BAA's decision to sell Edinburgh airport lifts the cloud of uncertainty that has been looming over it and Glasgow airport.
Five years after the Office of Fair Trade began an investigation into whether BAA’s ownership of seven UK airports, including Glasgow, Edinburgh and Aberdeen, was anti-competitive and two years after the Competition Commission ruled BAA must sell either Glasgow or Edinburgh, yesterday’s decision will allow both to move ahead.
The choice of Edinburgh confounds the expectation that BAA would retain the more successful of the two and divest itself of Glasgow, which has returned to growth this year after a downturn. However, Edinburgh, which has seen growth of 6% and attracted 20 new routes in the past year, is the more realisable asset. As an airport that has proved particularly resilient through the economic downturn, it should be attractive to prospective buyers when investors are especially risk-averse.
There are already good public transport connections from the airport to Edinburgh city centre and once the beleaguered tram project is completed, journeys should become more streamlined, increasing the prospects for further development as passenger numbers are projected to rise from the current 9.2 million to 13 million a year by 2013.
Nevertheless the announcement of the sale will produce uncertainty for the staff of the airport and of the 40 airlines which use it. The point of forcing BAA to sell a Scottish airport (in addition to Gatwick, already sold, and Stansted, whose sale is still being disputed) is to encourage competition to improve services. BAA has invested in both Glasgow and Edinburgh in recent years, providing improved facilities for passengers and attracting new airlines. Since both Glasgow and Edinburgh airports are within easy travelling distance for much of the population in Scotland, there is every reason to believe that competition can drive that process further.
That will happen, however, only if BAA invests profit from the sale of Edinburgh in Glasgow and Aberdeen to compete with both Edinburgh and Prestwick. There should be scope for cheaper landing charges to attract new airlines, thus opening up a wider range of destinations. As a country on the periphery of Europe, good transport links, including direct flights to strategic destinations, are essential to Scotland’s economic wellbeing.
Glasgow suffered a drop in passengers with the demise of a number of charter airlines but for the first time since 2005, numbers have increased each month this year. The right investment would continue that process.
One factor in BAA’s challenges to the Competition Commission’s requirements has been the difficulty in realising the full value of its assets if forced to sell at the bottom of the market. Edinburgh Airport could be seen as a bargain buy. Although a prompt sale would end uncertainty, care must be taken to ensure as far as possible that any new owner is committed to developing Scotland’s busiest airport to its full potential, to the benefit of the country as a whole.
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