12 March 2008

Leading airlines round on BAA/CAA

Bmi, easyJet, Ryanair, Monarch and Virgin Atlantic have joined forces to call for a fundamental overhaul of how the UKââ¬â¢s biggest airports are regulated.

They have followed British Airways and Flybe in condemning the Civil Avaition Authorityââ¬â¢s move to allow BAA to hike airport charges at Heathrow and Gatwick (see previous TravelMole stories).

The increases will ââ¬Åâœinevitably hurt consumersââ¬~, the four carriers warn, and follow a substantial increase in charges at Heathrow and Gatwick in the past five years and a doubling of charges at Stansted in the last year.

Stansted charges are also proposed to double in the coming five years.

TheÃ~carriers say the most pressing need is to introduce competition into the system, through three mechanisms.

All four of airlines support the break-up of the BAA London airport monopoly - but this must be accompanied by a price controls regime which better protects the interests of the travelling public ââ¬' replacing one highly-indebted monopoly owner with another would simply compound the problem

Secondly, the CAA should be examining options to allow companies other than BAA to build and operate terminal infrastructure on the airport sites.

Thirdly, each airport must be free to expand in order to provide the capacity that would facilitate ââ¬Åâœmeaningful inter-airport competitionââ¬~.

ââ¬ÅâœThe OFTââ¬â¢s decision to refer its investigation into BAA to the Competition Commission and the comments made by the Secretary of State for Transport following the CAAââ¬â¢s proposal to remove price controls at Stansted demonstrate that the Economic Regulation Group of the CAA is not protecting the interests of consumers and is skewing its decisions in favour of BAAââ¬â¢s shareholders,ââ¬~ the four airlines claimed.

Monarch managing director Tim Jeans said: "Only an inefficient monopoly supported by an ineffectual regulator could impose such increases. We and our passengers have no choice but to use Gatwick if we want to serve the London market and for years have had to put up with declining service standards and ever-increasing delays for our passengers.

"Gatwick Airport admits it was caught out by the security scares of eighteen months ago and has never been able to restore service levels. To excuse the latest increases by saying that service levels will now improve is nonsense. It will take years for new terminal buildings to come on line and there is no prospect of more runway capacity which is the real constraint at Gatwick.

"The CAA appears to have swallowed BAA's argument "hook, line and sinker" and this is more of a bail-out for BAA's parent Ferrovial, than any serious desire to improve service standards.

"Gatwick should now be sold off to an operator that can manage the airport effectively and who has the vision to return Gatwick to the world-class airport it once was."

by Phil Davies

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