Today brings the judgement of the Competition Commission on the BAA. As an early advocate of competitive airports for London, I look forward to being able to offer at least a couple of cheers for getting some of the way there at last. In an ideal world there would be different owners for each of the three BAA London airports at Heathrow, Stansted and Gatwick. Failing that, the Commission should demand that BAA chooses either to own Heathrow, the major airport, or the other two. Even requiring the sale of one would be progress.
Why does competition matter? The current level of service to airlines and to travelling passengers is not good enough, and the prices charged are high. If airlines and passengers have some choice of airport under competing managements, each airport will have to try harder to raise service standards and to cut prices. The current owners of BAA have substantial borrowings. New owners might have more borrowing capacity, to make faster and more substantial improvements that require capital outlays.
Improving the service requires new technology and new thinking. It requires collaboration with the government to raise their game over Passport Control and Security. How many times coming back into England do people face long queues to have their passports checked, simply because there are not enough staff present to deal with the numbers? For outbound passengers the delays are mainly at Security, where too few lines are offered and where the checks are clumsily managed. Passengers who do not know the routine are not asked to use their time in the line to prepare themselves for sending their belongings through the machines, so more time is wasted when they do reach the staff. Each time a disaster or attack occurs more retrospective checks are added on the odd assumption that the next attack will mimic the last one. Instead of using intelligence and detailed checking on people more likely to be terrorists, the system produces general checks on everyone. In contrast Customs where there are never queues target their searches and enquiries, choosing sensible random checks to supplement Intelligence driven thorough checks on people they suspect.
A new owner could seek a sensible security review with the government to seek to streamline the service and make it more effective at the same time. It would also allocate more space to the security checks function so we could have more lines for whatever checks are needed. Passport Control probably has enough space, it just needs more people some of the time. A new owner would talk to airlines about streamlining their check in systems, and raise the game on baggage handling. Above all it would provide more capacity, to cut wasted fuel and delays through aircraft having to circle or taxi awaiting a stand. That would be greener as well as better.
Let’s hope the Competition are bold. This could usher in a much needed improvement for the UK’s airports. Maybe they will even demand a similar disposal in Scotland. It will be interesting to see Scottish reactions. Usually MPs from Scotland favour monopolies rather than the “waste†of competition, and favour more rather than less government involvement in things. That is one of the reasons why Scotland remains poorer than England. Perhaps this time they will be offered a dose of something that works? Will they like it? Could it ever prove catching in the Northern air? It will be an interesting challenge for the Scottish economy, and for Labour struggling to explain the poor economic performance of Scotland compared to London .
August 20, 2008
With labour in power, this potential improvment will nerver be reached. It is just tinkering round the edges.
A new Conservative government needs to create the atmosphere of enterprise again, be removing government from trying to run everything.
I would like to hear much more about this from the party.
August 20, 2008
I think the issue goes wider than competitive airports for having lived in SW London and suffered the extreme blight that Heathrow imposed on us, its my belief the real problem is that the British state is in the airport patronage business and shouldn't be.
To explain, Heathrow is in the worst possible position for an international airport, but because of the British states patronage it has been allowed to be developed, though a very compromised development due to the blight it brings to 100's of people living in SW London. The fact is if the British state had taken the position it takes with any other business, that you stand on your own two feet, they would have demanded that Heathrow came to financial arrangement with the people whose environment it blights, ( don't we believe in property rights?) with the result the management of Heathrow would have very quickly realised there are better places to develop a hub airport. This is the line I think the Conservatives should take on the third runway at Heathrow, saying the Heathrow that they can build their runway, but they have to come to a financial arrangement with the people whose lives and homes they are going to blight. What's the betting when Heathrow realises it doesn't have the state patronage, and has to pay compensation to people for blighting their living environment, that they will rapidly drop the idea, and realise there are much better and cheaper sites to develop.
