BAA has been ordered by the Competition Commission to sell either Edinburgh or Glasgow airport within two years. BAA was also ordered to first sell two of its English airports - it runs seven U.K. airports in total.
"We have decided that the only way to address comprehensively the detriment to passengers and airlines from the complete absence of competition between BAA's south-east airports and between Edinburgh and Glasgow is to require BAA to sell both Gatwick and Stansted as well as either Edinburgh or Glasgow," said Christopher Clarke, the Chairman of the BAA Airports inquiry.
"We are confident that the sale of these airports will bring substantial benefits to passengers and airlines. We expect that the new airport owners, with the operating capabilities and financial resources to develop them as effective competitors, will have a much greater incentive than BAA to be more responsive to their customers. We also expect further benefits from BAA's own response to the action taken by these new competitors."
The Competition Commission's report said that more competition should see lower prices, improved levels of service, and more efficient investment in response to customers' needs.
"Airlines and their passengers, as well as freight companies, will benefit from airport operators being more customer focused."
BAA responded to the report with a short statement:
"BAA will consider the Competition Commission report carefully before deciding how to respond.
We
accept the need to change and, having reorganised to improve customer
service and having initiated the sale of Gatwick, BAA is already
changing.
However, we believe the Commission’s analysis is flawed and its remedies may be impractical in current economic conditions."
BAA would likely prefer to hang on to Edinburgh airport and sell Glasgow airport. Latest figures show that Edinburgh airport handles 8,884,000 passengers a year, while Glasgow saw 7,987,000 passengers pass through its doors in the last year.
Both airports have experienced a drop in traffic over the last year, although it has been more pronounced in Glasgow with an 8% drop versus a 2% drop in Edinburgh.