BAA may be forced to sell TWO London airports!

[akerosid]

According to today's FT:

FT.com / Home UK / UK - BAA faces forced sale of 2 London airports (http://www.ft.com/cms/s/0/b6f83f5c-6b29-11dd-b613-0000779fd18c.html?nclick_check=1)

This will come as a fair old shock to Ferrovial, since most reports suggested only one airport may need to be sold.

The thing is, most people seem to predict the one airport to be sold would be LGW (and if a second had to be sold, it would be STN), but although neither of these are Changi, neither gets anything like the bad press or complaints that LHR gets. Would it not make more sense to get the BAA to sell LHR instead?

That said and whatever about STN, a new operator could do wonders for LGW and its attractiveness as a long haul airport. It must surely be a reflection on the BAA's management of LGW over the years that despite being one of the first airports to have a rail link, it has never really capitalised on this facility; furthermore, although it pretty well smack in the middle of the stockbroker belt, business travellers still prefer LHR. LGW should be a far more popular airport with business travellers than Heathrow and a new operator, with a fresh page, could go a long way to achieving this.

[green granite]

Perhaps MOL will get to buy STN after all

[Rainboe]

I know BAA is one of the most reviled companies in British aviation, but look at this from Ferrovial's POV. The Brits make a total hash of running their own major airports and desperately sell to Ferrovial to raise a lot of money (where did all that go then?). A case of 'we can't make it go, here are the keys- see if you can jump start it then!'. Ferrovial, hardly in ownership long enough to make any significant effective changes apart from put fibreglass in the wings and maybe change the battery, is then told 'it's still a load of rubbish mate! We sold it to you, but now you've got to start selling bits of it off'. In other words, although we sold Ferrovial a total lemon, we're now going to start forcibly dismembering it! How will the Ferrovial shareholders feel, and how long will the court cases go on?

In short, it's all very well forcing mismemberment, but doesn't it smack of dishonesty to have sold it to a private concern first? A bit like selling a car to someone when you know it is useless and it is going to have to be scrapped soon anyway?

Having said that, the BAA is a national disgrace, but it is our problem. The ridiculous T5 process has ensured UK plc will have to lose European airport leadership to Europe. But is it Ferrovial's fault, or a UK that is sinking into a morass of hopelessness in almost everything it does?

Surely if we are going to dismember what was bought in good faith, the whole package must be bought back from Ferrovial giving them a good return on their investment, then whoever is ultimately responsible for this balls-up that is London Airports can then sell off the bits at will? But then Ferrovial might have a bizarre idea of the value of what it currently owns! Get around that one!

Whatever, the fatcat politicians and lawyers are going to have another field day! Weren't the planning and legal fees alone for T5 something astronomic?

[keel beam]

You cannot blame Ferrovial for MOST of BAA's ills. In fact their management are not that on the ball either. They missed an opportunity to get loans when they were cheaper, they just dragged their heels. So, financially, Ferrovial are not in as good a shape as they should be.

Selling 2 London airports and 2 Scottish airports is the way to go.

Let the competition commence!

[Seat62K]

I heard BAA's Rudd being interviewed on BBC Radio 4 this morning and some of what he said was risible. He claimed that Heathrow is not in competition with other BAA airports but instead competes with Continental airports. What this ignores is that the south east of England is one of the largest markets in the world as far as air travel is concerned (100 million pax per annum? - some of them transferring, of course) and both residents and visitors would benefit from being able to choose between airports with different owners (I exclude Luton and London City from my argument, for obvious reasons). I live in this region and when travelling on routes with flights from more than one airport, I always take the "airport experience" into account. This is "competition", except that it's not genuine because as far as the three main airports are concerned BAA owns them all.
I think, too, that there may be some merit in selling off individual terminals but this would need a bit more thought and couldn't, of course, be implemented at STN. (Perhaps Ryanair should build and run its own terminal at STN...)
P.S.
The Ferrovial consortium is not entirely to blame for the current state of London's three main airports. It's just not possible to argue the the rot set in only after it took over ownership. Some of the anti-Spanish comments I've seen are pathetic (and offensive). I assume that the Tories chose not to break up the BAA on privatisation partly (mainly?) because the company was worth more in one piece. If you want to go back far enough, the problem started with the Roskill Commission's failure to recommend an entirely new airport for London. Maplin Sands was my choice at the time. Imagine if the French had not built a new airport at Roissy; Paris would today be struggling with Orly and Le Bourget! New airports, I'll admit, were not always the solution (look at Montreal Mirabel). Although we now have the benefit of hindsight, the demand for travel to/from the South East has grown rapidly and even current ideas such as a third runway and a sixth terminal at LHR may turn out in the longer run really to be no more than "stop gap" measures.

