GIP faces pressure to prove itself at Gatwick
City airport in late 2006, they inherited cramped departure lounges, long lines
at security and some of the poorest punctuality figures of any airport in the
per cent to 87 per cent and average flight delays have been cut from 16 to seven
minutes. Meanwhile, check-in and security queues have been reduced and departure
lounges have been doubled in size.
of Gatwick from BAA on Wednesday, will be able to engineer a repeat of that success.
airline at Gatwick, is one of many who admire the job that GIP have done at London
owners need to prove they are not going to be merely "BAA Mark II".
welcomed the change in ownership. But he remains wary of what he calls an ineffective
regulatory system that saw BAA get approval for a 50 per cent increase in airport
charges at Gatwick over five years, "despite the fact that there will be no new
runways and no new terminals".
plans for the airport.
at the airport, whether by train or car, through to the departure lounge." That
means addressing long check-in queues, perhaps using similar methods to those
used at London City.
For example, EasyJet is attracting more business class passengers as companies
cut back in the recession, but there are few places for them to sit quietly. Mr
McGhee says that GIP is looking at the problem.
passengers who want a greater choice of food than is available on board.
Virgin’s Paul Charles says capacity is not such a big problem at Gatwick as at
Heathrow, making the runway issue less important.
Gatwick, and whether it has the operational skills to take on an airport that
is much larger and more complex than City.
General Electric and the US conglomerate provided it with $500m ( £305m) of financing.
Connecticut, who specialise in improving the performance of the companies it buys.
not been exposed to the full effects of market competition," said William Woodburn,
the former GE executive who runs GIP’s operating team, and who is expected to
join the new Gatwick board.
infrastructure fund, it uses low levels of debt to finance investments. The Gatwick
deal is being financed with bank debt accounting for only 45 per cent of the purchase
and Indian oil and gas storage. But it has only used debt to finance the initial
acquisition of three: Gatwick, London City, and Biffa, the UK waste management
more room for manoeuvre later on to raise bank finance for investing in the companies
Australia’s Babcock & Brown and Macquarie, used record levels of debt for
their investments on the assumption that they were stable utilities and therefore
less risky. But they ran into trouble when the credit crisis started and the debt
financial engineering, we think it is about operational improvements," said Adebayo
Ogunlesi, the former Credit Suisse banker, who chairs GIP.
raised last year. The investments it has made to date are carried at above cost.
buys, including a new chief executive. A similar shake-up is likely in Gatwick’s
Stansted now on the block but Ryanair’s chief could be a sticking point
first of three such deals expected in the UK over the next two-and-a-half years,
writes Pilita Clark.
airport operator, has too much market power, an argument airlines and other airport
users agree with.
Gatwick, the second largest; Stansted, a big base for Ryanair, Europe’s largest
no-frills airline; Edinburgh, Glasgow, Aberdeen and Southampton.
BAA should sell three airports within two years: Gatwick, Stansted and either
Glasgow or Edinburgh.
concerns. Gatwick was always regarded as the most appealing to suitors. It was
bigger with broader transport links and a better passenger catchment area.
chief executive of Ryanair, a vocal critic of BAA’s charges and poor services.
for any potential buyer of Stansted. "Basically, do you want to be the next object
of public ridicule from Michael O’Leary?" said one. "It’s an important part of
due diligence," said another.
If it wins, it hopes the commission will have to reconsider its whole ruling.
If it loses, it hopes the months taken up by the appeal will mean it ends up selling
Stansted and a Scottish airport in a more amenable economic and financial climate.