BAA loses final Competition Commission sell-off ruling

Media playback is unsupported on your device
Media captionBAA chief executive Colin Matthews: "This decision is a draconian one. A damaging one"

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.

"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 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

Around the BBC

Related Internet links

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