[Rainboe]

It still begs the uncomfortable question- how can you sell an entity and then demand it be broken up? Ferrovial will take the British Government to court and we know they will win a gigantic compensation, which will be paid......by the UK taxpayer. Having taken the decision to sell BAA to a private company, I'm afraid it's too late to decide it would be better to break it up. It actually belongs to someone else! In short, once again, we are compounding one balls up with another on top of it! And the taxpayer will pay yet again.

[PAXboy]

This is the natural end result of the UK politicians lack of policy. Thatcher and Major had no policy other than sell to the City and make a little bit of cash (a number of their deals were shown to have been less than optimum income for the taxpayer.)

Blair and Brown (as Chancellor) followed in their footsteps and failed to get as much money as they could have (like the gold sell off).

NOW they want to correct the mistake of having sold off BAA in one lump, some 20 years later? They want to do so at a low point in the market? A foreign company owns it? it is not just BAA mgmt that have proved their inability to run airports, successive UK govts have proved that making policy on the hoof is bad for us at every stage of the game.

[plane silly]

OK - So Gatwick gets sold off to whoever has the cash these days...

I want to travel to Chicago and live on the South coast of UK- what are my options?

LHR or LGW with a long transfer in a chaotic US airport.

So remind me... how is selling LGW going to increase competition exactly?

I have to fly from where the AIRLINES choose to fly from, not from the airport I want to fly from.

And no matter what some of you say, if LGW is sold and they offer say, United a great deal, do you really think they will pack up and move from LHR?

[Donkey497]

Just heard another interview with a BAA drone. He was giving the party line that there was no need for a sell off as customers were well served by the current situation. What he then claimed just blew his argument out of the water, as in the earlier post, he claimed competition for Heathrow wasn't Gatwick or Stansted, but rather Charles de Gaulle, Schipol and DUBAI [?????!!!!!!!] as major world hubs and that all airlines only operated hub and spoke operations.

Yeah, right!!! If I want to fly from Glasgow to Stockholm or Bristol to Stavanger, Dubai will always be my hub of choice as it's such a short convenient hop through there.

I take the point that there is little direct competition between major airports serving the southeast corner of Londistan, but largely due to blatant social engineering initially by whitehall & carried on long after privatisation by the BAA mandarins who haven't yet woken up, smelt the proverbial coffe & relaised that they're no longer in the Government.

Breaking up BAA is only the start, it needs changes in Government policy and a move away from this dangerous obsession with putting everything through Heathrow and concentrating every bit of industry & the population into the south east corner of the country.

[raffele]

Selling 2 London airports and 2 Scottish airports is the way to go.

BAA are saying that they expect the Competition Commission to say they are to sell at least one of STN and LGW, but possibly both, and one Scottish airport, either EDI or GLA

BBC NEWS | Business | BAA expects forced airport sales (http://news.bbc.co.uk/1/hi/business/7564474.stm)

The main problem, apart from the stranglehold across the South East and Scotland, is that they can't focus on more than one major project at a time. And with Heathrow East, a third runway and possible T6, they can't really do the modernisation thing at their other UK airports!

...can only focus on one development project at a time, causing capacity problems.

[widnowseat]

As someone who visits all 5 of London's airports as a passenger on a very regular basis, the irony for me in all this is that the very worst passenger experience is offered by non BAA owned Luton.

[ExpectmorePayless]

I quite enjoy stepping over the unwashed masses of EZY and RYR passengers as they sleep peacefully on the departure lounge floor. What else could I do to pass the time, but queue for half an hour in the WHSmiths only to be served by a Pole with a nose stud and Visitors ID badge, who can hardly speak a word of English.
Best of all, watch the speedy boarders who have paid extra for priority boarding enter a battered old bus followed by the rest of the passengers.
To be trundled halfway round the airport, only to be last off the bus and onto rain drenched steps.

I'm sure BA, BMI and Virgin will soon move their operation from LHR to STN and LTN once the BAA monopoly ends. :hmm:
I am equally sure there will be a host of airport operators willing to take on STN and LGW with all their costs, and immediately give the big money earning airline bosses, the low charges they keep demanding to continue to make big profits. :\

Lots of privatised companies providing competition in the electricity and gas industries worked wonders for consumers didn't it. :ugh:

[PAXboy]

Donkey497it needs changes in Government policyAh, another person who thinks the UK govt actually have a policy for air transport. :p

widnowseatthe very worst passenger experience is offered by non BAA owned LutonI agree that none of them are good but trying to choose one as being worse than the others? Unfortunately, the experience is unpredictable and by forces beyond your control. Each visit will be subject to, local traffic or public transport delays. How many flights are delayed at the airport that day and how good the particular staff that you meet on this trip etc.

