Azara Blog: BA attacks BAA over Stansted levy

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Date published: 2005/06/03

The BBC says:

British Airways is threatening to call for the break-up of BAA if it charges levy on Heathrow and Gatwick passengers to subsidise a new runway at Stansted.

The British Airports Authority is proposing a levy of up to £1 per user.

BA argues the charge would mean its passengers at these airports would subsidise Ryanair's Stansted hub.

The airlines would have to pay the fee as part of the standard passenger levy already charged but BAA says there are also other funding options.

Under current Civil Aviation Authority rules, cross-subsidisation between airports is illegal but these rules are thought to be under review.

BA said it hadn't called for an immediate break-up of the airports operator but pointed out that cross-subsidisation was not the only way forward for building a new runway at Stansted.

"However, if the BAA pursues cross-subsidisation for Stansted then we will look at every option, including supporting calls from other airlines for the break-up of BAA," Jay Merritt, a British Airways spokesman said. BAA currently runs Heathrow, Gatwick and Stansted as well as other UK airports.

Critics claim this gives it virtual monopoly control of London's main airports.

Ryanair said on Friday: "We'd like to see a break-up of BAA to introduce competition."

It thinks the proposed £4bn runway and terminal plan is too expensive and is expected, like BA, to appeal to the CAA against the levy.

"The price tag they're putting on it is to add all sorts of gold plating, including train links," said Ryanair spokesman Peter Sherrard.

Michael O'Leary, Ryanair boss, fears his company will end up paying the lion's share of the cost of the new project, saying it should cost about £400m.

He is believed to be willing to complain to the Office of Fair Trading and the Competition Commission as well as to use local planning laws to block construction.

BAA says a second runway is needed at Stansted because peak-time slots for take-off and landing are at or close to capacity in the South East.

The date for completing the runway has already slipped a year to 2013.

BAA spokesman Mark Mann warned that if the CAA, which sets the per-passenger fees, did not approve the levy or an alternative plan, it could slip even further.

However, Mr Mann added: "We're not looking to pick a fight with the airlines over this. We're not willing to die in a ditch."

BAA could also seek a passenger levy at Stansted but it would not say whether the fee would be as high as the illustrative price of 50p to £1 given for Heathrow and Gatwick.

According to BAA, per-passenger fees at Heathrow are currently £12, compared with a much lower £3 at Stansted.

They are separate from air taxes charged to customers.

BAA has a de facto monopoly on airports in southern England. And monopolies always cause problems. They either need to be strictly regulated by government, including price controls, or they need to be broken up. All the airline operators seem to be opposed to BAA on the Stansted development: BA (which does not operate out of Stansted), Ryanair and Easyjet (the other big Stansted operator). Stansted development is crucial to the East Anglia (e.g. Cambridge) economy, so hopefully they will be able to settle this dispute sensibly, rather than waste millions and millions on lawyers. Stansted has been a cheap and cheerful airport (with a brilliant Norman Foster terminal building) and it would be best for almost everyone if it remained so.

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