BAA may be forced to give up two London airports

BAA, the owner and operator of London’s Heathrow, Gatwick and Stansted airports, may soon find that it has little choice but to give up two  of these hubs, now that British regulators agree that competition and the quality of service are adversely affected by the firm’s ownership of nearly all major international airports in the United Kingdom. It appears as though the UK’s Competition Commission is also planning to ask BAA to give up one of its airports in Scotland, in addition to two in London. BAA, once a British government agency, was privatized two decades ago and has since been bought up by Spanish-controlled Ferrovial SA.

The Competition Commission was compelled to look into BAA’s near monopoly of London airports after a series of complaints from both passengers and major airlines, claiming that the operator offers a substandard level of service. According to a Bloomberg report, the Competition Commission appears to agree with this assessment and also added that BAA did not put into place adequately thought-out plans to deal with rising passenger traffic figures. As such, the Commission is now suggesting that it is time that BAA cede control of both Gatwick and Stansted, as well as either the Glasgow or Edinburgh airport. Under this recommendation, BAA would be able to keep London-Heathrow, which has been at the centre of much controversy in recent months, due to massive delays and piles of lost luggage, following the opening of Terminal 5. If Gatwick is sold in the near future, it is expected to go for around $6.3 billion. Analysts believe that there may already be two serious contenders for Gatwick, including the Manchester Airports Group, as well as Germany’s Hochtief. Both Ryanair and easyJet have already gone on record indicating that they agree with the Commission’s decision.

Thank you to Steve Rothwell of Bloomberg News for the initial report.

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