclough's commentary: "Clipping the wings of a stalling airport operator"

 

Britain's Competition Commission on Wednesday recommended the sale of three airports, two in London and one in Scotland, that are operated by Spanish-owned group BAA, owing to the company's dominance.

Following an investigation, the commission (CC) said it was seeking views on which two of London's Heathrow, Gatwick and Stansted airports should be sold.

After the period of consultation, the CC would also decide which of Edinburgh and Glasgow airports in Scotland should be relinquished by BAA.

BAA runs seven airports across Britain, so is effectively being forced to lose almost half of its portfolio and two of its biggest hubs.

BAA hit out at the CC's recommendations, describing the watchdog's findings as "flawed" and its remedies as "disproportionate and counter-productive."

"The Commission's findings state that the lack of runway capacity is a main reason for what it calls the current poor standards of service and the lack of resilience at times of disruption, which results in regular delays," BAA said in a statement.

"By calling not just for a fundamental restructure of BAA ... the Commission risks delaying" delivery of new runways, it added.

The CC said that it would publish its final recommendations during the first quarter of 2009.

Its statement on Wednesday said: "The Competition Commission has provisionally found that there are competition problems at each of BAA's seven UK airports (Heathrow, Gatwick, Stansted and Southampton in England, and Edinburgh, Glasgow and Aberdeen in Scotland) with adverse consequences for passengers and airlines."

"A principal cause is their common ownership by BAA. There are also competition problems arising from the planning system, aspects of government policy and the system of regulation."

The commission added: "The CC is now seeking views on which two of BAA's three London airports should be sold and similarly which of Edinburgh or Glasgow airports should be sold."

BAA holds a 60 percent market share of all passengers passing through British airports, a figure which rises to 90 percent around London, according to Competition Commission data.

British airlines have repeatedly called for the break-up of BAA which was bought in 2006 by a consortium led by Spanish construction group Ferrovial for 10.23 billion pounds. BAA was privatized in 1987, while the CC is an independent public body.

Airlines repeatedly attack BAA for delays, overcrowding and queues caused by extra security measures put in place after the September 11, 2001 terror attacks and London bombings in 2005.

About 1,700 aircraft take off from its British airports every day -- equivalent to one every 30 seconds -- and it handled 150 million passengers between March 2007 and February this year, according to BAA.

Date created : 2008-08-20

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