Parliamentary Committee Considers BAA's Future

by Robert Lee, Tax-News.com, London

17 March 2008

The British Airport Authority's (BAA) monopoly on UK airports is bad for passengers and bad for aviation, a report by the House of Commons Select Committee on Transport has concluded.

The committee's report on the future of BAA, published on March 15th, found that BAA’s common ownership of several major airports across the UK has stifled competition.

Commenting on the report, Chairman of the Committee, the Hon Gwyneth Dunwoody MP stated that:

“There is room for more competition, especially between London airports. BAA airports account for such a large proportion of air travel, and the company’s future is of central importance to the United Kingdom’s transport infrastructure."

“Ending BAA’s common ownership will encourage airports to compete for traffic. The Committee firmly believes that increased competition is possible and could have huge benefits for both airlines and passengers.”

The Committee further warned that Heathrow is losing its popularity, and found that added capacity at the west London site is required if Heathrow is to reverse this trend and retake its place as the European hub of choice for international carriers. Terminal 5 will benefit British Airways and passengers, the Committee suggested.

Dunwoody further commented:

“It is clear that a chronic shortage of capacity is hindering Heathrow’s ability to provide the sort of service to which it should aspire. That is why we support the Government’s proposal to add capacity to Heathrow. It is regrettable that BAA ever allowed the position to get so bad."

The Committee also observed that BAA should have “predicted the predictable” and planned better for contingencies, such as strikes or terrorist incidents, which has led to the current situation, with long queues in airports.

On the same day of the report's publication, BAA revealed that it had lodged the first application for a new full-length runway in the South East of England since the Second World War, the runway at Stansted.

This announcement came the day after BAA opened Heathrow's long-awaited Terminal 5, but according to the operator, these measures are "only the beginning of how BAA intends to transform all of its airports".

The Authority also questioned the select committee's wisdom in recommending the break-up of the company.

"BAA has committed to spend over GBP6bn over the next five years across all airports to help make that happen. The question therefore for those like the Select Committee, who advocate breakup of BAA, is whether that would help or hinder that process of transformation," it argued.

"BAA firmly believes that a break-up would only delay not just the much-needed investment, but also what the Government, and the committee itself in this latest report, have consistently identified as the overwhelming priority in the South East of England since the 2003 White Paper: the provision of extra runway and terminal capacity," BAA concluded.

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