Stansted Airport Must be Sold

On Wednesday, the Competition Appeal Tribunal unanimously ruled that the British Airports Authority (BAA) has to sell London Stansted Airport. The organisation had launched a legal challenge against the Competition Commission after a July 2011 ruling that it has to dispose of the property. BAA, which is owned by a consortium led by Spanish Ferrovial, has really been involved in a drawn out legal battle with the commission since it decided nearly three years ago to break up the airport operator’s ownership.

In March 2009, BAA was ordered by the commission to sell Stansted, Gatwick, and Glasgow or Edinburgh due to adverse effects on airlines and consumers that stemmed from the organisation’s dominance of the south-east of England and Scottish lowlands markets. The company sold Gatwick before the 2009 ruling to a consortium led by Global Infrastructure Partners for £1.5 billion, but the regulator had already identified competition issues at the property in 2008.

Then last July the commission confirmed its 2009 ruling after considering if it was invalid due to subsequent events. BAA said that circumstances had changed since the ruling, partially because the coalition government ruled out allowing new runways at Heathrow, Stansted and Gatwick in 2010. Chief executive Colin Matthews said at the time that the commission hadn’t recognised that BAA and the world have changed. Aviation policy has been changed after a new government ruled out new runway capacity, while the company has sold Gatwick. These are substantial changes to the airport market, while the airports in question now face more competition from non-BAA airports for the business of budget airlines – especially airports in Europe.

Before the tribunal, its legal challenge involved claims that the commission failed to gather information about if new circumstances existed at the time of its report last July. Due to its challenge against selling Stansted, the commission agreed last October that it could begin selling Edinburgh Airport first.

However, the Competition Appeal Tribunal says there wasn’t a failure of proper investigation on the commission’s part. It added that the regulator was entitled to make its 2011 assessment that a requirement to sell Stansted would be a proper remedy for the adverse effect on market, competition and regulatory failures. In response to the tribunal ruling, BAA said that they are disappointed by the decision and will carefully consider it before making anymore statements. It didn’t say if it will appeal the decision or not.

Competition Commission member Laura Carstensen, who was part of the original inquiry group, says they are pleased its decision was upheld by the tribunal. While BAA is entitled to explore the options to challenge the ruling, surely it’s time they accept the findings and begin the necessary sale. The organisation is in the process of selling Edinburgh Airport after their previous ruling, and they will press ahead to ensure this is promptly followed with the sale of Stansted to benefit airlines and passengers.

Meanwhile, the commission and tribunal were given support in their decision by Ryanair, one of the biggest critics of BAA in recent years. A spokesman said that Ferrovial and BAA have used every legal measure to delay the sale for four years since the commission first made its recommendation in 2008. The owners of Stansted are unfairly embellishing themselves at the expense of UK travellers, who are suffering from increased charges and third-rate service at the airport, and the CAA’s regulatory regime doesn’t do anything to protect airport users.

In response, a BAA spokesman said that Ryanair doesn’t pay any more at Stansted than what’s allowed by the regulator, which is less than Gatwick. The charges the carrier is referring to have been examined by the commission and comply with the CAA’s price cap. They have also been implemented for two years, so they don’t believe the airline has any case for legal action. The timing of Ryanair’s complaint is interesting, he added, as it coincides with the public debate on if the ruling to sell Stansted is right.