Scott Reid's business blog: The BAA break-up saga rumbles on

Published on Thursday 19 March 2009 12:30

Just when you thought the BAA airport break-up saga was done and dusted, it looks certain to face further delays.

Today's final report from the Competition Commission ordering the sale of Gatwick and Stansted south of the Border and either Edinburgh or Glasgow up here marks the culmination of a two-year probe.

Yes, it really has been that long. Those competition types like to be thorough, you know – two years is really not that remarkable for the CC.

In fairness, they've had quite a lot to weigh up. Spanish-owned BAA has attracted plenty of flak for the standard of services and pricing policies at its seven UK airports – the group also runs Heathrow, Southampton and Aberdeen.

In its long-awaited report, the CC argues that the sale of the airports will "kick-start a process of competitive rivalry from a standing start where today there is no competition at all".

Passengers and airlines will be hoping the break-up heralds substantial cost benefits.

Unfortunately, they may have to wait just a little longer to find out.

After all those months of evidence gathering and wrangling, the war of words between the CC and BAA shows no sign of fading.

The airport operator has described the Commission's analysis as "flawed", saying its remedies "may be impractical in the current economic conditions".

BAA Scotland spokesman and MD for Edinburgh Airport, Gordon Dewar, uses equally robust language, when he says "we fundamentally disagree with the findings of the CC".

He continues: "I think we have demonstrated clear evidence that the two airports serve distinct and separate markets and that they will never compete, regardless of separate ownership.

"We sit here today still very proud of the record we have delivered in terms of route development, extending Scotland's reach to the rest of the world."

Trouble is, an awful lot of folk out there believe there is simply no competition between Glasgow and Edinburgh.

So, what happens now? Well, not much, at least not overnight.

The watchdog has ordered that the airports be disposed of within two years in a set order, starting with Gatwick, followed by Stansted, and then finally either Edinburgh or Glasgow.

The "for sale" sign has already been hoisted at Gatwick and there has been talk of interest from trade buyers running the rule over Glasgow and Edinburgh, but nothing more concrete.

Despite a provisional finding from competition officials towards the end of last year flagging a likely disposal of one of BAA's Scottish assets, the airport operator is still humming and hawing.

BAA says its board needs further time to digest the findings contained in today's final report and may still appeal against the decision to force the sale of either Edinburgh or Glasgow.

Given the lack of potential buyers out there in the current climate (much changed since the investigation was launched), and what's at stake income-wise, you can't blame BAA for adopting stalling tactics.

One fears, this story could rumble on for some time yet.

• Scott Reid is deputy business editor of The Scotsman. Read more of his blogs on our Business Club site.