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OFT proposes to refer BAA to Competition Commission

The Office of Fair Trading (OFT) today confirmed that it proposes to refer the British Airports Authority (BAA), owned by Spanish giant Ferrovial, to the Competition Commission. The OFT invites comments until 8 February 2007 before making its final decision.
BAA handles 60% of UK passenger traffic through its seven airports, including the three main London airports -Heathrow, Gatwick and Stansted - Southampton airport, and in Scotland Glasgow, Aberdeen and Edinburgh. If BAA is referred, a negative opinion from the Competition Commission could signal the break-up of the company.The OFT concluded that around London, the dominance of BAA could be a bar to competition. This dominance - 90% of the air passenger traffic in south east England - could lead to the sale of Gatwick: the second largest airport in the UK. The OFT was also critical of BAA's customer satisfaction record.The report also found that Scottish passengers faced unregulated charges, generally exceeding those in the south east. However, passengers in Glasgow benefited from lower charges, thanks to competition from the independent Prestwick airport, reinforcing the OFT's case for greater competition.Chief executive of the OFT John Fingleton said: 'We believe that the current market structure does not deliver best value for air travellers in the UK and that greater competition within the industry could bring significant benefits for passengers. There is evidence of poor quality and high charges - BAA's investment plans, which are of great importance to the UK, have raised significant concerns among its customers. These are signs of a market not working well for consumers and we believe that a full inquiry into BAA's structure is justified.'The OFT also propose the deregulation of Manchester airport, allowing it to expand and compete for more customers in the north and north west of England. BAA will respond in a statement later today.

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