OFT refers airports group BAA for competition probe

Britain's consumer affairs watchdog said it was referring the supply of UK airport services by BAA to competition authorities for further investigation. The decision by the Office of Fair Trading (OFT) was welcomed by airlines and follows a period of public consultation after the OFT first proposed to refer BAA, owned by Spanish construction group Ferrovial, to the Competition Commission in December.

"This referral is good news for consumers. Let's face it, Heathrow is a mess, passengers continue to be stuck in long security queues at Stansted and Gatwick's development is being held back by this over charging monopoly," Ryanair's Head of Communications Peter Sherrard said. BAA said it was tackling problems with queues, made worse by increased security checks, and was investing heavily in developing its airports to improve services. "Putting BAA in the dock for a complex set of problems with deep legacy causes will not help solve them... We need a strong and united BAA," BAA chief executive officer Stephen Nelson said.

The OFT said it had received 60 responses during the consultation period from airlines, consumers and other organisations, most of which supported a referral. The watchdog said in December it had found evidence of poor customer satisfaction and the need for more competition to reduce costs. The referral had been expected after the OFT said in June it was launching an investigation into UK airports.

Analysts said in December the ruling could pave the way for a possible break-up of BAA's key London airports - Heathrow, Stansted and Gatwick. Airlines have been pushing for a break-up of airport ownership.

In a separate statement, Britain's Civil Aviation Authority (CAA) said it would impose greater financial penalties on BAA where services fell short and extend the use of financial trigger payments to reward the completion of key capital projects. The CAA said it had set charge increases at between four and eight per cent above the retail price index at Heathrow and between minus two and plus two per cent at Gatwick.

"We think this is unjustified. There has been a 50 percent rise in charges over the last five years, the 2003-2008 period, and under these proposals we have another 50 per cent over the next five years," a British Airways spokesman said.

BAA's airports handle 90 per cent of passenger traffic in the south-east of England and the group is building a £4.2 billion fifth terminal at Heathrow and plans a second runway at Stansted.

Ferrovial bought BAA, which also owns Scottish airports in Edinburgh, Glasgow and Aberdeen, for 10.1 billion pounds, taking on most of that amount in a syndicated loan.

Shares in Ferrovial were up 0.2 per cent at 75.3 euros by 1140 GMT, valuing the group at around 10.6 billion euros ($14.1 billion).