26 OCTOBER 2009

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Article from BTNews 26 OCTOBER 2009

COMMENT: Goodbye absent landlord

Gatwick Airport has been sold by Ferrovial, its Spanish owner, to Global Infrastructure Partners (GIP), an independent $5.64bn investment fund, which already owns London City Airport. 

For the most part the airlines have welcomed the move, Ryanair (naturally) rushing out a statement, and also Flybe, although for reasons that AERBT does not understand easyJet Chief Executive Andy Harrison called the ownership “a monopoly”.  All airports are a monopoly of sorts and that is why there is a regulatory system!  Virgin Atlantic was more cautious noting that Gatwick was somewhat larger than City.

The breakup of BAA has been mooted by the airlines since it was created in 1966, even more so from the time of Maggie Thatcher’s privatisation 1986, which also shaped the future for Stansted.  In 2006 Grupo Ferrovial paid £10bn for the seven BAA airports (Aberdeen, Edinburgh, Gatwick, Glasgow, Heathrow, Southampton and Stansted) a purchase frowned upon by most in the British airline industry.  “Absent landlords” would not work said many.  “Would the French allow the British to control Charles de Gaulle?” was a question raised.

Gatwick is a gamble for GIP.  In 2019 the airline is free of restrictions allowing for the building of a second runway, although planning permission would also be required.  The railway station is a mess and requires complete rebuilding  and the new owner must be aware that no capital anywhere in the world has ever properly supported two full international airports.  Newark (New York) only works due to Continental, Orly (Paris) because of French colonial links and the flights supporting that heritage, whilst in Moscow Sheremetyevo now only has Aeroflot as a major international carrier, the privately run Domodedovo Airport currently the popular gateway.

It would seem that BAA has rushed the deal through in order to announce it as the Competition Commission is considering an appeal following its March ruling that it must sell Gatwick, Stansted and either Edinburgh or Glasgow airports.  The thinking must be with the South London operation disposed of the Commission may go lightly on them.

One has to ask the question where does Ferrovial see the future?  Madrid pulls the strings.  Last year British journalists were asked to fly down for the day to hear various pronouncements.  The general opinion was that this should have taken place in London.  Instead of a joint statement the Spanish company jumped in first with what was a very public leak.  Do they really understand the way the British work or is this symbolic of how Europe will be in the years to come.  A serious case of an absent landlord either getting it wrong or being advised badly.

The strong argument is that the last three years have not been a success BAA wise, the various investments long planned, including T5, the Gatwick North bridge and Stansted’s terminal extension.  Terminal East at Heathrow, or whatever it is now called, has now been delayed until after the Olympics.  With planning permission for that development gained last year more questions regarding this hold-up should have been asked of the airport owner.  They have got off lightly.

We wish GIP every success with Gatwick.  As to Ferrovial they really do need to get their act together.  Madrid it not the place to run their UK airport investment.  It truly needs to be hands-on here in Britain.

Malcolm Ginsberg
Editor in Chief

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