Stansted Airport Must be Sold

The Court of Appeal in London has upheld a decision by the Competition Commission that airport operator BAA has to sell Stansted Airport. The company has been fighting a ruling to sell the airport for three years – since a decision was made in 2009 that requires BAA to offload the asset to reduce its stranglehold on the aviation market in Britain.

The newest ruling follows BAA being forced to sell Gatwick Airport and Edinburgh Airport as well. Both of those airports were bought by Global Infrastructure Partners – Gatwick in December 2009 and Edinburgh in April this year. Manchester Airports Group is said to be a potential buyer for Stansted Airport, which is valued at around £1 billion.

This decision is due to be a blow to BAA chief executive Colin Matthews. He has been hoping to avoid having to sell Stansted Airport during the tough economy. Last week, he made a late plea to keep the airport with a warning that a forced sale will discourage foreign shareholders from investing in the UK during the current depressed market. Those shareholders are the same ones who are investing £100 million per year in Heathrow Airport. He questions why the country as a whole would want to discourage inbound flows of equity, as funding for infrastructure depends on that, he added.

Following the Court of Appeal ruling, a statement from BAA said that they are disappointed that the court ruled in favour of the Competition Commission. They will carefully consider the judgment and intend to submit an appeal to the Supreme Court, it added.

On the other side, the Competition Commission, of course, welcomed the decision. Laura Carstensen, a member of the team that investigated the case of BAA, said they are pleased their decision on Stansted Airport has been upheld once again. This is still the right decision in the interest of airlines and passengers, and it’s certainly time for BAA to accept the verdict and get a move on with the asset sale, she added.

The Court of Appeal made its decision as BAA announced its results for the Heathrow and Stansted airports. Passenger numbers handled during the first half year increased 0.8% year-on-year to 41.8 million. Heathrow passenger numbers were up 2.2% to 33.6 million – its best first half ever. However, passenger numbers at Stansted fell 4.5% to 8.2 million. Underlying traffic growth (adjusted for the leap year) was estimated at 0.3% – a 1.7% increase at Heathrow and 4.9% decline at Stansted.

The group says this performance was characterised by the rise from 72.1% in load factor to 73.2%, as well as an increase in seats per aircraft – up from 194.1 to 196.1. Stansted recorded its highest load factor of 78.2% – a 0.2% increase from last year. Long-haul flights were the strongest performing market at both airports during the period – with a 2.2% growth to 17.8 million passengers. Traffic across Europe increased 0.3% to 21 million, but domestic traffic fell 3.3% to 2.9 million.

Matthews says that they are reporting a strong operational and financial performance for the first six months of the year. Passengers tell them they notice improvements at Heathrow, which received its highest passenger satisfaction scores in the two recent quarterly Airport Service Quality surveys. They are thrilled Olympic arrivals have gone smoothly so far, but there’s much more to do. The Games are the biggest peacetime transport challenge, and they are spending over £20 million to ensure the airport is prepared for its busiest period ever, he added.