From TravelMole:
The Office of Fair Trade has decided to carry out a probe into the UK airports market.
The study is designed to establish whether the market structure works well for consumers.
In May, the OFT said it was considering a probe and today announced that it has decided to proceed.
Its decision follows the purchase of main UK airports operator BAA by Spanish group Ferrovial for £10.3bn.
If the OFT finds competition is not working properly in the sector, Ferrovial might face a possible break-up of the group.
OFT chief executive John Fingleton said: “Greater competition between airlines over the past decade has led to wider choice for air travellers and lower fares.
“We now think it is time to explore the potential for greater competition within the airport industry as this could ultimately yield significant benefits in terms of timely and adequate investment in UK airports, a better value service to the UK travelling public as well as potentially relieving the industry – and ultimately its customers – of the costs of regulation that may be disproportionate.”
According to the OFT, nearly two-thirds of air passengers in the UK begin or end their journey at a BAA airport
In London this rises to 9 out of 10 passengers and in Scotland to 8 out of 10.
The OFT has not yet decided whether to defer the the airports market to the Competition Commission for a more in-depth investigation.
By Bev Fearis
Does anyone think that BAA Airports should be split up to allow better competition between them?
I personally don’t see that it would make any difference, especially for the London airports seeings as they seem to of been segregated to serve certain markets already:
Heathrow – predom international services (other than Europe!)
Gatwick – predom domestic/European service
Stansted – predom LCC services
By: rdc1000 - 3rd July 2006 at 20:43
Yes they were de-listed, of course they were, they stopped being a publicly owned company on their own right, but that doesn’t mean BAA doesn’t exist, thats like saying there is no such company as Land Rover, or Volvo, because they are pwned by Ford.
My company is doing a lot of work dealing with BAA at the moment, as a company we still deal with BAA as an entity.
By: cloud_9 - 3rd July 2006 at 14:45
Yes, but BAA still exists, for now, just the ownership has changed. I expect this will change going forward.
Well the change has already begun in parts because BAA (as a company) was de-listed from the London Stock Exchange a couple of days after the sale was agreed!
I was reading an interesting article in Skyport, the local newpaper for Heathrow, and it said that 82% of BAA shareholders agreed to the sale to Ferrovial, and that although Ferrovial have now bought BAA, they look set to keep most of the executive managers on because they have done such a good job so far of maintaining and developing the airports into world-class transit hubs.
By: rdc1000 - 30th June 2006 at 16:38
BAA dont own any airports as of 26th June, ADI bought them out.
Paul
Yes, but BAA still exists, for now, just the ownership has changed. I expect this will change going forward.
By: pierrepjc - 30th June 2006 at 16:22
BAA dont own any airports as of 26th June, ADI bought them out.
Paul
By: Dantheman77 - 30th June 2006 at 16:19
Keep stansted…with the growth of Low cost carriers, then the all the shops in the terminal + the new terminal (when it gets built) could be quite a cash cow in the future.
By: strawsonh - 30th June 2006 at 15:43
BAA should be forced to sell either Gatwick or Stansted to provide competition.
By: HP81 - 30th June 2006 at 15:23
This issue should have been dealt with before privatisation, but better late than never IMO.
There is no way that one company should own the three London airports, I would go so far as to say that LGW, LHR & STN should be totally split up, not just one of them.
S.B.
By: rdc1000 - 30th June 2006 at 14:56
The OfT investigation has been a threat since the 1980s when the Airport’s were privatised, many are asking why it has taken so long for something to happen?!
BAA control 92% of the London market by passenger figures. Whilst you are right to point out that the airports APPEAR to have their own markets you are slightly amiss. One of the problems id the greying between previously defined markets. Many full service routes now resemble LCC routes, whilst most charter carriers offer seat only sales on the same basis as LCCs. Charter carriers are in greatest numbers at LGW. Furthermore remember that easyJet’s largets UK base is London Gatwick..they’re an LCC!
And if you don’t think LHR has a strong domestic presence I suggest you look at the CAA stats, for whilst LGW may have more routes (not much in it there either), LHR handled nearly double the number of domestic passengers to LGW, and 3 times the number handled at STN.
Breaking down the airport ownership in the london market would add to competition because different owners would be able to compete not only on price but also on service offer. Currently the Airport’s are regulated so that their charges cannot get excessive, but the BAA still lives within a world where it chooses what it wants to do at its airports, look at the golden plated development they want for STN, instead of the LCC airport that the airlines want them to develop, they don’t see why they should pay for things they don’t want/need to be developed. Having another operator in the market would give them leaverage, and given that LGW would be the most likely to be sold then it may offer better competition in both markets, at least for central London.
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June 30, 2006 at 1:28 pm