As expected, the British Competition Commission released its interim report on competitive effects of BAA’s ownership of several UK airports (accounting for more than 60 percent of UK travelers), including most of the capacity in greater London and lowland Scotland. The conclusion?
The CC is inclined to the view that common ownership of the BAA airports is a feature of the market that adversely affects competition between airports and/or airlines. It is also inclined to the view that shortage of airport capacity, government policy and the regulatory system for airports might also be features that adversely affect competition or exacerbate other features which do so.
Among the key points in the CC’s very long report, which I plan to digest over the next couple of days, is the conclusion that the capacity constraints at BAA’s London airports have impaired competition, as BAA has not made necessary improvements to make its properties more competitive with one another — partly a result of insufficient government support for airport expansion. The CC also suggests that CAA, the British aviation regulator (sounds like BAA, but BAA Ltd. is a private company), might have regulated BAA too lightly.
The document is not a final recommendation or report; rather, it “set[s] out our current thinking in some detail” and requests further comment. The CC is expected to release a final report and recommendations in August.
- Full “emerging thinking” report [PDF]
- Executive summary [PDF]
