Newspaper article The Evening Standard (London, England)

Rip-Off Probe into London's Airports; CITY BRIEFING

Newspaper article The Evening Standard (London, England)

Rip-Off Probe into London's Airports; CITY BRIEFING

Article excerpt


BETTER, less-crowded airports and cheaper air travel could be ready for takeoff after the Office of Fair Trading today announced a shock competition investigation into the London airports monopoly of BAA.

Citing figures that BAA ownership of Heathrow, Gatwick and Stansted means it handles 92% of passengers in the London area, the OFT said it would launch a fullblown inquiry into whether air travellers are being ripped off and getting poor service.

OFT chief executive John Fingleton said his investigators will make recommendations that could lead to a Competition Commission inquiry and ultimately a break-up of the BAA monopoly.

"We will be looking to see whether rivalry between airports and even between individual terminals at airports will drive down costs and whether such increased competition provides better services and lower prices," he said.

The announcement of the OFT probe shocked the stock market as it comes in the middle of a hostile takeover bid for BAA, headed by chief executive Mike Clasper, from a consortium of international investors led by Spanish construction group Ferrovial.

Just as the OFT was putting out its announcement, BAA issued a formal defence document, saying it believes its airports are worth at least 940p a share compared with the 810p-a-share, [pounds sterling]8.75 billion offer tabled by Ferrovial. BAA shares were today down 24p at 810p.

Traders said the OFT investigation could leave Ferrovial in an impossible position, bidding for a company whose future structure is in doubt.

Fingleton admitted the timing of the investigation "is not perfect".

He added: "We had been looking at this for the last month. The problem we faced, given the current [takeover] situation, was that if we had delayed any announcement about our interest, then the timing would have been even less perfect. …

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