BA has called for the partial break up of BAA. FT story here.
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Orininally reported by FT.com
British Airways calls for BAA break-up
By Kevin Done, Aerospace Correspondent
British Airways called for the first time on Thursday for the break-up of the BAA London airports monopoly.
Willie Walsh, BA chief executive, said that Heathrow and Stansted, the two airports identified by the government for expansion with the building of additional runways, should not be owned by the same company.
The call came only two weeks after operations at London Heathrow, British Airways’ global hub, were thrown into turmoil by BAA’s inability to respond quickly to the government demand for heightened security procedures at all UK airports.
Security was raised significantly early on August 10 in the wake of the foiling of the alleged plot to blow up several passenger jets on transatlantic routes out of Heathrow, which led to chaos at the airport, with hundreds of flights cancelled, long delays and thousands of bags misplaced.
Mr Walsh said the call for the break-up of the BAA monopoly was in “no way influenced” by recent security events but was a strategic response to the study launched by the Office of Fair Trading into the UK airports market in June.
However, Mr Walsh was fiercely critical of BAA‘s operations at Heathrow.
He said on Thursday there was evidence of BAA’s poor performance “well before August 10. BAA cannot use the sudden change (in security procedures) as the reason for its performance. They could and should have been better.”
Mr Walsh said “If BAA had responded faster, a lot of disruption could have been avoided. If you don’t get moving first thing at Heathrow, it leads to operational chaos. I believe there was enough time. Other airports around the UK responded.”
He said that the airline was “keeping all its options open” regarding legal action against BAA and a demand for compensation.
BA urged the OFT to refer the issue to the Competition Commission to hold a full investigation into the UK airports market because of its “concerns about current airport regulation and ownership”.
In the event of a break-up there would still need to be “strong regulation to protect users against monopoly power in particular at Heathrow and Gatwick”.
BA also proposed competitive tendering for a wider range of services at London airports including the provision of IT systems.
Pressure for a reference to the Commission is growing across the airline industry. Ireland’s Ryanair, the biggest low cost carrier in Europe, also called on Thursday for a break-up of the BAA monopoly.
EasyJet, the UK low cost airline, said that UK airports should be subject to “strong price regulation to stop them abusing their monopoly positions”.
It supported the break-up of BAA, but said the primary focus of the investigation should be tougher regulation.
BAA, the world’s biggest airports group, was taken over by a consortium led by Ferrovial, the Spanish construction, infrastructure and services group, in June.
It controls seven airports in the UK, which handled 145m passengers in the year to March. Last year it accounted for 63 per cent of all UK air passengers. It includes the three London airports Heathrow, Gatwick and Stansted, three Scottish airports Glasgow, Edinbugh and Aberdeen, as well as Southampton.
The OFT study is being concentrated on the south-east of England, where BAA accounted for 92 per cent of all the passengers using London airports in 2005, and on Scotland where its share was 86 per cent.
Remedies following any eventual market investigation by the Competition Commission could include “divestment of airports, airport runways or terminals.”
The OFT expects to publish the findings of its initial study in late 2006, which is expected to be followed by a reference to the Competition Commission for a full investigation.
