CC requires BAA to press ahead with airport sales

The CC has been considering whether there have been any material changes in circum-stances since it published its final report on BAA in March 2009 that should give it cause to reconsider the implementation of the airport sales1Court of Appeal required by that original decision. The decision was subject to a legal challenge by BAA, which eventually culminated with the reinstating the CC's findings in October 2010. In February, the Supreme Court refused BAA permission to appeal further.

The CC has provisionally concluded that the sale of the airports is fully justified and that passengers and airlines would still benefit from greater competition with the airports under separate ownership, despite the current Government's decision to rule out new runways at any of the London airports. The CC has also concluded that there is no reason to change the original timescale with the Stansted sale followed by sale of one of the Scottish airports.2

CC Chairman and Chairman of the BAA Remedies Implementation Group, Peter Freeman, said: The CC will now invite responses before publishing its final verdict in May/June.

We remain convinced that the original decision to require BAA to divest three airports is the right one for passengers and airlines. We have re-examined that decision in the light of a significant subsequent development when the Government decided to rule out further runways at London's airports. Having examined the case closely, we are clear that many benefits will still arise with-out that expansion, by increasing competition and addressing detrimental effects from BAA's common ownership.

We found that, if anything since the report, there now appears to be greater capacity available which will increase the potential for competition between the London airports. The introduction of new ownership at Gatwick, whilst too recent for us to base any conclusions on, has also given a foretaste of the benefits competition can bring. There has also been no cause to alter our view on the need for either Edinburgh or Glasgow to be under separate ownership.

As for the timing and sequence of the sales, we have seen no reason to change those either and again if anything, the case has been strengthened as the conditions for airport sales have improved slightly since we originally decided to require them. However, we will continue to allow the airports to be sold in sequence with a small overlap between the two sales periods with Stansted to be sold first as it serves the larger number of passengers who will benefit.

Whilst there are reasonable concerns on setting a fair timetable for the sales process, it is also right that passengers and airlines should not have to wait indefinitely for the improvements that will arise from greater competition.

A summary of the draft consideration of possible material change of circumstances is available at: www.competition-commission.org.uk/inquiries/ref2007/airports/index.htm. The full version will be published shortly. Submissions should be made in writing by 19 April 2011 to airports@cc.gsi.gov.uk or to:

Julie Hawes
Inquiry Coordinator
"BAA Remedies
Competition Commission
Victoria House
Southampton Row
London WC1B 4AD

1BAA has since sold Gatwick Airport (in December 2009) to a consortium led by Global Infrastructure Partners.

2The original timescale included the sale of Gatwick.