The Competition Commission confirmed today it will require airport operator BAA to sell Gatwick, Stansted and Edinburgh airports to three different operators to improve competition and levels of service.
The Government’s competition regulator said, subject to final approval, it will require the airport sale and other measures to ensure that ‘investment and levels of service at Heathrow, and possibly Gatwick and Stansted, meet more effectively the needs of airlines, passengers and other airport users’.
It could also consider a sale of Glasgow Airport as an alternative to a sale of the airport in Edinburgh.
At Aberdeen airport, it is proposing measures to promote investment linked to rebates on charges.
The commission said it will also make recommendations to the government on a more effective and flexible system of airport regulation and on aspects of government airports policy.
It expects to publish its final report on baa's seven UK airports, and the appropriate remedies, in late February or early March 2009.
South east not competitive
Christopher Clarke, chairman of the BAA Airports inquiry, said: ‘The most effective way to introduce compe¬tition in the South-East and in lowland Scotland is to require the three London airports and the two principal Scottish airports to be separately owned.
‘Hence we are proposing the sale of Gatwick, Stansted and Edinburgh airports to new independent owners with the operating capabilities and financial resources to develop each of them as effective competitors. Under the common ownership of BAA, there is no competition. Under separate ownership, the airport oper¬ators, including BAA, will have a much greater incentive to be far more responsive to their customers, both airlines and passengers.
‘We recognize that current capacity constraints in the South-East will limit the pace of development of competition. Even in the short term, however, we expect benefits from different approaches to airport management as well as greater initiative in longer-term planning and development of new investment which will be critical to sustained effective competition.’
Colin Matthews, chief executive of BAA, disagreed with the commission’s ruling and said: 'As we said when the Competition Commission published its provisional findings in August, we do not believe that it has set out compelling evidence to support its view that selling Stansted as well as Gatwick will increase competition and we remain concerned that its proposed remedies may actually delay the introduction of new runway capacity.
'In Scotland, the Commission has not provided any substantial evidence to support its view that Edinburgh and Glasgow would compete under separate ownership, and we believe there is no justification for specifying which of these airports should be sold.
'We will continue to make our case to the Competition Commission.'