Airport shake-up 'good for passengers'

PASSENGERS could benefit after the biggest shake-up in decades was signalled for Scotland's airports.

The operator BAA should have to sell off either Edinburgh or Glasgow airport and face new controls at Aberdeen, a Competition Commission investigation has concluded.

Airlines and travel agents welcomed the prospect of increased airport competition, which they said could lead to lower fares and improved facilities.

But several business groups and aviation unions backed BAA, which said the proposed moves risked "creating uncertainty, delay and confusion".

The commission's provisional findings also called for Spanish-controlled BAA to sell two of its three London airports. Gatwick and Stansted are expected to be put up for sale while the firm retains Heathrow.

The commission said it had found "competition problems" at BAA's Scottish and London airports, "with adverse consequences for passengers and airlines". It said separate owners for Edinburgh and Glasgow would "improve their offerings".

The commission has also proposed unspecified "behavioural remedies or some form of regulation" at Aberdeen airport to address its local monopoly.

Christopher Clarke, who led the investigation, said: "We have provisionally found that there are significant competition problems arising from BAA's common ownership of seven UK airports – Heathrow, Gatwick, Stansted and Southampton in England, and Edinburgh, Glasgow and Aberdeen in Scotland.

"This is evident from a large number of factors, including its lack of responsiveness to the needs of its airline customers and a lack of initiative in planning capacity. This has resulted in investment that is not tailored to the requirements of airport users and lower levels and quality of service for both airlines and passengers."

The commission said BAA had a poor record in Scotland. "(It] has until recently been noticeably slow to develop new routes at Glasgow and Edinburgh, whilst, at Aberdeen, its investment plans are regarded as unambitious despite relatively high levels of profitability," it said.

Airlines welcoming the move included Ryanair, which said: "Competition works – monopolies don't."

Travel agents said fares could be cut as a result of lower airport charges and suggested airport facilities might be improved.

Colin Matthews, BAA's chief executive, told The Scotsman it could appeal against the decision, but he admitted: "We need to be realistic and face the possibility that our arguments will not be heard."

However, he said there was no "widespread clamour" in Scotland for Edinburgh or Glasgow airports to be sold off.

Liz Cameron, the chief executive of the Scottish Chambers of Commerce, accused the commission of "failing to fully comprehend that Glasgow and Edinburgh serve separate markets".

But Catriona Munro, a competition expert at the Glasgow law firm Maclay Murray & Spens, said: "It seems unlikely the Competition Commission will capitulate on such a significant issue."

BACKGROUND

• COMMON ownership of Edinburgh and Glasgow airports prevents competition between them.

• The commission proposes the sale of either Glasgow or Edinburgh airport and seeks views on this.

• Common ownership of the three BAA London airports (Heathrow, Gatwick and Stansted) prevents competition between them.

• The commission proposes the sale of two of BAA's London airports.

• However, it is unlikely to require the sale of Heathrow unless the sale of Gatwick or Stansted is likely to be impractical or ineffective.

• Aberdeen's comparatively isolated geographical position, combined with other factors that make it unattractive to serve a catchment of Aberdeen's size with more than one airport, restrict airport competition.

• Aberdeen's strong local monopoly position would not be solved by its sale, so views are sought on what other measures might be appropriate, such as behavioural undertakings or regulation.

• The current system of regulation of airports distorts competition between airlines.

• The system of regulation and the role of the Civil Aviation Authority should be reviewed to make regulation more effective.

• The government should review the 2003 aviation White Paper to consider its impact on airport competition.



IN NUMBERS

240m

UK airport passengers last year

150m

passengers at BAA airports

7

BAA airports

90%

BAA market share in London area

84%

BAA market share in Scotland

60%

BAA market share in UK

68m

Heathrow passengers

35m

Gatwick passengers

24m

Stansted passengers

9m

Edinburgh passengers

9m

Glasgow passengers

2m

Southampton passengers

22m

Manchester passengers

10m

Luton passengers

9m

Birmingham passengers

6m

Bristol passengers

6m

Newcastle passengers

£4.3bn

Cost of Heathrow terminal five

1987

Year BAA privatised

2015

Next new runway – at Stansted

2020

Earliest date for new Heathrow runway

£2-3bn

Expected Gatwick sale price

£1-2bn

Expected Stansted sale price

2003

Last government aviation white paper