BAA loses final Competition Commission sell-off ruling

 

BAA chief executive Colin Matthews: "This decision is a draconian one. A damaging one"

Related Stories

Airport operator BAA must sell Stansted and either Glasgow or Edinburgh airports, the Competition Commission has said in its final ruling.

In March 2009, the commission told BAA to sell Gatwick and Stansted airports and either Edinburgh or Glasgow.

BAA has already sold Gatwick but challenged the decision to sell the other ones.

BAA said it was dismayed at the decision and would now consider a judicial review.

Spanish-owned BAA operates Heathrow, Southampton and Aberdeen, as well as Stansted, Glasgow and Edinburgh.

'Draconian demand'

The Competition Commission said in its report that the sales process for Stansted would start in three months' time, and would be followed by the sale of one of the Scottish airports.

BAA had challenged the commission's initial ruling, but in October last year, the Court of Appeal ruled against the airport operator. Earlier this year, the Supreme Court refused BAA permission to appeal further.

Analysis

In many respects this decision sends us back to 2009. The ruling is the same - BAA must sell Stansted and either Edinburgh or Glasgow.

The response is the same too - BAA isn't happy and will almost certainly launch a legal challenge.

Its last legal challenge successfully delayed the sale process by two years, and it is possible that a new challenge could have a similar effect.

By the time any new challenge is concluded, it's not inconceivable that the Competition Commission could feel its original decision is out of date - and the whole process begins again.

"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," said Peter Freeman from the Competition Commission.

The commission said its decision was "fully justified" and passengers and airlines "would still benefit from greater competition with the airports under separate ownership, despite the current government's decision to rule out new runways at any of the London airports".

But BAA chief executive Colin Matthews called the decision "an unreasonably draconian demand".

"The world has changed since that [initial] report more than two years ago. It's more clear than ever that Heathrow does not serve the same market as Stansted," he told BBC Radio 4's Today programme.

"Any reasonable and legal way that we have to protect the company which has invested £5bn in UK jobs, we will do."

BAA also argues that being forced to sell airports in a difficult market could destroy shareholder value.

It points to investment fund Global Infrastructure Partners, the new owners of Gatwick, paying themselves a £350m dividend in March this year, just 15 months after buying the airport from BAA for £1.5bn.

Greater choice

Budget airline Ryanair accused BAA of "using delay tactics to maximise the amount it can raise for the inevitable sale".

"This is a cynical move which will damage London tourism and traffic and keep costs high for passengers," a spokesperson for the airline said.

Easyjet also said it supported the Competition Commission's decision.

"The sale of Stansted and either Glasgow or Edinburgh should encourage more timely, well designed and cost effective investment," said Paul Simmons, Easyjet's UK director. "We look forward to a long and fruitful relationship with the new owners of these airports."

Bob Atkinson from the website Travelsupermarket.com said the ruling was "excellent news" and would be welcomed by consumers.

"The introduction of new operators for some of the UK's key airports will give consumers greater choice and in turn should raise the standard of service within all UK airports across the board," he said.

He added that the threat of strike action last year at airports run by BAA demonstrated the importance of having different airport operators as a strike by BAA could have "practically paralysed" air travel in the UK.

 

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

Comments

This entry is now closed for comments

Jump to comments pagination
 
  • rate this
    +2

    Comment number 21.

    BAA are awful. But there is no sign that new owners do better. BAA lost Gatwick a year ago but the new owners have made it more user unfriendly than ever. Huge increases in car parking fees, more difficult passenger drop off and pick up, greater congestion and disorganisation than ever in departures and security, baggage and passport delays. When will UK users get the airports they deserve?

  • rate this
    -1

    Comment number 19.

    Without reading more facts about the case, I would assume that the legal question hinges on whether or not Stansted could be considered to be operating in a different (low cost airline) market to BAA's other airports. It would be interesting to hear peoples thoughts on this

  • rate this
    +1

    Comment number 13.

    Air fares are likely to come down because AIRLINE operators are always saying that BAA have very high charges because of their position as a monopoly.

  • rate this
    +3

    Comment number 12.

    The airport owner leases out the space/services for parking, food, shops and even the airline for the gates. Even if the airport owner reduces its lease price to these companies, they are not likely to pass savings onto the customer as we are used to paying the current price, so they will just pocket the extra profit. Only the companies renting the space will benefit not the end consumer.

  • rate this
    +1

    Comment number 11.

    The more competition is said to help consumers...the measure of that help should be lower travel costs and better services for all..

    Question; who will revist sell offs in the furure to ENSURE travellers are getting any benefits ? Operators taking out profits need to be monitored in the future.. Airports have just been turned into shopping malls so where is the benefit for traveller costs ?

 

Comments 5 of 6

 

More Business stories

RSS

Features

  • Atletico's Diego Godin celebrates his goal with teammate David VillaWeek in pictures

    Selection of the best news photographs from around the world


  • Susanne du ToitTop 10 Tips

    Portrait painter Susanne du Toit on being an artist


  • StampsPost Independence

    Will stamps get cheaper if Scots go it alone?


  • Rhea10 things

    Rhea birds can be extremely dangerous, plus other factlets


  • Plane at Shannon airportShannon's call

    The airport that hosted a roll-call of presidents


BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.