Gatwick may be sacrificial lamb for BAA | This is Money

Gatwick may be sacrificial lamb for BAA | This is Money: BAA has privately resigned itself to the fact it may have to sell one of its prestigious London airports in a major concession to regulators.



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BAA chief executive Stephen Nelson is expecting the Office of Fair Trading probe into the sector to break the firm's stranglehold on the market.


Transport analysts reckon BAA will push for Gatwick to be the one that is offloaded because it has the least potential for expansion.


But airlines Ryanair and BAA want Heathrow and Stansted to be under separate ownership.


A forced sale would undoubtedly be a blow for Ferrovial, the company's new Spanish owner, despite protestations to the contrary. It paid £10.3bn for the UK group earlier this year.

Should the OFT investigation be referred to the Competition Commission, BAA could be forced to sell off assets.


However, a more likely outcome is it will negotiate a quid pro quo with the consumer watchdogs and agree to loosen its grip on one airport in return for lighter economic regulation.


Transport analyst Andy Murphy-of Panmure Gordon said: 'One thing is certain, BAA will not want to sell Heathrow. Demand there is enormous.'


Heathrow is set for massive growth. BAA is pressing ahead with plans for the £1.5bn redevelopment of Terminal 2, known as Heathrow East. Eventually the new facilities will allow BAA to close Terminal 1, its second oldest terminal.


BAA faces pressure to dismantle its monopoly. It holds a 63pc market share and a 92pc share of the London airports.


But until now it has rejected the break-up calls, arguing that investment would suffer and Heathrow and Gatwick would no longer be the 27th and 44th most expensive airports for landing charges in the world.


It claims smaller companies would not have the expertise to spend the £4.2bn it is investing in the development of Terminal 5 at Heathrow.


Airlines British Airways and Ryanair are clamouring for BAA to be split up, but insisted that economic regulation must remain.

BAA boss Nelson said this 'have it both ways' proposal would be a 'poisonous cocktail' for consumers.