BAA Forced to Sell?

Unless BAA is able to mount a successful legal challenge against the UK Competition Commission’s decision announced on July 19, London Stansted (illustrated) along with either Edinburgh or Glasgow airport will be sold. (BAA)

Unless BAA is able to mount a successful legal challenge against the UK Competition Commission’s decision announced on July 19, London Stansted (illustrated) along with either Edinburgh or Glasgow airport will be sold. (BAA)

The Competition Commission (CC) has said in its final ruling that airport operator BAA must sell London’s Stansted and either Glasgow or Edinburgh airport in Scotland.

Spanish-owned BAA sold Gatwick Airport to Global Infrastructure Partners almost 18 months ago after a similar ruling but challenged the decision to sell the other airports.  The Commission has stated that its final verdict is “fully justified” and that the sales process for Stansted will start three months from now.  The sale of one of the Scottish airports will follow soon after.
Former CC Chairman Peter Freeman said:  “Our report has been challenged, reviewed and upheld and it is clear that the original decision to require BAA to divest three airports remains the right one for customers.”
However, BAA has responded by saying it is “dismayed” and will now “consider a judicial review” of the decision.  Chief Executive Colin Matthews has argued that:  “the Competition Commission has not recognised that the world and BAA have changed.  This decision would damage our company, which is investing strongly in UK jobs and growth.”
The operator has argued that the sale of Gatwick and the Government decision to rule out any new runway capacity in London are both significant changes to the airport industry.  It also feels that BAA-owned Heathrow and Stansted serve different markets.
The company says it has invested £5bn (US$8bn) in its UK airports, including £300m (US$484m) in Stansted, and is currently investing a further £1bn (US$1.6bn) a year.  Its operational performance has improved with shorter security queues, more reliable baggage delivery and better flight punctuality.  Surveys have also shown that passengers have recognised these various improvements.
However, former BAA airport Gatwick has welcomed the decision.  Chief Executive Stewart Wingate said:  “Under separate ownership, Gatwick is delivering real benefits to both airlines and passengers.  Greater competition amongst the London airports will see us raise the bar further still.”