BAA hits back over `monopoly'

BAA's chief executive, Sir John Egan, yesterday hit back at a recent MPs' report which recommended that the company should be stripped of its stranglehold on London's Heathrow, Gatwick and Stansted airports.

The all-party House of Commons Select Committee on transport last month called for a five-year preview, now being conducted by the Civil Aviation Authority, BAA's regulator, and the Monopolies Commission, to re-examine whether BAA should remain in control of all three airports or see Stansted and Gatwick operated separately.

But Sir John hit back: "Talk of a monopoly is misleading. BAA has five runways in the South-east - the same number as Schipol in Amsterdam, the difference being that Schipol runways are on one site instead of three."

Ownership of the three main South-east airports was "an old chestnut", Sir John argued. "It was on the agenda in 1987 and again in 1992 as part of the regulatory review. On both occasions it was rightly concluded that the UK obtains the most benefit from BAA operating three airports in one airport system." Sir John was speaking as BAA, operator of seven airports in Britain, unveiled a 14 per cent rise in pre-tax profits to pounds 418m in the year to March. The figures included a pounds 15m one-off gain on property disposals. Turnover rose 8 per cent at pounds 1.25bn.

UK airport passenger traffic rose by 6.7 per cent to 93.6 million and Sir John forecast total growth in the current year of between 4 and 5 per cent.

BAA was outbid last week by Swissair for the Allders international duty- free retailing arm, but Sir John said the company was right not to try to rival the Swiss offer of pounds 160m.

The CAA is studying a new formula to cap the charges BAA can levy on airlines using London Heathrow, Gatwick and Stansted.

Under the present five-year formula, which runs out in April next year, charges in the current year must fall by one percentage point below British inflation. Past caps have required falls of up to 8 percentage points below inflation.

The uncertain regulatory situation has cast a cloud over BAA's share price in recent weeks. The stock closed down 8p yesterday at 478p.