British Airways reverses stance on airports sell off - Heathrow Airport News

Airport news for Heathrow on 30/06/2008.

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Willie Walsh, British Airways chief executive, has dropped his demands for BAA’s control of Britain’s airport to be broken, and demanding more stringent regulatory measures instead.

BA has written to the Competition Commission, which is due to present its findings and proposals this August, and said: "We are concerned that ownership separation may prove counterproductive in so far as it diverts BAA management attention away from expansion of runway capacity or creates uncertainty around the status of government policy, thereby jeopardising construction of a new runway at Heathrow. Reform of the regulatory regime may therefore be preferable in remedying BAA's lack of investment."

Two years ago Mr Walsh had called for BAA to be split, lobbying the Office of Fair Trading to undertake an inquiry into the operations of the company, which owns seven of Britain’s major airports, including Gatwick and Heathrow.

The Competition Commission inquiry, headed by Christopher Clarke, former HSBC banker, seemed to agree. "Common ownership of the BAA airports is a feature of the market that adversely affects competition between airports and/or airlines."

The recent letter from British Airways raises some potential problems regarding a sale, however, including finding a suitable purchaser. It also argues that splitting the ownership of the terminals at Heathrow would not be in the interest of customers, citing the "complex logistical chess game" that significantly impacted 30 airlines when BA moved to Terminal 5. "Separate terminal ownership would render this complex arrangement still more difficult and use of capacity would likely become less efficient," the airline commented.

BAA has insisted that there have been factual inaccuracies in the inquiry, and also faulty analysis. In a letter sent to Mr Clarke it stated: "The commission has presented a one-sided view of the operation and development of BAA's airports, relying heavily on the criticisms it received from airlines. Such an approach is an inadequate basis for seeking to conduct a balanced appraisal of the company's performance."

BAA said further: "In some cases the 'emerging thinking' appears to be based on no evidence at all. Put simply, separation of ownership of airports would not lead to more competition."

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