Airport planning criticised by competition watchdog

The UK's biggest airport operator has been heavily criticised by the competition watchdog for failing to develop and provide sufficient runway capacity in south-east England.

This "lack of initiative on planning capacity" is highlighted in a report just published from the Competition Commission which has proposed that the British Airports Authority (BAA) should sell two of its three London airports (Heathrow, Gatwick and Stansted) as well as either Edinburgh or Glasgow airport.

Planning issues are highlighted in the report, which found that the present land-use and development control system posed competition problems, as did aspects of Government policy and the system of airport regulation.

The Commission accepted that government policy and the planning regime had contributed to a lack of capacity in south-east England, but also stressed that BAA had played a major role in not pressing for more capacity sooner and in planning terminal and runway capacity on a "conservative and sequential" basis so that plans for one airport were influenced by its plans elsewhere.

The Commission pointed out that in the past BAA had downplayed the need for additional capacity and had asked the Government to take full responsibility for deciding where new runway capacity should go, as well as removing risk associated with the planning system.

The watchdog was particularly critical of BAA for not seeking to discharge the "restrictive" section 52 agreement, which prevented the construction of a second runway at Gatwick, "even though this would have been essential to develop Gatwick as a credible hub airport."

In its report, the Commission rebuked BAA's claims that ownership of a number of airports had allowed it develop and demonstrate its own planning expertise, stressing that the BAA was reliant on consultancies for much of its planning work and pointing out that it spent £57m on consultancy work for the preparation of its Stansted planning application while its own project costs were only £9m.

Although the Commission concluded that planning issues had posed competition problems it decided not to propose any specific remedies as the Government had decided to legislate to streamline the planning regime for major projects, courtesy of the proposed Infrastructure Planning Commission.

Read the Competition Commission's press release

Read the BAA's response

Roger Milne

21 August 2008