AIRPORTS SYSTEM SHAKE-UP CONSIDERED

First, the Competition Commission (CC) laid into airport operator BAA saying its ownership of seven UK airports, including Heathrow, was probably anti-competitive and "may not be serving well" passengers' and airlines' interests.

Then the Government, responding to the report, said it was ordering a review of the way the major airports were economically regulated - a probe that would look at the charges BAA can impose on airlines for using Heathrow, Gatwick and Stansted airports.

The CC's views came in a 168-page document indicating the commission's "emerging thinking" into an inquiry into UK airport service and BAA which runs Heathrow, Gatwick, Stansted, Southampton, Glasgow, Edinburgh and Aberdeen airports.

It followed BAA's referral to the CC by the Office of Fair Trading which said the current arrangement did not give good value to air travellers. Airlines and others have called for a break-up of the BAA airport empire - a scenario that could now happen following the CC report.

The CC said BAA's common ownership of seven UK airports, "may not be serving well the interests of either airlines or passengers".

The report went on: "This is evidenced in BAA's approach to planning capital expenditure, including weaknesses in consultation and lack of responsiveness to the differing needs of its airline customers, and hence passengers, and the consequences for the levels, quality, scope, location and timing of investment."

The report into airport services and into BAA, which is owned by Spanish company Ferrovial, comes ahead of a provisional report planned for August and a final report expected by the end of the year.

BAA chief executive Colin Matthews said he recognised the CC's and airlines' concerns and would "be doing everything we can to address these".

Despite BAA's assurances following the report Transport Secretary Ruth Kelly announced a review of the economic regulation of the UK airport system. She said it was more than 20 years since the current regime had been put in place and there was "an urgent need to consider how the framework needs to be updated to reflect today's realities".