No journey through any of the London area airports is predictable, I cannot see that selling two of them off will change very much because you will have to change a lot of senior and middle mgmt AND revitalise hundreds of regular staff. That will take five years at least but, since BAA have been so bad, I can see little alternative.

[MarkD]

How much of HMG did BAA own when Ferrovial bought it? I thought it was fully private.

[colsie]

Reading todays paper it say´s one Scottish airport will be sold. It is most likely Glasgow as it is in competiton with Prestwick.

[Higher Archie]

Some thoughts.
Making Ferrovial sell LGW will do very little to sort out the South East airport situation. There is an overall lack of capacity. Because of the demand the 3 BAA airports will be well used, whether they are well run or not. Adding a new airport operator to run LGW, with a low charge, high quality policy will not work. Because if airlines want to move, there's no capacity for them.

Any new investor will want to get a return on their money first, then maybe add new capacity.

Making BAA sell an airport, a private company, to another private company, will not solve the situation. Maybe a case for nationalised transport infrastructure?

[allanmack]

"Reading todays paper it say´s one Scottish airport will be sold. It is most likely Glasgow as it is in competiton with Prestwick"

The Scottish papars are actually saying that because GLA is in competition with PIK, it is EDN that is most likely to be sold off. Basically nobody has a clue as to what is being suggested!

[egnxema]

Rainboe - you seem to be suggesting the Government sold BAA.

Before becoming part of Ferrovial, it was BAA plc, listed on the London Stock Exchange. It was not owned by HM Gov. but by shareholders in the UK. Ferrovial bought it from these shareholders.

[BAAADM]

I spent some 29yrs working for BAA, and the company lost its way several years ago, and its decline was simply speeded up under the Spanish takeover. Senior Management had, and still are, bought in from diverse industries, (such as the Co-Op), have very little idea of the Aviation world...but don't know that they 'don't know'!. Staff with a lot of 'real world' aviation background have been made redundant (like me!), and that has had some impact too ..but not as much as some may think as we were not listended to that much by the new breed anyway!.

I believe selling of Stn as well as Lgw is the way to go . and IF Ryanair were to bid..and win ..you would see a signifcantly better Airport in the long term..more efficient, cost effective and user friendly. Putting Security out to contract would be the start, followed by the Fire Service, two area of very, very high costs (both of course very important), but both run in a 'shabby' manner.

[Michael SWS]

I believe selling of Stn as well as Lgw is the way to go . and IF Ryanair were to bid..and win ..you would see a signifcantly better Airport in the long term..more efficient, cost effective and user friendly.There are not many scenarios I can imagine in which Stansted would be a worse airport than it is at the moment, but selling it to Ryanair is one of them. It would become cheap and utterly cheerless, just like Ryanair itself.

[Seat62K]

To clarify, I believe that BAA is owned by a consortium. Other than Ferrovial, I think that the Quebec or Ontario Teachers' Pension Fund may be involved (I'm too lazy right now to check!) plus at least one other. Could be wrong, though...
P.S. Why is there only one Competition Commission:}?

[tornadoken]

Persons willing to tie up capital in (Air)Ports and to embrace the ongoing drain, pain and fuss, do so out of no love for transport. It was the commercial property development potential of the space above/alongside terminals that was of interest in the unloading of the Railtrack entity. Associated British Ports was an investment proposition solely for the handling fees cashflow of containers in transit. BAA is a landlord of warehousing/retail space. The freight and warmware content of aircraft are of no investment relevance, except in being a potential liability, moaning about delays. Most landlords care not a jot for the business of their tenants, they just want their monthly stipend.

Port owners can grow revenue either by pillage of tied tenants (see BAA consistently, owned by the State, the City, or by one infrastructure-phile), or by partnering tenants to share incremental revenue from seizing market from others, and/or by creating fresh market: see every obscure Ryanair port, owned by whomsoever. Aircraft, freight and pax handling fees scarcely cover daily running expense: payoff on £NBillions capital comes from landlord's take from the shopping Mall. If A.N.Other were to takeover LGW that of itself would benefit tenants and cargo/pax Users not one tittle. Nor would the mere act of dividing ownership of clutch ports.

Better, cheaper facilities is what we all want, and won't get until and unless a Buyer cares to pour in more investment for later/slower return, and/or manage it more User-friendly than Ferrovial. Why do you assume, say, MAN Authority's shareholders would settle for a lower hurdle rate on their capital? F won in 2006 precisely because they modelled lower yield than did other Bidders.

