Villiers criticises BAA's "monopolistic grip" on airports

Shadow Transport Secretary Theresa Villiers has commented today on competition in the airport market, following a Competition Commission report on the issue:

"BAA’s monopolistic grip of so many of the UK's major airports has not been serving passengers or airlines well – as can be seen from the debacle at Terminal Five and the yearly Heathrow hassle during the summer months.

The Competition Commission’s thinking looks like a step in the right direction. Tough action is needed to inject much needed competition into the airport market and to give consumers and airlines the option of voting with their feet if the service they receive is poor."

BAA’s seven airports together account for over 60% of all passengers using
UK airports, including a near monopoly in the South East and Scotland. The Commission criticised a number of aspects of BAA's ownership of the airports for not serving the interests of either airlines or passengers.

Comments

[George Hinton]

Theresa has been conspicuous by her silence of late, this is a rather late intervention.
Comments have been made before of the relative silence of the Shadow Cabinet members, other than the front 5, and they do really need to speak out on their subjects. Theresa has had ample subject matter ranging from CrossRail, London and Continental, TfL, Threatened Tube strikes, NetWork Rail, MetroNet et al.
This young lady needs to increase her work rate.

[Thatcherite]

What monopolistic grip? 60% market share is not a monopoly. There is only a monopoly if there is only one supplier in a market.

In fact, there are several operators of airports in the UK, including First Group and local authorities. BAA does not own Luton, London City, Birmingham, Cardiff, Manchester, Leeds or Bristol airports.

Green opposition to the development of competitors' airports helps maintain BAA's dominance. Liberalisation and growth is the answer but Cameron, Goldsmith, Gummer and Hilton will never support it.

[Mike T]

Sorry Thatcherite but here in the south of England, they have a 95% monopoly of flights. In terms of market economics, a 30% market share dominance is considered to be harmful to the market.

After the T5 debacle, the UK is a laughing stock which could have so easily been avoided. BAA swore it was ready on time and budget, such crass lies and incompetence should not be rewarded.

People will not be taking a 3 hour train journey to say Manchester for a 4 hour to Italy.

What is interesting is Boris Johnson opposition to Heathrow's Third Runway and support for the pre-97 option of a brand new airport on the Thames Estuary. It is not beyond the wit of man or government to offer operator licenses for 10 years for all of the major UK airports (Heathrow, Gatwick and Stansted) and set service levels on each.

Pay off Ferrovial and use the remainder of the fees to build a brand new showcase 24hr multi-runway airport with rapid rail links on the Thames Estuary.

[Surrey_Boy]

Well said George Hinton re: Villiers. She is possibly the poorest performer in the Shadow Cabinet.

I know people in the transport sector who no longer bother to meet her because she is so clueless about their issues. They also presume, I suspect, rightly, that transport decisions will be made by Osborne, and not by Theresa.

It is a really important public policy area, and the Party needs to put someone with class into this post. Chris Grayling was there before and was hugely respected and regarded.

[George Hinton]

Mike T.

The problems with T5 are not solely at the door of BAA. BA has admitted short-cutting on training.
A combination of problems; parking, access, training caused the melt-down of service.

The domination of BAA in the south is a problem that needs to be addressed, particualrly now that the Co is owned by Ferrovial of Spain. An owner that is highly geared, receives unfair tax treatment from the Spanish exchequer, and has managed to obtain UK tax credits of a greater size than BAA paid in tax prior to the take-over.
The high gearing prevents proper investment in the business, the credit crunch suggests that interest costs wull rise, the dominant position in the south prevents fair competition and lumbers travellers with the "Thiefthrow" option. This is exarcebated by BA's reduction of service from Gatwick, and that airport's secondary status.
BAA must be broken up to introduce proper competition for the southern air-traveller, but for the the right reasons.

[Michael Rutherford]

Thatcherite, Tesco is criticised for having a market share of 30% as it's considered a threat to competition. I don't think it's unreasonable to call 60% monopolistic.

[Man in a Shed]

Am I the only one to think that the government has waited for the Spanish to buy BAA before threatening carving it up ?

Breaking up BAA is a good idea. Its been a good idea for a long time.

[David]

"In terms of market economics, a 30% market share dominance is considered to be harmful to the market."

40%, normally.

Villiers is correct in the term monopolistic, as it is used in this instance to describe market power, what the hypothetical monopolist has, and what, clearly, BAA has.

[David]

"Am I the only one to think that the government has waited for the Spanish to buy BAA before threatening carving it up ?"

The OFT's market investigation into BAA, which was needed for the Competition Commission to start on, was being carried out before Ferovial came into the picture.

[Surrey_Boy]

'The OFT's market investigation into BAA, which was needed for the Competition Commission to start on, was being carried out before Ferovial came into the picture.'

This is not the case. The hostile takeover bid by the ADI consortium (of which Grupo Ferrovial is the main player) was well in swing by the time the OFT made its announcement. In fact, it was announced on the same day as the final bid document from Ferrovial was published.

[passing leftie]

Now, ask yourselves, who was it who created this privatised monster? A commercial monopoly is the worst possible option.

[Mike T]

Understanding some of my friends working at BA Engineering are not entirely unbiased but their experience of BAA at T5 sounds reasonable.

The baggage handling system was BAA's responsibility to install and configure correctly according to the anticipated timetable of flights.

Only BAA didn't complete their configuration checks or testing prior to opening T5 nor leave anyone responsible for the baggage system nor provide BA access to the baggage system to re-configure it once problems started.

BAA have abused their market position for years and I'm bewildered why it's taken so long for the Competition Commission to take an interest.

[Tony Lucking]

A major reason for lack of investment in the BAA airports is the refusal of the Competition Commission to switch to a "Dual Till" regulatory regime. Under the existing "Single Till", the permitted "ration" of profit can be made with less investment in catering, shops, office letting, car parks etc rather than runways etc - and as BAA told the late Mrs Dunwoody in the nineties, "Shareholders have to be our no one priority".

Tony Lucking

[David]

"This is not the case"

Trust me, it was. The announcement is not the beginning.

[Yorkie Lad]

Mr Hinton obviously does not read the right newspapers. Theresa has constantly been in the press and in particular the transport press, which is after all her portfolio.

Might add, that at least Theresa came out of London to help various councils around the country win seats from Labour and the Lib Dem. Theresa was happy to canvass streets after seeing the regional press, unlike other MPs who were just left after having words with a few local journos.

[Yet Another Anon]

and as BAA told the late Mrs Dunwoody in the nineties, "Shareholders have to be our no one priority".
It's a private company with investors who invested in it as a going concern, if that wasn't what the authorities wanted then they shouldn't have set it up that way. It could have been broken up between a number of private charities limited by guarantee.

In my opinion though, in the airline industry the only concern of government should be in safety and national security, it has less effect in the everyday life of most people than for example ownership among supermarkets and agribusiness.

[Thatcherite]

The NHS is the worst monopoly but no Tory wants to smash it. Then we have comprehensive education and the fascist police....

[Surrey Boy]

'Mr Hinton obviously does not read the right newspapers'

Sorry, Yorkie Lad, but Hinton was spot on. Name one policy measure that Villiers has developed, either as shad chief sec to the treasury or as shad transport sec.

Her position on Heathrow is laughable - she is not for or against expansion. She is against the consultation paper launched by the Government, but does not rule out supporting a better consultation paper which could conclude that R3 should happen.

The truth is Villiers is better suited to canvassing in local authorities than preparing for government. Bring back Grayling, please.