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The sale of Gatwick Airport - Case Study Example

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The sale of Gatwick Airport

Gatwick Airport, the second largest airport in the United Kingdom, has been offered for sale by BAA, its owner following a move by the competition commission to push the Company to dispose three of its British airports due to dominance concerns of the Airline business market. Gatwick, being the country's second biggest airport, acts as a major component of the national infrastructure as well as a significant constituent of the British aviation industry. There have been misgivings through out the country's economic sector with many feeling that the airport has been flogged off with less attention to the bigger social effects.According to BBC NEWS (2008), the competition committee, which is charged with the job of ensuring and regulation the operations of airports in UK ruled that the BAA had no option but to give away three of the company's airports based in the UK to create more competition in the sector. It insisted that the organization have to sell two of the South East airports which comprises of Heathrow, Gatwick and Stansted. Regarding this, BAA which is possessed by Spanish company Ferrovial ruled out the sell of Heathrow and Stansted thus leaving Gatwick airport for bidding. Other airports ran by the BAA includes Glasgow, Edinburgh and Scotland based Aberdeen as well as southern England based Southampton. The competition commission has been trying to make to an end the monopolistic control on airport operations to install quality of the services offered in order to provide its clients with efficiency. As a result of this, different companies have indicated their interest in purchasing the airport that has been estimated to have a value of around $ 1.8 billion as per regulators although the price for the airport is likely to be set by the current market circumstances.. Some of the major companies who have indicated there interest in Gatwick include Manchester Airports Group Plc (MAG), Global Infrastructure partners and Lysander Gatwick Investment.
Since early 1970s , the control of Gatwick, Heathrow and Stansted airports has been under BAA which the competition commission blames for the insufficient competition between south-east English airports and the central Scotland based ones.
As per BBC NEWS(2008), this monopoly control has resulted to low levels of service provision to passengers and airline companies and as well lower the incentives for more chances of improvement. BAA has been blamed for slow implementation of new route development plans at several airports as well as being sluggish in venturing into fresh terminals and creating more runways. This situation has been contrasted with other airports such as London city and Manchester airports which have been in the front line in implementing these changes. They have been trying to expand the facilities and services and lowering charges as well as being more responsive to the special needs of the customers.
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Major Airport Operators in UK and Europe
Manchester Airports Group Plc (MAG)
It is the second biggest airport operator in the country and runs Manchester Airport, the third largest airport in the United Kingdom, presently handling 20 million freight passengers annually and having flights to more than 180 destinations globally with over 90 airlines. Other airports ran by the operator includes Nottingham East Midlands airport, Humberside airport and Bournemouth airport. The company also runs Borealis Capital Corporation and Manchester Pension Fund.
Global Infrastructure partners
Is an organization that possesses London City Airport. It has a brand value of $5.64 billion fund. It is run by professional investment executives' partners who experience direct investment to the fund. London City airport is the leading commercial airport in UK. It has ten airlines operating 32 destinations all over UK and the rest of Europe. It also connects to the rest ...Show more

Summary

Gatwick Airport, the second largest airport in the United Kingdom, has been offered for sale by BAA, its owner following a move by the competition commission to push the Company to dispose three of its British airports due to dominance concerns of the Airline business market…
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