Global Economics

Gatwick Airport Up for Sale


BAA, the owner of the British airport, as well as Heathrow and Stansted, put it up for sale today following last month's report of "competition problems"

Under-fire airports operator BAA today announced its intention to put Gatwick Airport up for sale.

The owner of Heathrow, Stansted and Scotland's three biggest airports said it was beginning the sale process "immediately" and that customers, staff and business would benefit from the decision.

It follows a report from the Competition Commission last month which identified "significant competition problems" because of BAA's dominant position and proposed the company cease running two of its three London airports.

Gatwick, near Crawley in West Sussex, is the UK's second busiest airport after Heathrow and was used by 35 million passengers last year.

BAA chief executive Colin Matthews said: "Gatwick has long been an important and valuable part of BAA and the decision to sell was not taken lightly.

"We believe that the airport's customers, staff and business will benefit from the earliest possible resolution of current uncertainty.

"When the Competition Commission published its provisional findings, we said that we would be realistic in our response, though we disagree with the Commission's report and the analysis on which it is founded."

He said the group wanted to continue to operate its three other South East airports, which include Southampton, and its three Scottish hubs.

This could fall foul of the Competition Commission's eventual recommendations.

In provisional findings issued last month from the long-running inquiry into BAA's position, the commission said it was likely to order BAA to sell Gatwick and Stansted Airports in southern England and one of either Glasgow or Edinburgh Airports.

Mr Matthews said: "We will continue to present our case, in respect of the South East airports and those in Scotland. At Stansted, we believe that a change of ownership would interfere with the process of securing planning approval for a second runway, which remains a key feature of Government air transport policy."

He added: "BAA will continue to change in many respects. We have a new management team. Our priority is to improve the quality of service we offer passengers and airlines."

BAA is owned by Spanish giant Ferrovial, which bought the firm in 2006.

Sir Richard Branson's airline, Virgin Atlantic, immediately threw its hat into the ring, saying it would be happy to join a bidding consortium.

Chief executive Steve Ridgway said: "We are delighted that BAA has ended the uncertainty over Gatwick's future.

"Virgin Atlantic would relish the opportunity to bid for Gatwick as part of a consortium and inject our customer service expertise into any future running of the airport.

"But Gatwick doesn't just need a new owner—it needs a much tougher regulatory system which ensures any new owner doesn't simply become BAA Mark 2."

A series of international firms have already reportedly expressed interest in Gatwick Airport as owner BAA faced being broken up by competition bosses.

Germany's Hochtief, Global Infrastructure Partners, the GE-Credit Suisse Investment fund and Australia's Macquarie group are all said to have indicated their interest to BAA chairman Sir Nigel Rudd.

Other bidders including American and Asian groups could also emerge in the coming months in what could be a multibillion-pound tussle.

Analysts have estimated the sale of Gatwick could fetch between £2 billion and £3 billion.

Gatwick is the busiest single-runway airport in the world, hosting 80 airlines and managing 262,000 air transport movements per year. It employs more than 25,000 people, around 2,400 of whom work for BAA.

In its stinging criticism last month, the Competition Commission said separate owners of the main London and Scottish airports would do a better job than BAA which has faced much criticism of late because of delays, baggage problems and the shambolic opening of Heathrow's Terminal 5.

The commission also highlighted a lack of responsiveness by BAA to the needs of its airline customers, a lack of initiative in planning capacity, investment not tailored to the requirements of airport users, and lower levels and quality of service for both airlines and passengers.

Steve Turner, national officer of the Unite trade union, which represents airport workers, said: "It simply beggars belief that a 'For Sale' sign can be hung across the country's second largest airport.

"Gatwick is a core component of the national infrastructure and an essential part of the UK's aviation sector yet it is to be flogged off with little care for the wider social impact.

"This is devastating news to the many hundreds of professional, loyal and dedicated staff at Gatwick and it will hit passengers too.

"At a time when the sector is being battered by the credit crunch, faces tough challenges in soaring fuel prices and new security measures, aviation needs stability, not the fire sale of a profitable, significant airport."

Mr Turner urged BAA to reconsider its decision and argue the case for retaining ownership, adding that the Government could not "sit on the sidelines" while airports were "destabilised".

He continued: "It is yet another failure of regulation but Unite will not stand by while workers pay the price with their jobs and passengers see services cut."

The union said it was concerned that BAA was attempting to pre-empt the final report of the Competition Commission which is expected to seek the break-up of the airport group.

Unite warned that selling off airports would lead to higher costs and hit services.

Provided by The Independent—from London, for Independent minds

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