Terry Murden: New owner has to prove BAA was wrong to resist airport sale

Matthews, group chief executive, admitted to me during a visit to Edinburgh that this was not an ideal time to be selling and that the company would not be disposing of any airports if it was not being ordered to do so by the competition authorities.

At least passenger numbers are not falling, which was the case last year and in the run-up to selling Gatwick. Since the turn of the year, Edinburgh has seen passenger growth of 9.4 per cent – twice the rate of Glasgow which has been recovering from the collapse of XL and Zoom Airlines.

Aviation experts had expected BAA to hold on to Edinburgh in order to build a dual-capital axis with Heathrow. BAA itself had never hinted at which one would be sold and at the weekend there was talk of it putting both on the block to see which would command most interest.

But Edinburgh’s potential is also why it will be put up for auction. BAA knew it could get a better price for its east coast asset and, therefore, a greater return for its shareholders, essentially the Spanish infrastructure firm Ferrovial, which holds 49 per cent of the company. Further growth in passenger numbers next year should help to push up the price.

Aside from speculation about the new owner for Edinburgh, questions are now being asked about BAA’s plans for Glasgow and, of course, Aberdeen, which will also remain in the shrinking BAA portfolio. It looks as though the programme of investment in both, and in Edinburgh, will continue unchanged by this announcement.

BAA has been forced into this situation by those demanding a more competitive and efficient market for airlines and ultimately passengers. The BAA position remains unchanged on this, its argument being that the real problem is capacity rather than competition, and only this week Matthews was refusing to give up hope that a third runway may be included in the coalition’s next aviation policy document.

In its case for retaining its Scottish airports, BAA also dismissed the competition argument, insisting that there was little passenger cross-over between Glasgow and Edinburgh, proving that the two airports operated in distinct, rather than rival markets. Some business leaders supported its case on the grounds that an integrated business could bring cost and operational efficiencies that multiple ownership could not.

However, we are where we are and by next summer Edinburgh will have a new owner whose task will be to prove BAA and its supporters were wrong.

Pulling plug on Longannet project raises many questions

THE abandonment of the £1 billion carbon capture and storage (CCS) programme at the Longannet power station in Fife has driven another wedge between Holyrood and Westminster and looks suspiciously like another example of Britain’s stop-start energy policy.

The decision has angered a lot of people and brought the energy and green lobbies together. But it is not quite so black and white. While Holyrood has attacked the Department of Energy and Climate Change (DECC) for ending the Longannet project for CCS – effectively burying carbon emissions at sea – the Westminster government has not exactly pulled the plug on the technology. It claims Longannet had shortcomings and that it could achieve better value for money by investing in projects elsewhere.

But frustrations and cynicism are understandable. CCS promised to create a new and world- leading industry around Longannet and dramatically reduce Britain’s carbon emissions. Four years after a competitive tendering process was launched among nine companies, management at ScottishPower, which employed 400 technicians on the project, were yesterday said to be spitting tacks that the DECC has decided it cannot afford the extra half- billion in funds that ScottishPower-owner Iberdrola is demanding to make it work.

A not inconsiderable sum has already been spent. ScottishPower has so far invested £10m, Shell and National Grid £10m between them, while The Scotsman understands a further £30m has come from the Treasury.

Energy Secretary Chris Huhne has pledged Westminster’s commitment to CCS technology, but says it will now be via alternative (cheaper) projects at other locations, namely the gas-fired station at Peterhead and a new gas plant at Cockenzie. He said the knowledge so far gained will be made available for future development. Reaction to the decision was so intense that even the Prime Minister was called upon to make a statement.

But Longannet is dead and the decision has left sceptics believing the coalition is not quite as committed as it claims. It also raises questions about the long-term future of coal production in Scotland.