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For Sale - One Airport, Used, Price £1bn. All Offers Considered

Monday, August 20, 2012
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A great example of competition regulation in action here. 

Back in 2009 by the Competition Commission told BAA that it must reduce its stranglehold on the UK aviation market. Part of the instruction was that BAA must dispose of Gatwick Airport (which it sold in December 2009) and Edinburgh Airport (which was sold by BAA in April 2012). However, BAA has been trying to hang onto Stansted, taking the decision through the courts in a long drawn-out process. Now that process is over - it has to sell the airport.

So, who might be attracted by the prospect of acquiring a major UK airport? Who would see the strategic value?

The Telegraph article points to some potential buyers, including Manchester Airports Group which has recently raised finance for a bid.  There are some obvious synergies there. Manchester Airports already owns East Midlands Airport, so Stansted would add a third large airport to its portfolio, allowing it to benefit from economies of scale.

Could Stansted also become a candidate for some vertical integration. Ryanair is Stansted’s biggest customer with around 70% of the traffic there.  There would be significant savings in landing fees and other operating costs for Ryanair if it were to become the new owner (perhaps as part of a consortium). But does Ryanair have the capability to operate an airport - how different are the management and operating skills involved?

As a major customer of Stansted, Ryanair has been very critical of the charges it is levied and of the current ownership. A typically forthright comment comes from a Ryanair spokesperson on the BBC:

“The BAA’s seven failed court appeals were nothing more than a blatant attempt to delay the sale while BAA and its Spanish owners, Ferrovial, fattened up its monopoly profits at the expense of airlines, passengers and British jobs”

A third possibility, mentioned in the BBC article above is that an overseas “sovereign wealth fund” may see Stansted as an attractive investment opportunity:

“Qatar Holding bought a 20% stake in BAA. Analysts suggest other sovereign wealth funds and infrastructure funds of big banks could be interested in Stansted”


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