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Privateers have failed

(Wednesday 20 August 2008)

THE Competition Commission's recommendation that the British Airports Authority should be forced to sell off two of its London airports and either Edinburgh or Glasgow confirms the failure of airport privatisation.

But the idea that selling off a number of airports would be better than maintaining a BAA monopoly is way off the mark.

According to BAA, its airports compete with Charles de Gaulle, Schiphol and Frankfurt as international hubs rather than with each other, intimating that getting international passengers to change at Heathrow and Gatwick rather than European mainland airports is positive for Britain's economy.

Airlines such as BMI and Ryanair, which support a BAA break-up, do not suggest that efficiencies would result from a sell-off, concentrating their propaganda on the contention that expansion of Heathrow, Stansted and elsewhere would have happened more quickly if each airport had its own dedicated owners to push development.

Neither case is convincing, as they ignore their real justifications, which are based on profitability.

The pro-break-up airlines want to be in a position to dictate cuts in charges by playing off one airport against another.

On the other hand, BAA favours no change, hoping to concentrate a greater share of international traffic on British hub airports so as to generate higher profits from the glorified shopping centres that they have become.

It also claims that its size has enabled it to make the case effectively for Heathrow's fifth terminal and third runway.

In this way, both break-up and no-change advocates suggest that not only is airport expansion essential but is best achieved by the model that chimes with their interests.

In fact, there needs to be a real debate on a long-term integrated transport strategy that isn't conditioned by claims that bigger and more airports in Britain are the best way forward.

Aviation is the fastest-growing contributor to greenhouse gases, which poses significant questions about the government's professed commitment to tackling global warming and how this relates to its encouragement of the industry.

Government ought to be rethinking its attitude to support for aviation, by dint of its preferential treatment of airlines with regard to VAT and fuel tax.

It should also be taking a stance on expanding high-speed rail links between British cities and making these links more attractive, price-wise, to phase out the environmentally unjustifiable short-haul passenger flights between relatively close urban centres.

Subsidising fares for the railways, the greenest form of long-distance travel, may be seen as interfering with the market, but this is a market that requires government intervention.

Despite the views of both BAA and its airline business opponents, private profits can't be the sole basis on which policy priorities are established.

As so many of the aviation trade unions make clear, what is needed is not further fragmentation in the cause of private profit. Nor do they wish to see their members pay for change in terms of jobs, wages and conditions.

Instead, the only sensible course to take in light of privatisation's failure is that Britain's airports, as an essential part of the country's infrastructure, should be taken back into public ownership.