It's official: BAA forced to sell Gatwick, Stansted, one Scottish airport
Friday March 20, 2009
As had been expected following its mid-December ruling on the matter, the UK Competition Commission is requiring BAA to sell both London Gatwick and Stansted and either Edinburgh or Glasgow International, reasoning that this is "the only way to address comprehensively the detriment to passengers and airlines from the complete absence of competition between BAA's southeast airports and between Edinburgh and Glasgow."
In its final report issued yesterday following a two-year inquiry into BAA's ownership of seven UK airports, the CC stipulated that BAA must sell the three airports within two years and that they are to be sold in sequence, beginning with Gatwick, then Stansted, than one of the Scottish facilities. They must be sold to different owners and the purchasers must be approved by the CC.
"We are confident that the sale of these airports will bring substantial benefits to passengers and airlines," Chairman of the BAA Airports Inquiry Christopher Clarke said. "We expect that the new airport owners, with the operating capabilities and financial resources to develop them as effective competitors, will have a much greater incentive than BAA to be more responsive to their customers. We also expect further benefits from BAA's own response to the action taken by these new competitors."
He noted that at Heathrow, "the UK's only hub airport, BAA will continue to have substantial market power even after it no longer owns either Gatwick or Stansted." The CC is recommending that CAA work with BAA and airlines to strengthen consultation at LHR and will introduce annual independent audits of the existing quality service regime. It also is requiring BAA to improve consultation with airlines at Aberdeen, as well as to publish certain financial and other information.
BAA said it will consider the Commission report "carefully" before deciding how to respond and claimed that the "remedies may be impractical in current economic conditions". Last month, BAA reported a 2.7% year-over-year decline in passenger numbers at its UK airports and an 18.5% fall in operating profit to £582 million. A Grupo Ferrovial-led consortium bought the airports operator in 2006 for more £10 billion. BAA has two months to appeal the decision.
EasyJet CEO Andy Harrison said the CC "completed an excellent body of work of the sort that has been sorely lacking over the years in the industry. The breakup of BAA has been the inevitable outcome of these failures, but breakup alone will not resolve the problems of individual monopoly airports."
Stansted Airline Consultative Committee Chairman David O'Brien said passenger numbers at STN "are in freefall, driven downwards by high airport charges and BAA monopoly indifference." He said airlines could reverse that trend "if new owners deliver what airlines and their passengers need--efficient facilities and lower costs."
Ryanair called on the Irish Competition Authority to examine the findings of its UK counterpart and to investigate the Dublin Airport Authority's "anti-consumer control over the three main Irish airports."
by Cathy Buyck
ATWOnline
Friday March 20, 2009
As had been expected following its mid-December ruling on the matter, the UK Competition Commission is requiring BAA to sell both London Gatwick and Stansted and either Edinburgh or Glasgow International, reasoning that this is "the only way to address comprehensively the detriment to passengers and airlines from the complete absence of competition between BAA's southeast airports and between Edinburgh and Glasgow."
In its final report issued yesterday following a two-year inquiry into BAA's ownership of seven UK airports, the CC stipulated that BAA must sell the three airports within two years and that they are to be sold in sequence, beginning with Gatwick, then Stansted, than one of the Scottish facilities. They must be sold to different owners and the purchasers must be approved by the CC.
"We are confident that the sale of these airports will bring substantial benefits to passengers and airlines," Chairman of the BAA Airports Inquiry Christopher Clarke said. "We expect that the new airport owners, with the operating capabilities and financial resources to develop them as effective competitors, will have a much greater incentive than BAA to be more responsive to their customers. We also expect further benefits from BAA's own response to the action taken by these new competitors."
He noted that at Heathrow, "the UK's only hub airport, BAA will continue to have substantial market power even after it no longer owns either Gatwick or Stansted." The CC is recommending that CAA work with BAA and airlines to strengthen consultation at LHR and will introduce annual independent audits of the existing quality service regime. It also is requiring BAA to improve consultation with airlines at Aberdeen, as well as to publish certain financial and other information.
BAA said it will consider the Commission report "carefully" before deciding how to respond and claimed that the "remedies may be impractical in current economic conditions". Last month, BAA reported a 2.7% year-over-year decline in passenger numbers at its UK airports and an 18.5% fall in operating profit to £582 million. A Grupo Ferrovial-led consortium bought the airports operator in 2006 for more £10 billion. BAA has two months to appeal the decision.
EasyJet CEO Andy Harrison said the CC "completed an excellent body of work of the sort that has been sorely lacking over the years in the industry. The breakup of BAA has been the inevitable outcome of these failures, but breakup alone will not resolve the problems of individual monopoly airports."
Stansted Airline Consultative Committee Chairman David O'Brien said passenger numbers at STN "are in freefall, driven downwards by high airport charges and BAA monopoly indifference." He said airlines could reverse that trend "if new owners deliver what airlines and their passengers need--efficient facilities and lower costs."
Ryanair called on the Irish Competition Authority to examine the findings of its UK counterpart and to investigate the Dublin Airport Authority's "anti-consumer control over the three main Irish airports."
by Cathy Buyck
ATWOnline
