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The markets we operate in

Terminal 5 & aircrafts

BAA is being forced by the Competition Commission to dispose of Gatwick, Stansted and either Glasgow or Edinburgh airports. Such a move could be beneficial to Heathrow, ensuring that it has the right resources and focused management.

Regulatory controls

Almost every aspect of running an airline is governed or influenced by a web of tight regulatory controls. These cover everything from the routes we fly, to the business partners we cooperate with, the airport slots we use, the fares we set and the infrastructure costs we pay. Strict rules also govern safety and security and the management of our environmental impact.

There were a number of important regulatory developments during the year which will have a major impact on the industry in general and on our own long-term strategy.

Liberalisation

In April 2009 we completed our third application to EU and US competition authorities to operate a joint business on north Atlantic routes with our oneworld alliance partners, American Airlines and Iberia.

We are seeking the same anti-trust immunity to run this business as is already enjoyed by our major competitors. Their respective alliances, Star and Skyteam, are already allowed to coordinate schedules and offer customers a range of benefits and valuable services. Other recent regulatory changes have made these routes, and Heathrow in particular, far more competitive than in the past and we have argued that the move would bring real benefits and choice to customers. We expect a decision in the autumn of this year.

The second phase of Open Skies is at a critical stage too. This would give European carriers reciprocal rights of access to US airports of the sort that US carriers now enjoy in Europe. The latest negotiations are moving slower than we had hoped. The EU retains the right to revoke phase one if satisfactory progress is not made. European airlines are generally keen to avoid this however, believing that further liberalisation will provide a long-term boost for the industry and extend choice for customers.

UK airports

The UK Department of Transport is reviewing the way the CAA regulates airport charges. There is strong pressure for a review of the way BAA is regulated and for the introduction of cost-effective charges that ensure airports are managed efficiently.

“The UK Government announced during the year that it was in favour of developing a third, short runway at Heathrow.”

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