27 August 2008

BAA and the Competition Commission

Mark Keinman wrote an interesting piece in the Telegraph on Sunday in which he ended with the following:

"the travelling public might one day end up wallowing in nostalgia for BAA. What a turnaround that would represent."

Whatever could he mean? His article was written following the much publicised Competition Commission report into the likelihood of BAA having to sell both Gatwick and Stansted airports, following the poor state of operations it conducts and its "arrogance" that comes from having a virtual monopoly over most airports in the UK.

In its preliminary report, published last week, Christopher Clarke, the Competition Commission's chairman, said that Spanish-owned BAA had abused its position as the dominant airport operator in the south-east, being solely responsible for the lack of runway and terminal capacities here; having a 'lack of responsiveness' to customers; and for failing to spend money on 'essential operational processes'.

Ferrovial, the parent company of BAA, was also blamed for the disastrous opening of Terminal 5 at Heathrow, which resulted in hundreds of thousands of passengers inconvenienced as flights were delayed and cancelled as a result of new automated baggage handling systems failing.

Colin Matthews, chief executive of BAA, admitted that his company had offered a poor service to customers and airlines; he even admitted that his most profitable airport - Heathrow - was ranked 90th of the 101 world airports for delays. He said that Heathrow would "definitely not be sold" as a result of the Competition Commission's preliminary report, but would not be drawn on the future of Stansted or Gatwick. The CC have also signalled that either Glasgow or Edinburgh airport must be sold, too.

The airlines' responses to the preliminary report has differed surprisingly, with British Airways and easyJet preoccupied with how many more 'bums on seats' they're likely to manage with a new airport operator in situ - something both airlines feel BAA was hampering; rather than ownership of the airports - unlike Ryanair, whose chief executive Michael O'Leary took a more altruistic approach: that passengers would be better served by the break-up of BAA's monopoly.

This is where Mark Keinman's article takes over. O'Leary was categorical about wanting to step-in to purchase Stansted, being quoted saying he'd be "in like a bandit"; but as Keinman quips Ryanair's "rough-and-ready approach to customer service" could herald a day in the not-too-distant future when "the travelling public might one day end up wallowing in nostalgia for BAA. What a turnaround that would represent."