Sold! Gatwick snapped up for a bargain £1.5bn
October 21, 2009The UK's second busiest airport has gone under the hammer for just £1.51 billion – a whopping £500 million lower than initial estimates of its value.
London Gatwick's owner, BAA, grudgingly agreed to put the gateway up for sale after the Competition Commission accused it of anti-competitive behaviour.
Regulators had said that the Spanish-owned company – which runs seven major UK airports, including Heathrow and Stansted – has a stranglehold in the south-east.
The winning bid for Gatwick was submitted by Global Infrastructure Partners (GIP), an investment fund that has a 75 per cent stake in London City Airport.
Its offer, which includes a conditional sum of £55 million tied to future traffic performance, falls well short of the £1.8 billion BAA had hoped to secure. Earlier estimates had run as high as £2 billion, but the economic downturn drove the price down markedly.
The sale is expected to bring significant benefits to passengers by ramping up pressure on airport operators to either improve services or risk losing customers.
"There is ferocious competition between airlines, but very little between airports," Simon Calder, travel editor for The Independent, explained to the BBC.
"At the moment, there is very little incentive to get passengers to switch between Heathrow and Gatwick. [But now] we will ultimately have proper competition between airports."
The agreement comes as BAA steps up its appeal over the Competition Commission's order to sell three of its seven UK airport within two years. As Cheapflights reported yesterday, the operator has accused the commission of "apparent bias" in its divestment ruling.
While the Gatwick sale now looks certain, BAA is still hoping to overturn orders to shed two of its other bases – one in Scotland and another in south-east England.
BAA currently owns Gatwick, Heathrow, Stansted, Southampton, Edinburgh, Glasgow and Aberdeen airports. It has total debts estimated to be in the region of £9.6 billion.
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