Jim Mason
2006-08-31 09:44:05 UTC
BAA rejects break up calls31 August 2006
BAA today dismissed calls for the break-up of its UK airports, arguing that
a more fragmented ownership structure would undermine vitally needed
investment in airport capacity.
In a submission to the Office of Fair Trading study on the UK airports
market, BAA urged the OFT to focus upon the true interests of consumers.
Stephen Nelson, BAA?s Chief Executive, said: ?I fully understand why
airlines like British Airways and Ryanair want to weaken airport operators
and achieve greater control over prices and investment at the airports
where they hold such powerful positions themselves, but the job of the
competition authorities is to protect the longer term interests of all
consumers.
?The biggest problem facing UK air travellers is the shortage of airport
capacity, especially in South East England. Failure to build new runway
capacity will lead to gridlock, disappointed customers and significant loss
to the national economy.
?Despite this, some airlines want to break up BAA and impose even heavier
price regulation. This have-it-both-ways proposal would be a poisonous
cocktail for consumers. It risks setting back the much needed investment
programme which BAA is pursuing, to transform London?s airports through
projects like Heathrow Terminal 5, Heathrow East and the Stansted second
runway.?
BAA?s final submission to the OFT argues that the airports market is highly
imperfect because most people use the airport closest to where they live,
or which offers flights to their preferred destination. The market is also
distorted by many unusual factors, such as airport slot allocation
procedures and inter-governmental agreements on air services.
BAA says that the threat to investment from break-up will outweigh any
possible benefits to consumers in terms of choice, price or quality of
service. BAA?s UK airports are already among the cheapest in Europe in
terms of landing charges, which are heavily subsidised by BAA?s retail
activities and regulated by the Civil Aviation Authority.
Stephen Nelson added: ?We are not saying that the current situation is
perfect and we welcome the OFT?s review, so long as it is wide-ranging and
evidence-based. The OFT needs to consider regulation as well as ownership
structures. The evidence suggests that BAA has done a good job since
privatisation, in terms of security and safety; capacity; quality of
service and price.?
BAA today dismissed calls for the break-up of its UK airports, arguing that
a more fragmented ownership structure would undermine vitally needed
investment in airport capacity.
In a submission to the Office of Fair Trading study on the UK airports
market, BAA urged the OFT to focus upon the true interests of consumers.
Stephen Nelson, BAA?s Chief Executive, said: ?I fully understand why
airlines like British Airways and Ryanair want to weaken airport operators
and achieve greater control over prices and investment at the airports
where they hold such powerful positions themselves, but the job of the
competition authorities is to protect the longer term interests of all
consumers.
?The biggest problem facing UK air travellers is the shortage of airport
capacity, especially in South East England. Failure to build new runway
capacity will lead to gridlock, disappointed customers and significant loss
to the national economy.
?Despite this, some airlines want to break up BAA and impose even heavier
price regulation. This have-it-both-ways proposal would be a poisonous
cocktail for consumers. It risks setting back the much needed investment
programme which BAA is pursuing, to transform London?s airports through
projects like Heathrow Terminal 5, Heathrow East and the Stansted second
runway.?
BAA?s final submission to the OFT argues that the airports market is highly
imperfect because most people use the airport closest to where they live,
or which offers flights to their preferred destination. The market is also
distorted by many unusual factors, such as airport slot allocation
procedures and inter-governmental agreements on air services.
BAA says that the threat to investment from break-up will outweigh any
possible benefits to consumers in terms of choice, price or quality of
service. BAA?s UK airports are already among the cheapest in Europe in
terms of landing charges, which are heavily subsidised by BAA?s retail
activities and regulated by the Civil Aviation Authority.
Stephen Nelson added: ?We are not saying that the current situation is
perfect and we welcome the OFT?s review, so long as it is wide-ranging and
evidence-based. The OFT needs to consider regulation as well as ownership
structures. The evidence suggests that BAA has done a good job since
privatisation, in terms of security and safety; capacity; quality of
service and price.?
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