CC Orders BAA To Sell Two Airports

The Competition Commission (CC) has ordered BAA to sell both Gatwick and Stansted as well as either Edinburgh or Glasgow.

In its final report on BAA's ownership of seven UK airports, the CC also stipulates that BAA must sell all three airports within two years. They are to be sold in sequence, beginning with Gatwick, then Stansted, followed by either Edinburgh or Glasgow.

The sale of Gatwick was initiated by BAA in September 2008 and the sales process is already under way. The CC is also requiring BAA at Aberdeen to improve consultation with airlines as well as publish certain financial and other information. In addition, the CC is recommending to the airports' regulator, the Civil Aviation Authority (CAA), that it should take certain specified action at Heathrow, the UK's only hub airport, where BAA will continue to have substantial market power even after the sale of Gatwick and Stansted. Further, the CC is making recommendations to the Government on aspects of government airports� policy, as well as on matters arising from the inquiry on the shortcomings of the current airports' regulatory system to be taken into account in their current review of the need for, and design of, a more effective and more flexible regulatory system.

The CC's final report takes into account the substantial evidence received from BAA, the airlines, the CAA and many other parties over almost two years, including the further evidence since the publication in August 2008 of the provisional findings and proposals on possible remedies. The report finds competition problems with adverse effects for both passengers and airlines at all seven of BAA UK airports (Heathrow, Gatwick, Stansted and Southampton in the South of England, and Edinburgh, Glasgow and Aberdeen in Scotland).

Christopher Clarke, Chairman of the BAA Airports inquiry, said: "We have decided that the only way to address comprehensively the detriment to passengers and airlines from the complete absence of competition between BAA's south-east airports and between Edinburgh and Glasgow is to require BAA to sell both Gatwick and Stansted as well as either Edinburgh or Glasgow. They will each then operate under separate ownership from BAA's other airports. We recognise that in using our powers in this way, we will have a significant impact on BAA's business. However, given the nature and scale of the competition problems we have found, we do not consider that alternative measures, such as the sale of only one of the London airports or greater regulation, will suffice.

"We are confident that the sale of these airports will bring substantial benefits to passengers and airlines. We expect that the new airport owners, with the operating capabilities and financial resources to develop them as effective competitors, will have a much greater incentive than BAA to be more responsive to their customers. We also expect further benefits from BAA's own response to the action taken by these new competitors."

BAA said it will consider the Competition Commission report carefully before deciding how to respond.

A spokesperson said: "We accept the need to change and, having reorganised to improve customer service and having initiated the sale of Gatwick, BAA is already changing.

"However, we believe the Commission's analysis is flawed and its remedies may be impractical in current economic conditions."

(CD/JM)