‘We had to choose an airport to sell. It’s as simple as that’

Operator BAA yesterday announced plans to sell Edinburgh airport following a ruling by the Competition Commission that it must dispose of one of its Scottish bases in either the capital or Glasgow.

The decision, which came as a surprise to many in the industry, means BAA will retain Glasgow airport, as well as Aberdeen, Scotland’s third largest airport, .

BAA said it would formally approach the market in the new year in the hope of agreeing a sale by the summer.

It is understood there is already a number of interested parties keen on taking control of Edinburgh, an airport which has seen passenger numbers rise to around nine million a year, making it the busiest in Scotland.

Industry analysts said the next owners would likely look at increasing the number of long-haul routes out of the capital, possibly to the United States and the Middle East.

While passengers are unlikely to see a significant change in routes and fares in the short-term, there were suggestions that Glasgow and Edinburgh would do battle over low-cost carriers such as Ryanair and easyJet.

BAA’s decision follows a long-running legal wrangle with the Competition Commission, which had told the Spanish-owned firm to sell both Stansted and either Edinburgh or Glasgow.

The company’s decision to opt for Edinburgh confounded expectations, but will make for a quicker and more lucrative sale, with the airport having overtaken Glasgow in terms of passenger numbers.

However BAA, which is owned by a consortium led by Grupo Ferrovial, will continue to appeal the decision regarding Stansted.

Laurie Price, head of aviation strategy at consultancy Mott McDonald, said he was “staggered” by BAA’s decision to chose Edinburgh over Glasgow.

He said: “The centre of gravity seems to be moving west to east. Maybe BAA believe they can make a better immediate return for Edinburgh, but it’s short-term gain for long-term pain.”

He said the advent of smaller long-haul aircraft such as the Boeing 787 or the Airbus 350 meant Edinburgh’s next owners could hope to attract more long-haul flights without building a bigger runway.

He said: “With these aircraft there will be new opportunities for direct services. Edinburgh airport is not dissimilar to the likes of Birmingham and there are five million people living in Scotland.

“As the economy comes back, so too will the traffic – someone could end up with a nice little earner. I could see someone like Emirates or additional services to North America.”

But aviation writer and former airline executive Richard Havers said the change in ownership and increased competition between Edinburgh and Glasgow could see the latter offering “candy-coated carrots” to airlines such as Ryanair to switch their flights from the capital.

He added: “While the airport sell-off might be seen as a good thing, the simple fact is there are not enough of us living in Scotland or visitors wanting to come here to make real game-changing traffic flows at either of our two principal airports.

“Ideally, we should have built just one airport, somewhere close to Falkirk or Bathgate, with a high-speed rail link to the centre of both Glasgow and Edinburgh.”

Passenger numbers at Edinburgh have grown by more than 6 per cent over the past year and by 9.5 per cent since the start of 2011, despite tough economic conditions which have seen other airports struggle.

BAA, which has spent more than £40 million on improving the airport’s terminal building in recent years, said it expected a number of interested parties.

Colin Matthews, the company’s chief executive, said: “We did not want to make this decision, but given we had to choose one of them, we wanted to choose the one where we were the most confident we would get a long list of good bidders. That’s because Edinburgh has performed well through a difficult, difficult period. It’s as simple as that.”

Asked whether there had been any interest in the airport so far, he said: “Yes, sure, but we’ve not had any formal approaches.”

He added the sale would not lead to a “U-turn” over the way the company runs its operations in Glasgow.

Hugh Aitken, easyJet’s commercial manager for Scotland, said his firm welcomed BAA’s decision and looked forward to working with the next owner.

He said: “We believe increased competition will improve Edinburgh and Glasgow airports and help us in our aim to make travel easy and affordable.”

Yesterday’s announcement came a week after the owners of Prestwick airport – Scotland’s fourth largest – signalled a possible sale. It is unclear how New Zealand-based Infratil will act now that its biggest rival is set to remain in BAA hands.

The Ayrshire airport’s passenger numbers have slumped by nearly a third from two million to 1.4 million in two years, leading to an assessment by its owners that it would be difficult for it to remain in their portfolio “long term”.

It is thought the sale of Edinburgh airport could raise £500m. In 2009, BAA sold Gatwick for £1.5 billion, which has around 35 million passengers a year, while City Airport, which has around 7.5 million passengers a year, sold for £750m in 2006.

Councillor Tom Buchanan, Edinburgh’s economic development leader, said: “It’s vital to the city, to the region and to the country as a whole that Edinburgh has an excellent international airport, building on its performance of recent years and developing more new, direct services to key destinations.”

But there was concern over what the future may hold for the airport, with the Labour MP for Edinburgh South, Ian Murray, calling for continued certainty over direct flights to “key destinations”.

He said: “Even with a new owner, the prestigious position must be protected and there must be certainty on direct flights to key destinations.

“I know this will be a worrying time for staff employed on the site and those flying out of Edinburgh who need to know that their jobs will be safe in the short and long term.”

The SNP’s Edinburgh Western MSP, Colin Keir, said: “This is a unique opportunity to buy Scotland’s premier airport and the new owners, whoever they may be, should show a commitment to more direct routes and new investment for the airport and the city, this is vital not only to Edinburgh’s economy, but the national economy as a whole.”

Tory transport spokesman Jackson Carlaw MSP added: “What is vitally important now is that BAA use the funds gained from the sale to further improve and invest in Glasgow and Aberdeen airports.”