John Strickland: Jewel in the crown will bring the highest returns

Published on Thursday 20 October 2011 00:00

BY opting to sell Edinburgh airport, BAA has gone for the highest chance of a financial return, knowing that the sale is going to happen in the next year. It is not the ideal time to be a selling an airport and, given the choice, they would not be doing so.

The decision is surprising in some respects. If they were thinking strategically, you would expect them to keep the jewel in the crown. In general terms, Edinburgh could command a significant premium over Glasgow – it just has most things going for it and the general trend has been that Edinburgh is growing, while Glasgow is losing out.

In terms of the changes passengers will see, it would not surprise me if more long-haul routes are offered.

Edinburgh is quite tight on capacity at the moment and there’s not a lot of room for manoeuvre. However, at certain times of the day it could certainly accommodate more long-haul type flights. There’s already been some success with routes to the US and that could be grown. There could also be more routes to the Gulf with the likes of Emirates.

If you look at what’s happened with Gatwick, there’s no doubt the new management put a lot of effort into improving the front end, improving security checks for passengers and that kind of thing. In terms of what passengers will see at Edinburgh, I don’t think there will be a massively tangible difference in the short-term as a lot has been spent on the airport recently.

In terms of things like the airport’s drop-off charge, that reflects the mix of passengers they have and the competition for low-cost carriers like Ryanair pushing for the lowest possible costs. Airport operators have had to find other ways to raise money and that has meant things like drop-off charges. I can’t see that changing.

There will be lots of interest in Edinburgh airport. I would imagine we’ll see interest from groups already running airports in this country, such as Global Infrastructure Partners or Manchester Airports Group. But Edinburgh is very much on the map globally and it’s popular with airlines, which makes it even better. I could see interest internationally from some of the big airport operators.

What will be interesting for Scotland as a whole is what BAA does with Glasgow and whether there’s more aggressive competition between Prestwick and Glasgow. We only have part of the story at the moment.

• John Strickland is a director of JLS Consulting and a former airline executive who worked for airlines including British Airways and KLM.

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