Page last updated at 11:46 GMT, Thursday, 19 March 2009

Will Scottish airport sales take off?

Airport departures sign
BAA is being told to sell three airports in the UK
The airport operator BAA is to be broken up because it is too powerful and restricts competition, according to the Competition Commission.

It wants BAA to sell either Glasgow or Edinburgh airports, and also both Stansted and Gatwick in England.

Airline industry analyst John Strickland looks at the likely impact of the move.


Will the sale of three of BAA's seven airports benefit customers?


I don't think in the short term we're going to see any dramatic changes.

It's going to take time for the sales process to elapse - the Competition Commission is talking about two years in a very difficult economic climate.

For this process to go through, and for a new owner to come in and make big changes, will take a period of time.

Airlines have long argued that they want to pass on lower prices to customers, but there's been little commercial or market incentive on BAA to give the airlines what they regard as appropriately low charges.

There are no guarantees, but I think in the current climate airlines are under a lot of pressure to retain and win traffic in a decreasing market - there's a lot of price pressure there.

Is BAA more likely to sell Glasgow or Edinburgh airport?


I think it's probably likely to be Glasgow because it is less profitable - although the difference in revenue is more marginal than perhaps would be expected.

Of course, Prestwick and Glasgow are next door to each other and Prestwick has been very successful in attracting new services to Scotland, particularly low cost carriers such as Ryanair.

Some people have criticized BAA for not doing enough to develop Glasgow.

Prestwick has a much lower cost base than BAA or a new owner of Glasgow can have. They will be doing what they can to exploit that.

Edinburgh is something of the 'jewel in the crown' in Scotland as far as airlines are concerned. The passenger profile is quite different.

It tends to attract more business customers who tend to pay higher prices for fully flexible fares, using more profitable short-stay car parks and spending more money in the terminal getting hire cars and so on.

Will BAA be able to sell the airports in two years given the current economic climate?


BAA don't think it's a realistic time frame and the evidence is arguably there already with the fact that the Gatwick sale has been slow to get off the ground, even though it arguably is more attractive to purchasers than Stansted, Edinburgh or Glasgow.

Only time will tell if the commission is open to reviewing this if need be.

BAA could challenge the decision and there is a window of about two months for an appeal.

I think it will be very difficult to challenge, particularly if they are left with Heathrow.



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SEE ALSO
BAA ordered to sell Scots airport
19 Mar 09 |  Scotland
Regulator orders sale of airports
19 Mar 09 |  Business
Scottish airports 'not for sale'
17 Sep 08 |  Scotland
Gatwick Airport put up for sale
17 Sep 08 |  Business
Q&A: Future of British airports
17 Dec 08 |  Business
BAA 'should sell three airports'
20 Aug 08 |  Business
In quotes: BAA break-up threat
20 Aug 08 |  Business
BAA expects forced airport sales
16 Aug 08 |  Business

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