British Competition Commission Orders BAA Monopology to Divest in British Airports
The British Competition Commission is soliciting feedback on a preliminary report that calls for the partial dismantling of BAA’s monopolistic control of British airports. The Commission is calling for BAA to sell two of its three London metro airports and one of its two Scottish airports.
According to the Commission, BAA accounts for 60% of passenger travel in Great Britain, and 90% around London. The Commission insist that the lack of competition has led to poor service and a delay in critical infrastructure development.
BAA is likely to hold onto Heathrow in London, the world’s largest airport in terms of international passenger travel. The report states that the Commission is “unlikely to require the divestiture of Heathrow unless the sale of Gatwick or Stansted is likely to be impractical or ineffective.”
Hochtief, Germany’s largest construction firm, has already expressed interest in purchasing Gatwick. Manchester Airports Group, the second-largest airport operator in Great Britain, would like to acquire either Gatwick or Stansted, or both.
Putting Gatwick and Stansted into the hands of new owners is not expected to result in substantial changes in competition among the airports in the near term. A five-year pricing deal among the airports is expected to remain in place. However, airline carriers may choose to divert a greater level of air traffic to Stansted of Gatwick if the owners promise substantial investments in infrastructure, or a reduction in landing fees.
The Commission is also inviting comment on which Scottish airport – Edinburgh or Glasgow – should be sold to a separate operator. A sell-off of either is expected to lead to greater competition among the two airports, resulting in less expensive travel options for passengers. Because the Glasgow infrastructure supports more long-haul flights, experts expect to see greater investment in Edinburgh’s long-haul capacity in the years ahead to remain competitive.
BAA has faced criticism over its lethargic management for many years. The air-traveling public often complain of delays and overcrowding. At Heathrow, nearly one in three flights is delayed; last year, 68 million passengers traveled through Heathrow’s terminals even though they were designed to accommodate just 45 million passengers annually. In a 2007 customer experience survey by the Airports Council International on the world’s 101 airports, Stansted came in at 74. Gatwick was ranked 75 and Heathrow, 90 of 101.
The Competition Commission is confident that service will improve after BAA’s monopolistic control is dismantled. It is report follows a 17-month investigation into the airport market, and was spurred by an earlier investigation by the UK’s Office of Fair Trading.
A final version of the report is expected in March 2009, with an auction that takes place before 2010.
About the author: Jason Hardy is an avid writer on legal issues, including international writing about many subjects including european antitrust lawsuits. Eu competition law interests Jason particularly. He resides in Seattle, Washington.
According to the Commission, BAA accounts for 60% of passenger travel in Great Britain, and 90% around London. The Commission insist that the lack of competition has led to poor service and a delay in critical infrastructure development.
BAA is likely to hold onto Heathrow in London, the world’s largest airport in terms of international passenger travel. The report states that the Commission is “unlikely to require the divestiture of Heathrow unless the sale of Gatwick or Stansted is likely to be impractical or ineffective.”
Hochtief, Germany’s largest construction firm, has already expressed interest in purchasing Gatwick. Manchester Airports Group, the second-largest airport operator in Great Britain, would like to acquire either Gatwick or Stansted, or both.
Putting Gatwick and Stansted into the hands of new owners is not expected to result in substantial changes in competition among the airports in the near term. A five-year pricing deal among the airports is expected to remain in place. However, airline carriers may choose to divert a greater level of air traffic to Stansted of Gatwick if the owners promise substantial investments in infrastructure, or a reduction in landing fees.
The Commission is also inviting comment on which Scottish airport – Edinburgh or Glasgow – should be sold to a separate operator. A sell-off of either is expected to lead to greater competition among the two airports, resulting in less expensive travel options for passengers. Because the Glasgow infrastructure supports more long-haul flights, experts expect to see greater investment in Edinburgh’s long-haul capacity in the years ahead to remain competitive.
BAA has faced criticism over its lethargic management for many years. The air-traveling public often complain of delays and overcrowding. At Heathrow, nearly one in three flights is delayed; last year, 68 million passengers traveled through Heathrow’s terminals even though they were designed to accommodate just 45 million passengers annually. In a 2007 customer experience survey by the Airports Council International on the world’s 101 airports, Stansted came in at 74. Gatwick was ranked 75 and Heathrow, 90 of 101.
The Competition Commission is confident that service will improve after BAA’s monopolistic control is dismantled. It is report follows a 17-month investigation into the airport market, and was spurred by an earlier investigation by the UK’s Office of Fair Trading.
A final version of the report is expected in March 2009, with an auction that takes place before 2010.
About the author: Jason Hardy is an avid writer on legal issues, including international writing about many subjects including european antitrust lawsuits. Eu competition law interests Jason particularly. He resides in Seattle, Washington.
Labels: eu competition law, eu law, european antitrust lawsuits
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