BAA told to offload Gatwick and Stansted

BAA's airport monopoly must end within two years, says the Competition Commission.

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Last Updated: 31 Aug 2010

In the biggest shake-up in airport ownership in more than 20 years, the airport watchdog has ordered BAA to sell both Stansted and Gatwick, and either Glasgow or Edinburgh airports.

The BAA party was over before it began for Spanish owner Ferrovial, which took over the reins in 2006. To cap it all, the monopoly owner has now been ordered to offload three of its interests to three different buyers, who must be approved by the commission and have the resources to be effective competitors. Good luck, we say.

The thinking is that the airport sector will now get a long-overdue injection of competitive fizz, resulting in lower prices and an improvement of services. There are, however, a couple of problems - not least the economy. Shifting three airports (worth an estimated £4bn together) in the current credit climate, not to mention the current travel market, will be about as easy as getting a double-decker bus to take off. Even if they do manage to sell it, they'd have to do so at a knock-down price.

BAA's chief exec Colin Matthews may have had a point when he said it's ‘simply not practical to proceed'. Take Gatwick: it's already up for sale, for a predicted sum of £2bn, but bidders are struggling to conjure the requisite equity and debt financing. BAA has labeled the watchdog's analysis as ‘flawed', and said that it may well appeal within the next couple of months.

The move does appear good news for the rest of us - on the surface at least. BAA has been able to get away with a series of errors over the last few years, culminating in the Heathrow Terminal 5 debacle, without the threat of rivals breathing down its neck. The watchdog reckons the break-up will lead to lower prices and better service, and force BAA to up its game at Heathrow too, which may mean business visitors finally getting a more welcoming introduction to our fair shores.

That is of course a laudable aim. But we can't help feeling the regulators have missed the point somewhere. Airports don't really operate under the traditional notion of competition: punters don't choose airports because of what they offer, they choose destinations - and the nearest and cheapest way to get there. People aren't exactly going to change their holiday plans because the airport suffers from snaking check-in queues and a dodgy selection of sandwiches. More genuine competition does of course exist among airlines over which airports they use, but Heathrow is the convenient hub - that's where they all want to be.

We'll leave the final moan to the greens. The Competition Commission also attacked BAA for its pedestrian approach to building new runways, and now hopes the split will hasten such developments at Gatwick and Stansted. Which isn't exactly in keeping with many people's views on air travel. The eventual buyers may have to get past protestors superglued to the door of their headquarters before they can celebrate. 

 

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