NO BUY ZONE
Heading for blue skies or a bumpy ride? The future of Glasgow Airport appears to be up in the air, with reports suggesting it is to be put up for sale by the owner, BAA. An announcement might be made as early as next month, around the time the Competition Commission, which has been engaged in a year-long investigation into whether BAA should be broken up, publishes its final recommendations. Judging by its interim findings, released in April, the commission seems minded to favour a break-up. BAA owns three of the London airports and three in Scotland: Glasgow, Edinburgh and Aberdeen.Those who believe BAA should be forced to sell off some of its airports maintain that the situation at present gives the operator a virtual monopoly that favours neither airlines nor passengers. A break-up, they maintain, would introduce an element of competition that would deliver better services and facilities. Should the commission live up to expectations in its final report, Glasgow would be the favourite to be sold off in Scotland. BAA, which is owned by Spain's Ferrovial, has predictably called for the status quo to remain. BAA Scotland and its allies, including the Scottish Chambers of Commerce, argue that a break-up would put in peril a multi-million investment programme and introduce uncertainty into the marketplace at a challenging time for the industry.
Both arguments cannot be right. In theory, it is possible to envisage Glasgow being freed to develop on its own, potentially becoming a Scottish version of the highly successful Manchester Airport. But would it be possible to replicate the Manchester model of airport at Abbotsinch? Manchester is owned by the Manchester Airports Group, the second biggest operator in Britain, which is itself owned by the 10 local authorities of Greater Manchester.
The Scottish local authorites around Glasgow airport do not have the cash to buy it and those in Ayrshire have the problem of Prestwick, owned by New Zealand's Infratil, on their doorstep, which would probably rule them out. In any case, Manchester's success is built on being part of a major player in the airports business. Also, it is hard to imagine the SNP's futures fund, already under pressure to deliver on projects, stretching to buying a big airport. It is possible that a private equity fund could step in but that would be on the likely basis of stripping out costs to sell on for a profit. It is investment that is needed.
For a variety of reasons, including the impact of the credit crunch on individual and corporate spending patterns, now is not a good time to try to sell an airport, especially if the reasons are to hold on to prize assets (which Glasgow is not) by getting rid of an asset that, in relative terms, is not doing so well (in other words, Glasgow) and to make a pre-emptive strike against the likely recommendations of the commission. A period of turbulence seems more likely to lie ahead.
Copyright © 2008 Newsquest (Herald & Times) Limited.
The Herald
Copyright © 2008 Newsquest (Herald & Times) Limited. All
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