August 20, 2008
I've been a critic of the BAA and I remain so in some aspects of what they do. However, having read the Competition Commission's report I find myself agreeing with the BAA that it is flawed. Take this one statement. "In Scotland, BAA has until recently been noticeably slow to develop new routes at Glasgow and Edinburgh, whilst at Aberdeen, its investment plans are regarded as unambitious despite relatively high levels of profitability. At Southampton, it has shown a reluctance to respond to its customers’ demands." It's not the BAA's job to develop new routes, that's a job for the airlines. Of course they have a part to play, but it's a small part. For Scotland's size and with all the other factors air travel is well developed and will not be magically bettered by a bit of airport competition.
The Competition Commission's report reads like a thesis and they need a sharp dose of reality. Many of the problems that exist are about capacity, government, planning and CAA regulations; all this is against a background of demand for air travel. While it's easy to talk about these things it's much harder to fix them and splitting up the airports is not a panacea, nor much of a solution. I remain unconvinced that it will help and once again I'm minded to think that none of this may have happened if BAA hand not been bought by a Spanish company.
August 20, 2008
When we go abroad, we never go to London even though we live just one hour away by train. It is always Manchester or Midlands for us.
Air travel is, today, crucial. Dubai exists simply because its airways are so efficient and they go everywhere that their customers want – and they do not waste time or money on other places either. We English are really falling behind. Compared, even with Bangkok or Singapore airports, Heathrow is appalling. Dubai airport is now as big as Heathrow and, believe me, it works too.
If – big if – we could actually link our airports with our cities by efficient train services, then, surely, it would not matter whether you landed at Birmingham or Manchester even – you would be in central London in an hour and half.
August 20, 2008
Have to agree with Richard [4:27 pm]. This is not an ownership/competition problem, it is a capacity/planning problem. When an airport is fully slotted in its allowable operating hours; that's it. You will only get price competition when there are enough airports with spare take-off and landing slots that they can't sell.
Anyway, everyone knows that Heathrow Two, has to be on Salisbury Plain. Low population density, fly in and out over West Dorset; again low population density; major roads not far away. [ I can hear Natural England quango screaming already].
August 21, 2008
I agree with Iain above. John Redwood has made the mistake of thinking like a socialist!
The question shouldn't be how we modify the regulation to improve airports/hospitals/etc but how we remove this regulation to allow them to do it better themselves.
The main problem with airports isn't lack of competition although that doesn't help. Like the railways, they may be partially privately owned but in practice almost everything they do is, in shockingly minute detail, mandated by the state. The government is doing to air travel exactly what has done to the railways since 1946, ossifying them. That's the reason the train from Paddington to Slough still takes 20 minutes, no quicker than it was 150 years ago and less comfortable. (People in the Labour party call this progressive politics!)
There's no good reason why transport should be run by the state. They invariably do a worse job than businessmen.
More radically, the state (both here and in the U.S.) should stop telling private companies how to conduct security. Did the U.S. security services stop any flights hitting their targets on 9/11? No, but at the cost of their own lives the passengers of Flight 93 did. Did the extra security checks after 9/11 stop Richard Reid? No again, private citizens acting on their own initiative did. Are the 2 hour queues we all have to endure likely to stop the next terror attack? No again. But that doesn't stop the state charging us for the privilege.
As with that poor butcher in Scotland who caused the UK's worst recent food poisoning outbreak, the result of enquiry decided that more regulation was required. This was despite the fact that he had just been inspected and officially given top marks. Everytime the state fails to protect us, they propose more laws and more inspections. Nowhere is this persistent failure more visible than at Heathrow.
As Ronald Reagan said, get the government off our backs!
August 22, 2008
I would like to see a Kanzai-style airport in the Thames estuary, and Canary Wharf shows it could be done, even in this backward country.
But what is your answer to the question of the Scottish ferries? They need to be a subsidised monopoly, or they couldn't serve the islands all year round. One could suggest the odd improvement, e.g. linear, Norwegian style routes, but on the whole they are an excellent institution with a very good workforce and ethic, (as the old BR might have been if it hadn't been for the unions.) Young men in a hurry say everyone should fly, but that would be a great loss. The ferries are a real asset, adding greatly to community life, and good for tourism. The EU is bent on spoiling them as it did our railways, saying the monopoly must be broken up and the subsidy removed.