Competition Commission releases final report on BAA

[raffele]

BAA must sell three airports, in this sequence: Gatwick, Stansted and either Glasgow or Edinburgh, within 2 years.

BAA have 2 months to respond and make an appeal if they wish

BBC NEWS | Business | BAA could challenge airport sale (http://news.bbc.co.uk/1/hi/business/7951377.stm)

[Munnyspinner]

And to the CC have now created new monopolies in each of the regions served by these airports. Stansted competing with Gatwick - I think not.

[davidjohnson6]

Munny - I'm not quite sure I follow your logic here.

Gatwick and Stansted are already local near-monopolies in Sussex and East Anglia. How does the CC report make things any worse ?

While LGW and STN are far apart, they do still compete with each other to a significant degree particularly as they are both heavily used by LCCs and leisure travellers. People based near central London find that LGW, LTN and STN are roughly equidistant in terms of time it takes to reach these airports and may well be neutral as to which airport they use to fly. If all 3 are in separate ownership, one should see airport fees at these airports fall (or improved service) and the people of London can only benefit.

[Munnyspinner]

Ok, they do both serve the greater London Market ( c10M) the are geographically distinct. This, I assume, means that inbound traffic will look at STN and LGW as being UK Airports with a London suffix. They both have trin links to Central London and as an entry point to UK they are perhaps pretty indistinct.

On this basis I will accept that they must therefore be in competition to a certain degree.

However, I suppose this in itself begs a question. If they truly are in competition then surely separet ownerhsip is only aimed at reducing cost differentials between them which, if passed on the the consumer will lead to greater movement of pax from North to South and/or vice versa to secure these cost savings.

Taking this to a logical conclusion (and I'm beginning to get very confused here!) does this not mean that if they both had identical routes and costs the catchments for each would become geographically distinct - where the cost t/from the airport is the only deciding factor?

[davidjohnson6]

If LGW and STN compete in a meaningful way against each other, not only does the 'preference catchment boundary' between LGW and STN move further north or south, but also those living near one of those 2 airports (e.g. residents of Brighton or Cambridge) will see innovation, better service or lower fees. It encourages the management of these airports to become more efficient and target their product offering better at airlines and passengers.

On your point about LGW and STN (in theory) having identical routes, I think this misses certain aspects of how airports compete for pax.
- Not only does the airline matter, but so does the schedule of the flight.
- LGW by virtue of having some long-haul flights has the potential for some 'non-official' connecting feed onto LCCs
- LGW and STN have different facilities for pax - LGW being better for those who like their airport shops (e.g. my Mum)
- Does one airport have a more comfortable lounge in which to wait ?
- Perhaps one airport has some sort of loyalty scheme, whereby regular use gives you money off duty free purchases ? (just like supermarkets !)
- Are long-term parking charges at the 2 airports the same ? This might be caused by the local availability of land
- Does one airport have a reputation for regular delays to flights ? Perhaps an airport can fix this by investing in infrastructure ?
- Are the transport links from central London equally good ? Trains to Gatwick run 24 hours, while early morning flight from STN require a coach trip.
- The area around LGW is probably wealthier than the area around STN, so a network carrier will tend to have its leisure flights based at LGW while a cheaper LCC will aim for STN
- Is one airport easier to 'get through' than the other, important perhaps for the retired or those with small children ?

If LGW and STN were identical on all the above points, then I guess you are right, and the catchment boundary would just move north / south to secure the relevant cost savings.