Watchdog raps BAA over running of Stansted but allows fee increase

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The Independent Online

The Competition Commission has ruled in favour of increasing charges at Stansted over the next five years, putting paid to Ryanair's long-running campaign for lower levies at its main UK base. Airlines operating out of Stansted will pay BAA, which runs it, an increase from £6.34 to £6.56 in 2009-10 and to a maximum of £7.05 by 2014.

But the outcome is no victory for BAA. Not only was the operator, owned by Spain's Ferrovial, calling for price increases of up to 7.1 per cent, compared with the 1.75 per cent the changes represent. But it also took a sharp rap on the knuckles for acting "against the public interest" and leaving passengers facing "unacceptable delays" after introduction of new security arrangements.

Lack of consultation over development plans was also criticised, and the commission is recommending that the Civil Aviation Authority not only require BAA to improve its dialogue with airlines over capital investment proposals, but also introduce a quality rebate scheme, akin to those at Heathrow and Gatwick, to impose financial penalties if BAA fails to meet agreed standards.

The commission has already published preliminary conclusions that BAA should be required to sell two of its three London sites and another in Scotland. In September, the company put Gatwick up for sale but so far has made no moves about Stansted.

The problems over lack of consultation centre on the proposal to extend Stansted, including building a second runway. The plans are a major factor in BAA's request for higher levies on airlines. But some of its biggest customers – including Ryanair and easyJet – have dismissed the scheme as unnecessarily expensive.

The Irish budget carrier has called the plans a "gold-plated Taj Mahal" and says they illustrate BAA's monopolistic stranglehold through its ownership of the three main London airports. It has conducted a high-profile campaign against the scheme, alongside calls for a lowering of Stansted's charges. Jim Callaghan, the Ryanair director of regulatory affairs, said the levy increase rewards the "BAA monopoly" and will further reduce the number of travellers at Stansted, adding: "The Commission is hamstrung by the failed regulatory system which has allowed the BAA monopoly to build up huge amounts of unnecessary capital expenditure over the years. This Taj Mahal approach to expenditure rewards the airport monopoly with higher charges to the travelling public."