BAA break-up is the bronze medal - the gold medal is better regulation

The Competition Commission (CC) has hit the nail on the head.

Its report into the structure, behaviour and regulation of BAA is a hugely important piece of work which rightly recognises that the current system of airport regulation is fundamentally flawed and BAA has acted against the interests of the travelling public for many years. It should be welcomed as a giant step towards a better set of rules for how our busiest airports are run.

It is particularly pleasing that finally a public body has recognised what the airlines have been saying for years – that regulation isn’t working and BAA is a failure. The CAA has never acknowledged any of this, and instead has allowed air passengers to pay the price for the over-priced acquisition of BAA. The CC has brought some clear thinking to this issue, which it will need to maintain. There are four critical issues that will need to be resolved if airports are going to ever deliver efficient passenger friendly services:

• The BAA London airports are all individual monopolies because planning constraints and congestion prevent proper competition. We welcome the CC’s view that "evidence…reinforces the need, even were the airports to be separately owned, for a more effective regulatory system". (Page 18)
• The CC has said that we need better regulation, something we have been saying for years. In the long-run the only way to protect consumers from the owners of these monopolies is a root and branch reform of airport regulation, which the CC will provide the first steps for, and we need the Department for Transport must act to fill the leadership void left by the CAA.
• Ferrovial paid a ridiculously high price for BAA. That’s Ferrovial’s problem and airport passengers shouldn’t pay for Ferrovial’s stupidity for years to come
• The CC report referred to another important issue - who runs terminals? They have referred to our proposal that terminals should be broken up, saying "the separate development and ownership of terminals may address some of the detriments we have noted". (Page 9 of remedies section) We believe this is the best way to ensure that airports are built around airline and passenger needs, not those of shop-owners. This means giving airlines much more influence over how airport terminals are built and operated, we have shown we know how to deliver efficient services that our passenger want, the airports have proved they don’t.

Andy Harrison, easyJet Chief Executive said:

“Today’s Competition Commission report is what we have been waiting for, an honest and unbiased assessment of our airports. They have said what everyone knows, that our airports aren’t working, and that BAA and regulation aren’t working. But let’s not kid ourselves into thinking that the break-up of BAA will automatically result in a better deal for the travelling public. Simply selling a monopoly airport from one greedy, highly indebted capitalist to another will benefit no-one part from the dealmakers in the City. Gatwick will be sold to the highest bidder, who will probably be highly indebted, like Ferrovial, and, like Ferrovial, will be expecting UK consumers to pick up the bill.

“Therefore the other part of the CC’s work is just as important. Without better regulation there will be no more protection for the consumer from the greedy new owners than there was from BAA - in fact it would just create a number of BAA “Mini-Me Monopolies” – smaller monopolists, hell-bent on sweating their assets and increasing charges, without improving the passenger experience.”