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Is BAA’s airport monopoly bad for tourism?

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The chaos at London’s airports this summer – principally Heathrow – following the increased security measures highlights the important role that they play in UK tourism.

More than 100 million travellers pass through these hubs every year; without them, there would be no tourism industry.

A huge amount is invested in them. For example, Terminal 5 – on budget and on time – will cost around £4bn and building extensions and refurbishments are are rife at Heathrow.

However, the chaotic scenes earlier this year – which are not yet entirely resolved – pose some questions which need to be answered.

1. How damaging has the new regime been to UK tourism? Many British people travelling abroad were hugely inconvenienced – among them visitors from overseas trying to return home. The impression was of total turmoil. Who was at fault? BAA? Although the airlines were caught on the hop, their handling of the situation gave the impression that no one was in charge, which is not good for UK tourism. There must be a balance between the security needs of the country and the efficient operation of our airports. The tourism industry was badly let down on this occasion.

2. Should BAA retain a monopoly on the capital’s main and other UK airports? Some airlines – particularly Ryanair – don’t think so. In response to the principle that competition leads to increased efficiency, we must ask whether competition between Gatwick and Heathrow, for example, under different operators would improve efficiency? Marginally perhaps, but Heathrow will remain the most popular and populous and Gatwick would need to slash its charges to wholly uneconomic levels to entice many airlines from Heathrow.

3. Should BAA be split so that different companies handle its retail and other operations? BAA would say that its retail operations help finance its investments. But walking into any of the major terminals is like walking into a shopping mall, and operating an airport demands different skills from those of a mall. So, perhaps there is merit in loosening BAA’s stranglehold on the entire organisation of the airport.

One thing is clear: a repeat of this summer’s chaos would be very damaging to UK tourism and we cannot be sure that it won’t happen again.

Whoever owns and whatever the structure of BAA, the tourist industry needs assurance that air travel is as efficient and pleasurable as possible. BAA must give assurance that effective plans are in place, complemented by well-informed staff, in order to cope with any future emergencies.

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The chaos at London’s airports this summer – principally Heathrow – following the increased security measures highlights the important role that they play in UK tourism.
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