Capital's airport in line for possible sale

EITHER Edinburgh or Glasgow Airport is set to be sold after the UK competition watchdog ruled that their joint ownership by BAA is harming passenger interests.

The provisional findings of a detailed report by the Competition Commission (CC) also recommended that the firm ceases running two of its three London airports.

If the provisional proposals are rubber-stamped in the CC's final report at the end of the year then BAA will have to look at how to dispose of one of the airports.

The CC found that BAA's airports account for 88 per cent of passengers in Scotland.

While BAA has argued that there is limited scope for competition between Edinburgh and Glasgow because they serve different markets, the CC found that 22 per cent of passengers at Edinburgh were from the catchment areas of Glasgow, while 16 per cent of Glasgow's customers were from the Edinburgh area.

And half of all Edinburgh passengers found Glasgow to be their second choice of airport.

The report said: "Taking all the evidence into account, we consider that Edinburgh faces limited existing competition from other airports under non-BAA ownership.

"Moreover, Glasgow is its closest substitute and we see potential for competition between the two airports."

BAA also runs Aberdeen Airport, although the CC was satisfied that it serves a separate market and does not need to be sold.

Christopher Clarke, chairman of the CC's BAA airports inquiry group, said: "We have provisionally found that there are significant competition problems arising from BAA's common ownership of seven UK airports.

"This is evident from a large number of factors including its lack of responsiveness to the needs of its airline customers and a lack of initiative in planning capacity.

"This has resulted in investment that is not tailored to the requirements of airport users and lower levels and quality of service for both airlines and passengers."

The commission also said there were competition problems arising from the existing planning system and the system of regulation for airports which is under the control of the Civil Aviation Authority.

Mr Clarke said that BAA in Scotland has, until recently, been "noticeably slow" to develop new routes at Edinburgh and Glasgow, while its investment plans at Aberdeen have been "unambitious" despite relatively high levels of profitability.

BAA Scotland's Gordon Dewar, currently managing director of Glasgow, who is due to become Edinburgh Airport's MD in September, said: "We remain of the view that Glasgow and Edinburgh airports serve separate markets and that competition between the two is highly unlikely, regardless of ownership.

"This is a view shared by many of Scotland's leading business organisations and is based on detailed and robust evidence.

"We are disappointed the Competition Commission has chosen to take a different view, following what appears to be a flawed analysis of our airports and without presenting compelling evidence."

He said BAA will respond in detail as the investigation enters its next phase.