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March 19th, 2009

BAA airport sell-off: consumer boost or weak compromise?

Posted by: Ross Chainey

The Competition Commission has ordered airport operator BAA to sell Stansted and either Edinburgh or Glasgow aiport, once it has completed the sale of Gatwick. The commission has been looking into BAA’s dominance of airports in Scotland and England’s south-east for two years and decided that the lack of competition between airports has been detrimental to passengers.

The commission’s final report also recommends that the airports be sold within two years and that they be sold in sequence, starting with Gatwick.

BAA was acquired by Spanish company Ferrovial in 2006 for 10 billion pounds but has been hit hard by the economic downturn. The firm has said that it may challenge the order to sell because such quick sales in such conditions could be impractical.

Whether the order to sell will actually benefit air passengers is a much debated issue. A spokesperson for Virgin Atlantic told The Times that the airline supports the move. ““The break-up of BAA is something Virgin Atlantic has requested for many years and it will undoubtedly benefit consumers. Better airport facilities in the UK and lower prices will be the result and we therefore congratulate the CC on its findings.”

Paul Whelan, head of industry body the Small to Medium Airports Group, disagrees, telling the BBC that it will do nothing for the consumer. “There are a lot of airlines including Ryanair using Edinburgh and it is doing a good job, while Stansted has also been good for airlines.” The BBC also has this Q&A which asks if this is a good move for air passengers.

The Telegraph’s Transport Editor, David Millward, meanwhile writes that the Competition Commission’s report is a ‘weak compromise.’ “After all it is not BAA that has suddenly decided to charge for the clear plastic bags people need to carry liquids through security. It is Manchester Airport, whose owners have been tipped to bid for Gatwick or Stansted.

“In many ways the Competition Commission report is a weak compromise. Many are disappointed that Heathrow was not broken up with terminals competing against each other for business. That worked at JFK in New York and it could well have worked here.”

So who will possibly step in to buy the airports up for sale? It’s a complicated business; the commission has ruled that each should be bought by a different company and potential owners will be put under tough scrutiny. The Guardian has published this guide to the companies in the running.

What do you think of the Competition Commission’s decision? Do you think forcing BAA to sell some of its airports will improve customer experience? What do you think of the current standard of the airports in question?

August 20th, 2008

Smashing up BAA - an improvement for passengers?

Posted by: Astrid Zweynert

baa.jpgWhen the government established the British Airports Authority in 1965, its aim was to make airports more flexible and profitable. Profitable they may have been but flexibility is not something that Britain’s larger airports are renowned for.

The list of complaints about BAA is a long one, both from airlines and passengers. Airlines says the charges levied are excessive. Travellers say airport terminals are overcrowded, delays are all too frequent and increased bureaucracy has prevailed since the tightening of baggage restrictions in August 2006.

Some commentators say competition will do wonders for airports which might get run for the benefit of airlines and passengers rather than the operating company, which sometimes has been criticised as being more interested in making money from its airport shops than in giving travellers a speedy journey through its terminals.

“BAA is one of Britain’s most arrogant, complacent and customer-unfriendly businesses. It’s a showcase for the disbenefits of immunity from competition,” Jeff Randall writes in the Daily Telegraph. “BAA handles more than 90 percent of all airport traffic in the South East, yet treats those who pay its wages - airline passengers - as a nuisance. As long as it enjoys such monopoly power, we can look forward only to more of the same.”

But others argue that with BAA’s more than 40 years of experience and the company’s investment in the UK’s airports, a break-up could cause even more problems, and crucially, might not help sort out one of the key issues for transport policy - airport capacity. Heathrow, for example, is so close to bursting point that even small disruptions can lead to big delays.

Even British Airways, which has experienced its fair share of problems at BAA-owned airports, pointed out after the release of the Competition Comission’s report that the “ownership structure is secondary and that the focus should be on tougher regulation to help create more capacity.

Five years ago, the government published a 30-year air transport policy document. It was born following an exhaustive consultation process, which was open to every person in the country. An impressive 500,000 people from all over Britain participated, a reflection on what a crucial part airports play in people’s journeys.

The policy document recognised that new capacity remains the key issue facing Britain’s airports. It recommended that two new runways should be built in the south-east - one at Stansted and one at Heathrow, provided robust environmental conditions could be met.

Do you think the breakup of BAA’s airport empire will help improve things for passengers? Or is a complete rethink needed on how airports are run?

April 22nd, 2008

Is breaking up so hard to do?

Posted by: Stephen Addison

air.jpgBAA has long been the whipping boy for the often dismal ”passenger experience” at its airports. 

Too many shops, too many queues, not enough staff — the complaints are well-rehearsed and calls for the company to be broken up grow louder after every fresh disaster. At least they could get rid of Gatwick, and possibly Stansted too, the critics say.

But BAA itself insists breaking it up would jeopardise its planned programme of long-term investment at Britain’s airports.

Its former chief executive Stephen Nelson told the Competition Commission a year ago: “Our analysis is that the fundamental problem for passengers is lack of capacity, not the structure of BAA.

“Putting BAA in the dock for a complex set of problems - with deep legacy causes - will not help solve them. As well as tackling the immediate issue of queuing times, we are ready to make major, long-term investments in British airports, that will free the travelling public from congestion and provide a good experience at our airports, all for a few extra pounds per passenger. 

“But to achieve this, we need a strong and united BAA. We have the balance sheet scale to finance these projects efficiently and retain the unrivalled expertise in planning and building new airport facilities on time and on budget.”

That was before T5 of course but BAA’s position remains the same. What do you think of the basic point? Would a break-up necessarily result in an enhanced experience for the long-suffering passenger?