HC Deb 10 December 1985 vol 88 cc555-7W
Mr. Dicks

asked the Secretary of State for Trade and Industry when the Monopolies and Mergers Commission report on the British Airports Authority will be published.

Mr. Howard

The report is published today.

The Monopolies and Mergers Commission was asked to investigate the efficiency and costs and standard of service of the commercial activities of the British Airports Authority. Its report concludes that the authority has shown a generally satisfactory standard of performance although there is room for improvement.

In the course of its inquiries the commission made a detailed study of the various elements of the authority's commercial activities including concessions, licences, leases, rents and property and the implications for competition and quality of service. The commission recognises that the authority is continually faced with the need to decide between competing demands for limited facilities and support the view expressed by the chairman of the authority, who told it that the duty to provide proper operation facilities for passengers and cargo shippers must take precedence over commercial activities. The commission says that in practice an airport constitutes a closed market in which monopolistic exploitation would be practicable and that such general considerations must be borne in mind in any attempt to assess how well—or badly—the authority carries on its commercial activities.

The commission recommends an increase in the size of the board to allow a member with retailing experience to be appointed, and that the board should pay a more active role in ensuring that when decisions on the provision and allocation of space at new and redeveloped terminals are needed a full range of feasible commercial possibilities is considered.

The commission recommends that planning guidelines be updated more frequently, that more challenging targets for commercial performance and budgets be set and notes the authority's awareness of deficiencies in the property mangement information systems.

The Commission also recommends that a distinction continue to be drawn in the authority's accounts between air traffic operations and commercial activities. Other recommendations concern regular tendering for concessions, fuel arrangements at Gatwick, and quality of service and performance indicators.

The commission explains that competition at point of sale is limited by the lack of space at terminals, but considers that even where competition would be possible the authority's policy sometimes restricts or prevents it. While the authority believes that it has an obligation to protect concessionaires' interests, it also believes that in some areas consumer choice is better secured through a variety of products for sale than through duplication of suppliers and tries to ensure by price regulation and other controls over concessionaires that customers get value for money. The commission did not find these arrangements fully effective and offered several recommendations to increase competition.

As is usual in such references, the commission was asked to consider whether the authority is pursuing a course of conduct contrary to the public interest. It concludes that while there is scope for improvement in the service provided by the authority in its commercial activities, it is not, in relation to those activities, pursuing a course of conduct which operates against the public interest. In a note of dissent one commission member found that the attitude of the BAA in effectively restricting or preventing competition to its concessionaires operated against the public interest and that a partial remedy would be for the authority to be obliged to implement the relevant recommendations in the report.

While the report necessarily deals with the present position at BAA airports, the commission notes that in the context of the White Paper "Airports Policy" it will be necessary for the authority's successor to assess the extent to which commercial opportunities may reasonably be pursued.

The authority will be producing its preliminary response to the commission's findings in three to four months and my right hon. Friend the Secretary of State for Transport will make a statement on this response at that time.