Britain's leading airlines have called for the break-up of BAA, the airport
operator after the Civil Aviation Authority (CAA) allowed it to ramp up
landing fees at Heathrow and Gatwick.
The CAA this morning gave BAA permission to charge carriers landing at the two
London airports significantly higher fees over the next five years, a move
certain to result in increased ticket prices for passengers.
British Airways, Virgin Atlantic, bmi and Ryanair called for the break-up of
BAA, and said that the “outdated” regulatory system had “broken down and
BAA’s financial troubles demonstrate the need for both action and leadership
or consumers will end up picking up the bill”.
British Airways said the CAA’s decision “to allow BAA to ramp up airport
charges significantly demonstrates conclusively that the airport regulation
system has failed”.
And in a joint statement Virgin Atlantic, bmi, Ryanair and easyJet said: “It
is clear to us that the regulation of BAA’s London airports has failed and
needs to be changed.”
Today’s announcement covers the period from April 2008 to the end of March
2013. The airlines said that the changes would mean that landing fees at
Heathrow would increase from £10.36 to £19.31 per passenger, a rise of 86
per cent, while at Gatwick charges will increase by 49 per cent from £5.61
to £8.36 per passenger.
The four carriers said: “These increases, which will inevitably hurt
consumers, follow a substantial increase in charges at Heathrow and Gatwick
in the past five years and a doubling of charges at Stansted in the last
year. Stansted charges are also proposed to double in the coming five years."
The airlines also called for Ruth Kelly, the transport secretary, to step in,
and for a moratorium on price increases to be imposed.
Mike Rutter, chief commercial officer of flybe, said: “We call on the
Competition Commission to break up BAA, an organisation now owned by a
debt-ridden company who clearly have no interest in the well-being of the UK
economy.
“It is also time for the Ruth Kelly to urgently review the position of the CAA
in regulating aviation and to overturn the CAA ruling.”
Dr Harry Bush, the CAA’s economic regulation director, said: “Passengers and
airlines deserve better than they have been provided with at Heathrow and
Gatwick in recent years.
“However, the resulting improvements in airport facilities and service
standards - some £5 billion of investment over the next five years and a
halving of security queuing times - have to be paid for in increased
charges.”
BAA complained that the settlement did not give it enough. A spokesman said:
“We believe the review does not recognise sufficiently the scale of the task
we are embarked on."
Paul Ellis, BA’s airport policy and infrastructure general manager, said:
“When BAA’s new owners, Ferrovial, bought them, the CAA said they would not
be influenced by Ferrovial’s high debt levels. In practice, they have
ignored their own policy and caved in to intense pressure from BAA by
setting excessive price increases. Heathrow passengers will pay, on average,
17 per cent more than the Competition Commission recommended in September
2007.”
This is possibly the worst case of Britains open market being abused. For years the Spanish government recieved Billions of pounds from the EU ( and thus the UK) and awarded Ferrovial various contracts to build highways and airports accross spain. This meant Ferrovial could grow into the large company it is, thanks to UK tax payers money.
And to repay the U.K. for all our money Ferrovial uses an Ilegal spanish tax break on foreign company purchases, to buy BAA & load up BAA with debt which it now cannot finance. Now the U.K. people must once again pay for this.
It is unforgivable that the U.K. govenment aloud the Spanish company to break EU rules in this purchase.
It is also interesting to note that when BA looked into purchasing Iberia, the spanish banks refused to back any bid that resulted in Iberia losing majority Spanish ownership.
Europe wonders why we English are such bad Europeans...
Adrian, Aldershot, England
I agree with Brian Anderson: I simply avoid routes through the London airports. It's not just the queues, it's the whole tawdry, low-ceilinged, cramped, wall-to-wall carpet experience.
jimbo, Oslo, Norway
I am afraid this will be another step in the down grading of Britain’s airports in the eyes of the worlds travellers, with the inevitable negative impact this will have on UK's economy.
I am sure airports such as Frankfort, Schipol, CDG and even Dubai are already making plans to benefit from the continuing erosion of the UK airports competitiveness.
Today, they are already perceived as crowded, untidy and unfriendly spaces, now passengers can add expensive to the list.
Andy, Bristol, UK
A New Labour monopoly!
Tax the people.
Becasue that is the sole purpose of all this Global warming nonsense, an excuse to rob us blind.
Now BAA is Spanish owned? No problem, rob the people even more. And there is nothign we can do about it.
