BAA Break-up

I’m kinda undecided on the BAA break-up. The FT thinks it should definitely go ahead. But as a fairly strict libertarian, and therefore keen on economic freedom, I’ve always had a problem with monopoly break-up except in the most extreme of cases (and I’m not sure this qualifies).

Nevertheless, as my job now takes me onto an aeroplane more than I before, I’m curious and so I read the summary from the Competition Commission’s provisional report. I’m not sure I’m any the wiser, but there were some interesting facts and statistics embedded within:

• Gatwick’s proportion of business travellers is a mere 18%, far lower than I would imagine (I know it’s not strong on the transfer front, but normally appears to have many terminating flights to useful places, from what I’ve seen). By comparison, Heathrow’s is 40%.

• From the set of BAA-owned airports, only Heathrow and Aberdeen have above 20% of transferring passengers, with 34% and 21% respectively. Heathrow’s reputation as a hub is clearly deserved.

• BAA’s airports account for 60% of UK air passengers, but 90% in south-east England, and 84% in Scotland. Maybe there could be a local monopoly at work here, at least?

It’s interesting that the Competition Commission makes lots of slights about poor service, lack of responsiveness to the market, high prices, and so on. This seems a bit unfair. I’ve often wondered how one can gauge the degree of monopoly exploitation fairly, partly there’s rarely an accurate enough free-market alternative implementation to compare it to. The theory does dictate that a monopoly might happen, given some of the stats above, but saying that there is one is a much bigger stretch. This does make me think that perhaps a bit more laissez-faire might go a long way in keeping things market fair - although, as I think they hint at, a bit less regulation would help even things out too.