A terminal decline for airport owner?

WITHIN weeks, UK airports will be groaning under the weight of the sun-seeking masses making their summer getaways. In the glass-magnified heat of the terminal buildings, bodies will be crammed together in security queues as children wail, teenagers bemoan the lack of shops and errant pushchairs batter legs.

Those queuing will offer up curses on the airport owners – which, in the majority of cases, will be BAA.

But perhaps they should pay heed to the old adage – be careful what you wish for.

Yesterday, the Competition Commission issued its interim report on the airport giant – which has Edinburgh, Glasgow, Aberdeen, Heathrow and Gatwick in its stall – and indicated that its monopoly may not be operating for the greater good.

The commission will come back in August with a list of measures it requires to be taken, which may include the sale of some of BAA's concerns.

It says the common ownership "may not be serving well the interests of either airlines or passengers" – but analysts, airlines and consumer groups who spoke to The Scotsman are split over whether it is better to fly with the devil you know.

Leading Scottish business organisations believe it is, feeling that BAA has a proven record of investment. They are worried that if the airports were opened up, they would become a fighting arena for providers, with services suffering the collateral damage.

The deputy chief executive of Edinburgh Chamber of Commerce, Graham Birse, said BAA's stewardship had brought "continual investment in the facilities, and investments in services".

He said aside from structural improvements, such as the expansion of terminals, BAA had kept its airports running smoothly in the face of the increased threat of terrorism. He compared this to other airports in Europe which had become "gummed up" by increased security measures.

He said: "You can get through the security barriers in Edinburgh in five minutes, but people are fighting in other places to get on board."

He said the commission had failed to understand the different markets served by the three Scottish airports, which would not be affected by increased competition. And he accused it of failing to appreciate the geography north of the Border.

He said:

"At the end of the day, if you want that level of investment that BAA are putting in Edinburgh, the airport has to be a profitable concern and putting it in a risky position isn't going to deliver better services in the long run."

The Scottish Council for Development and Industry (SCDI) said the Competition Commission had yet to prove that new operators would deliver better services for Scotland.

Iain Duff, the organisation's chief economist, said travellers had benefited from a "huge growth in the number of destinations served by Scottish airports over the last few years" and major investment in facilities and security.

"BAA is committed to significant, future investment plans for the three main Scottish airports and we would need assurances that any change in ownership would not threaten this investment and the planned improvements to access and service," he said.

"New air routes are vital to our continued economic development and to meet our ambitious economic targets.

"One thing we can't allow is the uncertainty over the future ownership of our airports to undermine current investment in new facilities and the development of more routes in and out of Scotland, which is crucial to sectors such as tourism and financial services."

But the low-cost airlines, who are in the unenviable position of having to negotiate contracts with all-powerful BAA, are all for a break-up, and have lobbied heavily for one.

Peter Sherrard, of Ryanair, said: "

In a monopoly, there's no real onus on the airport to provide good services in terms of reducing security queues, making sure baggage belts work or delivering on time. They have monopoly control of the market – why should they bother?"

He said that in Europe, where competition was more effective, terminals were delivered on time and prices were falling as opposed to rising.

And he claimed that BAA was overly keen to spend money on its airports, with bills then passed on to travellers. "Consumers' interests are clearly not being served," he added.

"Breaking up the ownership would mean decreased costs in terms of charges, which would happen naturally."

Mike Rutter, Flybe's commercial officer, said the airline had been saying for years that the monopoly was "bad for the consumer".

And John Strickland, director of JLS Consulting, an independent air transport consultancy, said Scotland could see benefits through increased competition which would not be delivered in London.

The London airports are already operating at capacity, but there is major potential for growth at Aberdeen and, particularly, Glasgow.

Mr Strickland said: "Prestwick is flourishing because it's privately owned and focus on Glasgow might be gained (from a sell-off]. There's a point of view, as well, that Aberdeen perhaps does not have as much as it could. It doesn't have a large number of low-cost airlines. There has been more creativity at Inverness, which is owned by Hi-Al."

Whether or not it is a positive move for travellers, this may be BAA's last summer of free reign over the majority of Scotland's airports.

In coming years, it may no longer be BAA's name that they curse as they try to get some food in the empty hours between flights.