BAA to relax its stance on Stansted

23.2.2009   (Financial Times)

By Kevin Done, Aerospace Correspondent

BAA is softening its opposition towards a forced sale of Stansted airport, as
the long-running investigation by the competition watchdog into the UK airports
group reaches a climax.

The Competition Commission, in its final report due early in March, is expected
to call for BAA to be broken up, with the sale of three of its seven UK airports:
Gatwick, Stansted and either Edinburgh or Glasgow.

BAA has already pre-empted the findings of the two-year probe by announcing the
sale of Gatwick, the second-largest UK airport.   The process is well advanced
and BAA has called for final, binding offers for Gatwick from a short-list of
three rival consortia by March 30, with the aim of completing the sale by late

BAA and its majority owner, Spanish infrastructure group Ferrovial, indicated
in January that they could be headed for a courtroom showdown with competition
investigators over the calls for the additional sale of Stansted and Edinburgh
airports, after claiming the Commission’s plans would breach human rights law
and European laws against property seizure.

The issue is delicately poised, however, and Ferrovial is anxious to avoid creating
more controversy than is necessary with UK authorities, particularly as it has
recently won government backing for its plan to build a third runway at Heathrow
airport, by far its most important UK asset.

Ferrovial has been co-operating closely with the Commission over the Gatwick
sale, even though the watchdog has no formal jurisdiction over the disposal, and
the group is keen to examine the final details of the Commission’s report before
starting a potentially damaging appeal.

It is still hopeful of winning some flexibility over the timing of the sale of
Stansted, as well as over its own freedom to choose which of Edinburgh or Glasgow
airports it should sell.

A planning inquiry is due to begin this spring into BAA’s application to build
a second runway at Stansted, and there is concern this process could be jeopardised
by the demand for the airport to be sold, as the new owner will have to reconsider
the capital spending plans.

In its provisional remedies published in December, the Commission said it would
seek views on the timing of the sale of Stansted given the forthcoming inquiry.

The watchdog has already indicated that a second runway at Stansted may not be
needed until 2017 rather than 2015.

Traffic at Stansted, the most important airport for low-cost airlines in Europe,
is being hit hard by the recession and in particular by the reduction of capacity during the winter months by its
biggest customer, Ireland’s Ryanair .

Volumes have been falling year-on-year for 15 months in succession, undermining
the timing of BAA’s plans.   The number of passengers in January fell by 11.2%
year-on-year to 1.29m, representing a 19% decline in two years from 1.6m in January