BA welcomes Competition Commission announcement

British Airways welcomes the Competition Commission's issues statement on BAA airports published yesterday (August 9, 2007) as competition between airports will improve customer service levels and lead to more investment in new infrastructure.

The airline believes that separate ownership of Heathrow and Stansted airports is key so that decisions about new runway construction in South East England are not concentrated in the hands of one company.

Willie Walsh, British Airways' chief executive, said: "Common ownership is the root cause of the failure to expand Heathrow's runway capacity. There is huge unsatisfied demand for extra runway capacity at Heathrow from customers and airlines and less demand at Stansted. At both airports, as long as environmental conditions are respected, new runway developments should be market-led not left to a common owner's interests to dictate timescales.

"A more competitive London airports market would encourage the building of new facilities which would benefit both customers and the UK. The damaging consequences of common ownership are all too apparent today in the fragility of Heathrow's day-to-day operation".

British Airways urges the Competition Commission to ensure that strong economic regulation at Heathrow and Gatwick continues, even if BAA was broken up, to protect users against local monopoly power. It also calls for any new structure to be put in place swiftly to avoid a prolonged transition period and more delays in tackling service quality and investment deficit issues.

The airline believes that the introduction of a licence for London airports should be considered, as is common practice for regulated utility companies. This would enable the Civil Aviation Authority, as regulator, to set performance conditions to ensure effective price and service quality levels for both passengers and airlines. It would also establish a financial structure to guarantee market-led investment in facilities and allow the CAA to apply tough sanctions in the event of serious performance failures. The ultimate sanction would be the withdrawal of the licence.

Willie Walsh said: "The current airport regulation system is all carrot and no stick. There is no regulatory comeback over poor customer standards or falling investment levels, so little incentive for the airport operator to regard these issues as priorities."