There is an inevitable sense of déjà vu in today’s tribunal ruling against BAA’s appeal contesting the Competition Commission’s earlier ruling that BAA has to sell Stansted Airport, writes John Barrington-Carver.
The UK Competition Appeal Tribunal is a judicial body made up of judges and industry experts. It remains to be seen whether BAA will continue the fight against the disposal of Stansted having already been forced to sell off Gatwick and into accepting the ruling to sell Edinburgh which is expected to go through this summer. Stansted is the third-busiest airport in the UK and is a major hub for the UK’s low-cost airlines.
The past or any future delaying tactics have been and would be a blow for consumers. This is because the Government has set its face against increasing runway capacity particularly in the London area and at least new ownership and investment capital will improve airport services in the region for both passengers and airlines. Importantly, it should help keep the UK in line with airport standards of service in Europe and elsewhere.
New ownership of an airport brings investment with it to provide better services for passengers and better handling facilities for airlines as is evidenced by Gatwick since it was sold by BAA two years ago. Gatwick’s new owners pledged a £1bn investment programme into the airport and 2 years later passengers and airlines alike are already seeing the benefits of the programme starting to roll out to passengers. As Cheapflights Media’s CEO Hugo Burge says: “Gatwick has been transformed from a dowdy uncaring nightmare into the most exciting airport turnaround story. Going through security is a joy… yes, I use the word joy and mean it. More automated gates to pass through and bag x-ray machines than you can shake a stick at. It is also designed with the customer in mind. Loads of space and more open machines than they could get away with, making for short speedy queues. The airport is getting a fresh and vibrant feel and you get the feeling the investment is only just starting.”
Today’s ruling is the latest twist in an on-going saga that began in 2009 when the Competition Commission ruled that BAA’s dominance in London and Scotland meant it must sell Gatwick, Stansted and either Glasgow or Edinburgh airports. Its speculated that BAA have been reluctant to be pushed into selling Stansted because it is one of the few UK main regional airports that has not recovered its pre-2008 passenger traffic. This will reflect on the price investors are willing to pay for the airport despite the fact that it is the third largest in the UK –BAA received £1.5 bn in mid-2009 when it sold Gatwick which price was well below the original £2.2bn asked for it.
BAA is owned by Ferrovial a Spanish group. It was held at the time of the original sale of BAA that Ferrovial had paid too much for BAA. Ferrovial’s original £10.3bn purchase of BAA in 2006 was notable for the amount of debt it had to service. As a result, many industry commentators at the time felt this inhibited its ability to invest in it’s newly acquired UK airports. It also meant that under Ferrovial, BAA raised airport charges excessively to help service the debt – all to the detriment of consumers and airlines.
Hugo Burge commented: “Consumers should welcome today’s decision as it paves the way for new ownership, increased competition between London’s airports and new investment into one of the UK’s busiest airports.”
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