BAA sells Gatwick for £1.5 billion

Oct 22 2009 By Iain Laing, The Journal

GATWICK Airport is to be sold for £1.5bn after owner BAA was told it owned too many airports and customers were suffering from a lack of competition.

US-based investment fund Global Infrastructure Partners (GIP) said customers should get a better service when it takes over in December.

GIP, which already owns London City Airport, said it planned to "transform the airport experience" for passengers but conservation groups said they were worried about "damaging" expansion at Gatwick.

In winning the ‘race’ to take over Gatwick, GIP fought off the challenge of a rival bid from a consortium including Manchester Airports Group.

BAA put Gatwick up for sale while the Competition Commission (CC) was inquiring into whether the company’s ownership of seven UK airports was anti-competitive.

The CC eventually ruled that BAA had to sell Gatwick and Stansted and one of either Glasgow or Edinburgh airports – a decision that BAA is currently appealing against at a competition tribunal.

BAA said that proceeds from the sale of Gatwick – the UK’s second-busiest airport – would be used to repay some of its £9.6bn debt.

BAA chief executive Colin Matthews said the company planned to focus on improving Heathrow and its other airports, which include Southampton and Aberdeen.

Michael McGhee, the GIP partner leading the acquisition, said: "We will upgrade and modernise Gatwick Airport to transform the experience for both business and leisure passengers.

"We plan to work closely with the airlines to improve performance, as we have done successfully at London City Airport."

A long-standing local agreement means a second runway cannot be built at Gatwick before 2019, but there are plans to expand the North Terminal to allow for an extra five million passengers a year. Brendon Sewill, chairman of the Gatwick Area Conservation Campaign, said: "We are worried that a faceless international consortium will squeeze every pound it can out of the airport rather than addressing local worries."

Shadow transport secretary Theresa Villiers said it was vital that GIP improved services at Gatwick, while the Campaign for Better Transport said it wanted to see Gatwick become "better, not bigger".

Airlines said they were looking forward to working with the new owners, with BA saying it wanted to see an efficient Gatwick, and Virgin pointing out that the airport had suffered from a lack of investment "for years".

Gatwick opened in 1958 and is the busiest single-runway airport in the world, handling 32.2 million passengers in the 12 months ending September 2009. It serves more than 200 destinations in 90 countries. It generates around 23,000 on-airport jobs and a further 13,000 indirect posts.