George S. May Business Blog

London’s Gatwick Airport sells for $2.5 billion

Per orders of Britain’s competition watchdog, the London Gatwick Airport will be sold to an international investment group for nearly $2.5 billion.

BAA, Gatwick’s current operator, has verified that Global Infrastructure Partners (GIP), an investment fund that invests worldwide in infrastructure, will purchase a 100-percent stake in Gatwick for 1.51 billion pounds, or $2.49 billion, BAA said.

“Today’s announcement marks a new beginning for both Gatwick and BAA,” BAA Chief Executive Colin Matthews said. “We wish Gatwick well for the future and are confident that the airport will flourish under new ownership. BAA will focus on improving Heathrow and our other airports.”

BAA, which is actually Spanish-owned, owns six other airports in the UK, including Heathrow. Gatwick went up for sale in September 2008, after the commission published preliminary findings of competition problems at all seven BAA-owned airports. The Competition Commission has also ordered BAA to sell Stansted and an airport in Scotland (either Edinburgh or Glasgow).

So with new ownership of Gatwick, what, if anything, can we expect to change?

GIP said it plans to upgrade and modernize Gatwick for business and leisure passengers, and would work closely with the airlines to improve performance.

In reality there is not much that will change. In fact, this whole deal, to me, seems to be much ado about nothing. I understand promoting competition and preventing monopoly’s. But, at least from my own consumer standpoint, there is no competition when it comes to booking my flights other than price and time of travel. Never once have I looked at a flight and changed my route because of the ownership of the airport. Does the Competition Commission really think that people will read the headlines and then redirect more of their flights through Gatwick because GIP is now running the show. Actually, all GIP can do at this point, other than maintain the status quo, is fail. Gatwick was not suffering before the change in ownership. They are the busiest single-runway airport in the world, handling 32.2 million passengers in the year that ended September 2009. If GIP comes in and lays an egg, then people may start redirecting their routes away from the airport. If GIP comes in and does well, nothing will have changed and nobody will notice.

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