The Competition Commission has published the provisional findings of its investigation into BAA Ltd, the privatised entity that operates the main airports in the London area.   The Commission’s concern is whether there are features of the market for airport capacity which may adversely affect competition.  It says it is not concerned with the environmental issues that can arise from air travel.  A key conclusion of the findings is that BAA’s common ownership prevents competition between the airports; separate ownership would incentivize airport operators to overcome capacity constraints and facilitate competition.   Remarkably, the Commission fails to mention the likelihood that climate change considerations will limit the expansion of airport capacity.

The Department for Transport published its most recent projections of air passenger demand and aviation carbon dioxide emissions last November.  It assumed that a new runway is built at each of Heathrow and Stansted airports, but no further capacity subsequently. On this basis UK aviation emissions are forecast to increase linearly from 37.5 mt carbon dioxide in 2005 to about 60mt in 2030, at which time growth is projected largely to cease, on account of capacity constraints.  

The UK government is committed to reducing domestic carbon dioxide emissions by 60% by 2050, or even by 80% should that seem necessary to prevent dangerous climate change.   The Department estimated that aviation’s contribution would amount to 30% of the UK’s overall emissions by 2050, assuming that other sectors achieved the planned 60% reductions.   If an 80% reduction were needed, aviation’s share would be 60% of the total.

It seems to me that the Department’s projections for aviation’s contribution to climate change are unfeasibly large.   And remember that these forecasts assume no more than two extra runways.   So the Competition Commission's disregard of climate change as a serious constraint on the expansion of airport capacity, and hence on competition amongst airports, is surely a major deficiency.