15 January 2009

CAA objects to some Competition Commission remedies for BAA

The Civil Aviation Authority has questioned the need for further regulation at Heathrow and for price caps at Aberdeen in its response to Competition Commission.

Although it agrees with the Commission’s decision over the sale of two of BAA’s South East airports and one of the Scottish airports, it believes some of the ‘behavioural’ remedies being proposed "risk undermining the gains offered to passengers by breaking up BAA".

Dr Harry Bush, group director for the CAA’s Economic Regulation Group, explained: "Airport sales will increase competition in the short and long term and regulation must support this process by allowing the new airport owners to change the way they run the airports, and by avoiding undue constraints on their freedom to compete."

The CAA said it does not consider a case has been made for the remedies package at Heathrow to go further than the package of service quality and other measures implemented following the recent price control review.

"Further, the CAA considers that applying these additional measures to Gatwick and Stansted appears likely to detract from the benefits that the airport divestments will bring," said the response.

"In addition, the CC proposes the introduction of a price control for Aberdeen Airport. The CAA does not consider that the evidence presented by the Commission is sufficient to justify the imposition of a price cap remedy. Price caps are one of the most intrusive forms of economic regulation and considerable care needs to be taken before they are imposed."

By Bev Fearis