BAA may have to sell three airports

[December 17th 2008]

The Competition Commission is recommending that airport operator BAA sells Stansted and Edinburgh airports in addition to Gatwick.

The move is intended to create more competition between UK airports and to ensure better service for airlines and passengers. BAA has already announced its intention to sell Gatwick airport and airlines including Ryanair have demanded that it should be forced to sell Stansted too.

Explaining the Competition Commission (CC) decision, chairman of the BAA Airports inquiry Christopher Clarke said: “The most effective way to introduce competition in the South-East and in lowland Scotland is to require the three London airports and the two principal Scottish airports to be separately owned”.

Clarke continues: “Under separate ownership, the airport operators, including BAA, will have a much greater incentive to be far more responsive to their customers, both airlines and passengers”.

BAA’s response suggests that it will not give up Stansted and Edinburgh airports without a fight. BAA chief executive Colin Matthews comments: “As we said when the Competition Commission published its provisional findings in August, we do not believe that it has set out compelling evidence to support its view that selling Stansted as well as Gatwick will increase competition and we remain concerned that its proposed remedies may actually delay the introduction of new runway capacity”.

The CC’s decision to recommend that Edinburgh airport is sold has come as something of a surprise. This year Edinburgh has overtaken Glasgow as the busiest airport in Scotland. Given the choice, BAA may well prefer to hang on to Edinburgh airport rather than Glasgow.

Matthews says: “In Scotland, the Commission has not provided any substantial evidence to support its view that Edinburgh and Glasgow would compete under separate ownership, and we believe there is no justification for specifying which of these airports should be sold”.

The CC will now consider responses to its provisional decision document. It says it expects to publish its final report on BAA’s seven UK airports, and the appropriate remedies, in late February or early March 2009.

Written by: Nick Purdom

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