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Last Updated: Apr 21st, 2008 - 14:39:57 |
LONDON (Reuters) - The Competition Commission is set to indicate this week whether airports operator BAA should divest airports or even break itself up -- a move that many think will solve the country's airport woes.
The body will publish its 'emerging thinking' document on the matter on Tuesday, and may sow the seeds of a break-up of the group's monopoly of southeast England.
A weekend newspaper report said investment banks were already sounding out potential airport buyers in anticipation of the ruling favouring a break-up.
BAA, owned by Spain's Ferrovial, owns the trio of airports Heathrow, Gatwick and Stansted.
Its critics see it as being partially responsible for Heathrow's disastrous Terminal 5 opening, when hundreds of flights were axed and thousands of pieces of baggage were delayed.
"The Competition Commission is quite likely to indicate it is seriously considering mandating some sort of break-up," Blue Oar analyst Douglas McNeill told Reuters.
"(A break-up) ought to benefit the airlines, although it will take a few years to take effect. The current regulatory system is not working so well," he added.
The Competition Commission could not immediately be reached for comment.
Under the current system, airports regulator the Civil Aviation Authority (CAA) sets a cap on the amount that BAA can charge airlines for using its airports. But what the correct amount should be is a matter of dispute, with both BAA and the airlines unhappy with last month's settlement.
The CAA said in March BAA could almost double airline charges at Heathrow over five years, a hike it said was needed to pay for better security and other investments.
The airlines reacted angrily, with Virgin Atlantic and Ireland's Ryanair demanding a break-up of BAA, which in turn said the price-cap was too low.
However, budget airline easyJet said on Monday a break-up was not necessary, and that an overhaul of the regulatory system was what was required.
"What is most important is not ownership, but price regulation. The London airport system is full; therefore selling Gatwick would have the effect of creating a mini-monopoly. There has to be stronger price regulation," a spokesman said.
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