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UK regulator orders BAA airport sale.

The UK's Competition Commission (CC) has confirmed the break-up of airports operator BAA by ordering the company to sell three of its seven facilities; London Gatwick, London Stansted and either Edinburgh or Glasgow.

The CC's announcement is part of a final report on its two-year investigation into BAA's perceived dominance over airports in Scotland and the southeast of England. BAA has responded to the findings by saying the CC's analysis was 'flawed'.

In its provisional report published in December 2008, the CC said it believed the lack of competition between airports owned by BAA was detrimental to passengers.

Now, the CC has ordered that the airports be sold within two years.

It has also been announced that the airports must be sold in sequence, starting with Gatwick, followed by Stansted, and then finally either Edinburgh or Glasgow to ensure an orderly sale process.

The sale of Gatwick is already under way and possible buyers are being vetted. Regarding Heathrow, which will continue to give BAA substantial market power in the southeast, the authority has recommended improved consultation between BAA and the airlines.

The CC said its move was the: "only way to address comprehensively the detriment to passengers and airlines from the complete absence of competition between BAA's southeast airports and between Edinburgh and Glasgow."

It added that the sale of these airports would: "kick-start a process of competitive rivalry from a standing start where today there is no competition at all."

Christopher Clarke, chairman of the enquiry, said the move should bring substantial benefits to passengers and airlines. However, Paul Whelan, head of industry body the Small to Medium Airports Group said: "It will do nothing for the consumer.

"There are a lot of airlines, including Ryanair, using Edinburgh and it is doing a good job, while Stansted has also been good for airlines," he added.

BAA, which was purchased by the Spanish company Ferrovial in 2006 for 10bn [pounds sterling] (US$14.3bn), has seen profits fall during the present economic downturn.

BAA said a fall in passenger numbers had reduced its 2008 profits, which declined by 18.4% from the year earlier.

The company reported a profit of 582m [pounds sterling] (US$833) before tax and interest, down from 713m [pounds sterling] (US$1bn) in 2007, as 2.7% fewer travellers went through its seven UK airports.

Its Chief Executive Colin Matthews told the BBC: "We've been improving customer service across all airports, [but] we've got a long way to go."


BAA has two months to respond to the findings, but Mr Matthews said it might: "have to appeal" the decision as trying to sell three airports in the current economic climate might be impractical.
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Title Annotation:Headline News
Publication:Airports International
Geographic Code:4EUUK
Date:May 1, 2009
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