Pete Hodge, Skelmersdale,
This is a testimony to the weakness of the government. Can you for one moment imagine France allowing such a situation to prevail?
The problem is bound to impact on the city.
At 06 00h there is a line400meters long to go through security.
Nobody from Scotland uses Heathrow if there is another route.
My wife and I spent approx £400 extra to fly to Dubai this month avoiding London after the awful mess we encountered last year.
Brian Anderson, Edinburgh, Scotland
It is hard to understand and for the passengers, airlines and country alike impossible to accept what is going on with UK Air Transport. The BAA (Ferrovial) will always go for the cheapest option in order to create maximum profits with little or perhaps no thought to the users of their Airports.
As everybody knows, except it appears the Government who rely on faulted assumptions and perhaps a magic wand, Heathrow expansion is not only an accident waiting to happen but will cause considerable blight in terms of pollution and lower house values to tens of thousands of people.
A New airport is required, like numerous other countries in the World have realised and built/building, which will provide the passengers and airlines lower real costs and protect the country against competition from Europe for a long time to come.
The decision, today, to allow such a humongous hike in passenger taxes will hurt all but the BAA (Ferrovial) who will, no doubt, laugh all the way to the Bank!
Mel Simson, Sipson, Middlesex UK
The problem is that the British consumer has got so used to shoddy service and mistreatment that we allow it to go on. BAA has not succeeded in its attempts to be customer friendly and should be broken up.
Hamad Lone, London, England
Monopolies are invitations to abuse, indeed. BAA also has an effective monopoly in Scotland, where it is just as bad, but less reported.
Compare Aberdeen airport to Bergen and Stavenger (reasonable benchmarks), and cringe. We are still walking a couple of hunderd meters outside to board and disembark from international flights. Would you believe that sometimes the weather in Aberdeen can be a little bit harsh?
Gordon, Aberdeen, Scotland
A monopoly of all major airports should not be allowed to begin with - As with all monopolies, they are able to dictate costs of vital services with the consumer bearing most of the increases to maintain their profit levels - The quality of service has never reflected on the previous increases - Ferrovial dug themselves a very deep hole when they aquired BAA - The recent news that they are selling the duty free shops and now will increase landing fees highlights their quandry - Now they want to consumers to bail them out - How refreshing!
WTaylor, London, UK
Thanks, CAA. Now we all have to pay more because a Spanish company can't manage its finances after borrowing to buy BAA with an illegal subsidy.
The UK population would unanimously prefer Ferrovial to go bust.
A terrific bit of regulation - did somebody get a backhander?
Dave, Slough,
When will the authorities get on with it and just break up the BAA monopoly?
Richard, Bexhill, uk
Noel... you should do a little research before commenting....
Prior to 1965, airports were run by the Government. In '65 the Government created BAA to run them on their behalf.
Started with 4, Heathrow, Gatwick, Stanstead and Prestwick. '71-'75 Edinburgh, Glasgow and Aberdeen added.
1986, BAA made a company. '87 floated on stock exchange.
2006, Ferovial buys BAA on massive borrowing. Debt then placed onto BAA.
These are facts.
Below is what I think will happen as a result of the current investigation....
BAA will be forced to sell 1 London Airport
Will keep Heathrow. Makes a lot of money.
Will keep Stanstead as 2nd runway is cheapest.
WILL sell Gatwick as no new runway until 2019 and even then it will be very expensive. BA is reducing its presence. American Airlines is moving out. Others may follow. Still perceived mainly as a holiday charter airport.
Winners; airlines (will not pass on any cost savings)
Losers; passengers, staff and the banks.
Lance, crawley, UK
I don't see the problem?
Surely just supply and demand economics.
As some airports get ever more popular and demand increases, price goes up?
Jamie, Halifax, West Yorkshire
it all started because a few years ago the thought they have a cash cow and paid a lot of money to buy it. Their gamble went wrong, and so they are now saddled with huge debts. The customers , airlines and customers lost out. Unless we all go elsewhere and it is perfectly possible to do so, by flying from other airports. So vote with ur feet, boycott the two airlines. or not fly at all. holiday in uk, and not go abroad. it will help the uk local economy too. with the bad exchange rate for £s u will be doing urself a favour too.
anthony wong, london, uk
Another chicken coming home to roost. Monopolies are invitations to abuse, and arrangements to 'regulate' these invitations to corruption. BAA should never have been allowed to acquire so many London airports, and now should be required to dispose of all but one.
Noel Falconer MEcon, COUIZA, France