Watchdog finds "complete lack of competition"
The UK Competition Commission (CC) today (March 19) confirmed its decision that BAA must sell three of its seven airports.
In its final report, the CC said the airports owner must sell Gatwick, Stansted and either Glasgow or Edinburgh.
The decision will leave BAA, which in turn is owned by Spanish company Ferrovial, with four airports: Heathrow, Southampton Aberdeen and one of the two other Scottish airports.
Christopher Clarke, chairman of the Commission's airports inquiry, said there was "a complete lack of competition" between the airports in south east England and between Glasgow and Edinburgh.
BAA said it would "consider the Competition Commission report carefully before deciding how to respond."
But it also said its analysis of the problems was "flawed."
The CC also ruled that the sale of the three must be completed in two years with Gatwick going first, followed by Stansted and the one of the Scottish duo.
BAA began the process to sell Gatwick last September and already has a list of bidders.
The CC also said that BAA had to improve consultation with airline customers at Aberdeen and called on the UK airports' regulator CAA to take "certain specified action at Heathrow."
The Commission also plans to make recommendations to the UK government on aspects of its airports' policy.
This will include "shortcomings of the current airports' regulatory system" being taken into account and the need for a "more effective and more flexible regulatory system."
The CC has been compiling its report for two years and published its preliminary findings, calling for the sale of three BAA airports, last year.
Mr Clarke 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 recognize 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."
The full BAA response said: "BAA will consider the Competition Commission report carefully before deciding how to respond.
"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."
The CC ruling, which will break up the much criticised monopoly of BAA at major airports in Southeast England, was welcomed by the Stansted Airline Consultative Committee which represents airlines at the airport.
Its chairman said: "Passenger numbers at Stansted are in freefall, driven downwards by high airport charges and BAA monopoly indifference. The airlines can reverse this trend if new owners deliver what airlines and their passengers need - efficient facilities and lower costs.
"Under the discredited CAA regulatory regime of Dr Harry Bush, BAA produced unwanted and overpriced facilities with the inevitable consequences of collapsing traffic and loss of business.
"Prospective new owners should take note."
The Stansted Airline Consultative Committee (ACC), which represents airlines at Stansted, today (Thursday 19 March 2009), welcomed the Competition Commission's decision to break up the BAA monopoly and looks forward to working with the new owners to develop traffic at Stansted.
ACC Chairman David O'Brien said today: "Passenger numbers at Stansted are in freefall, driven downwards by high airport charges and BAA monopoly indifference. The airlines can reverse this trend if new owners deliver what airlines and their passengers need - efficient facilities and lower costs.
"Under the discredited CAA regulatory regime of Dr Harry Bush, BAA produced unwanted and overpriced facilities with the inevitable consequences of collapsing traffic and loss of business. Prospective new owners should take note."