We can't undo Ports privatisation because the bow-wave of impending investment equates to measurable pennies on income tax. We do not vote for tax increases. We could have a User co-operative (see NATS, the CRSs) if the carrier industry had ample capital capacity. So, F will unload burdensome dross and enjoy LHR's ongoing revenue with little net acquisition capital. Who's a clever boy, then?

[BarbiesBoyfriend]

The reason for the break up of BAA is simple- and was highly forseeable too btw.

Although the 'old' BAA (ie pre-merger) was arguably a monopoly, Ferrovial already owned a couple of UK airports at the time it approached BAA. I think SOU was one, can't remember the other.

Put the two together and all doubt about it being a monopoly was removed. QED todays breakup.

They might have got away with it if they'd flogged their existing UK airports at the time of the merger thus preserving the status quo at least.

But 'oh, no..............':D

Point 2. Up here in Scotland GLA is widely tipped as most likely to get sold.

Big mistake on two counts.

(i). Most of the population live in/ around Glasgow. GLAs behind EDI at the moment, but when things pick up again, as they will..........

(ii). If the point of the sell-off is to promote competion, selling EDI will do more to that end as GLA is already-and unlike EDI-competing with another airport. If GLA fell into the hands of the same folk who own PIK, the situation could be almost as bad as it is now.

[plane silly]

Question - If STN gets sold to Ryanair, how is that increasing competition? You would only benefit if you flew Ryanair because I can't see them selling decent slots to anyone else! Welcome to Ryanair International...

God help us.... but then I live South of the River so I don't have to go there! :D

[danmcdermott]

BAAADM:
"I believe selling of Stn as well as Lgw is the way to go . and IF Ryanair were to bid..and win ..you would see a signifcantly better Airport in the long term..more efficient, cost effective and user friendly"

I think the competition watchdog would have something to say about one of the main airlines owning the airport.

[eu01]

From the news right now:
Airports operator BAA, owned by Spain's Ferrovial, received a tougher-than-expected ruling from the competition regulator on Wednesday, which said it should sell two of its three London airports because of problems created by its near monopoly.

Along with two of its London airports -- Heathrow, Gatwick and Stansted -- BAA should sell either Edinburgh or Glasgow, cutting its portfolio of British airports to four from seven, the Competition Commission said on Wednesday.
A big auction coming... :rolleyes:

[birdscarer]

Ryanair won't get STN.
MOL would love to have it, but I would love to have LGW and guess we both stand about the same chance of getting it!
The competition commission would put the brakes on it faster than you can say 'to be sure!'

My money is on MAN going for LGW. They would do a good job too!

[birdscarer]

Maybe TBI, Balfour Beaty and Macquarie....infact, any airport owner will probably be tempted to put in an offer for one of the three.

[mattcam]

when will we find out

[VAFFPAX]

VA would NEVER move their ops to STN. It does not make sense. 40 minute train journeys on a crappy train from a crappy station? No way. LGW perhaps, if the new owner (if any) were to make improvements that made VA happy. With all the investment into the dedicated VA terminal at T3, it wouldn't make sense to up and move to the sticks in Essex.

mattcam, we'll find out in April when the final recommendation is made.

S.

[no sponsor]

My understanding is that if BAA choose to keep LHR, they must sell STN and Gatwick. If they sell LHR, they can keep the other two. Hence the reason why the CEO of BAA was using the argument over competition from abroad, not the UK. They still have 2 more months to influence the decision.

I would expect one of the Middle Eastern Sovereign Wealth Funds would buy one the London airports. Perhaps they would make an offer for LHR BAA can't refuse.

[BigBoeing]

Id rather use a crappy train to get to a decent airport than have to put up with a crappy airport, served by crappier trains, and crappest road links.

[Diedtrying]

LONDON, England (CNN) -- Britain's competition watchdog said Wednesday that airport operator BAA should sell three of its seven airports, including two in London.

BAA urged to sell three UK airports - CNN.com (http://edition.cnn.com/2008/BUSINESS/08/20/britain.baa/?iref=mpstoryview)


What are the views of the chaps and chapesses who sit up the front pointy end of the aircraft?

[VAFFPAX]

You might, but international travellers won't. The ones that do are either restricted by funding or are already so demoralised by the airport arrivals experience that they don't care.

If Stansted Express was cleaned up and redone with faster timing, and Liverpool Street was cleaned up from the dingy look, my view might change. Victoria is a great ending for the Gatwick Express, even if Gatwick Airport is not the most fabulous.

S.

[PPRuNe Pop]

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