BAA ordered to get rid of Stansted as watchdog calls for more competition

BAA has lost its final appeal against the Competition Commission ruling that it must sell Stansted airport, and either Glasgow or Edinburgh. The Spanish-owned group – which also owns Heathrow, Aberdeen and Southampton airports – expressed "dismay" at the decision yesterday, and warned that it may push for a judicial review.

The determination is the latest in a string of statements, appeals and restatements in a two-year saga over who should own Britain's airports.

BAA has already sold Gatwick to Global Infrastructure Partners (GIP) for £1.5bn in 2009, in an attempt to pre-empt the regulator-induced break-up it could see was coming.

But Gatwick was not enough. And yesterday's ruling from the commission unequivocally restated its original finding from 2009 that not only is the sale of Stansted and one of the Scottish airports fully justified, but also that both passengers and airlines will benefit from greater competition.

It is now time for BAA to get on with the sales, said Peter Freeman, chairman of the commission's BAA Remedies Implementation Group.

"Our report has been challenged, reviewed and upheld, and it is clear that the original decision to require BAA to divest three airports remains the right one for customers," Mr Freeman said.

"Both we and the courts have now exhaustively re-examined the case for the sales and found it to be sound, so there are no grounds for delaying further," he added.

BAA is required to sell Stansted first, beginning the process within three months. It must then move on to divest either Glasgow or Edinburgh.

But even now, BAA has not given up the fight. The company's chief executive, Colin Matthews, says the Competition Commission has not recognised that the world has changed since the original determination two years ago.

"This decision would damage our company, which is investing strongly in UK jobs and growth," he warned. "We have a responsibility to protect our shareholders' investment and we will now consider a judicial review of the Commission's decision."

BAA has several strands to its argument. The favourite – which was singled out for rebuttal by the Competition Commission yesterday – is that the world has changed since the March 2009 decision. Not only has BAA sold Gatwick, but the Government has also ruled out any new runway capacity in the South-east.

BAA also points out it has invested £5bn since the group was taken over by Spain's Ferrovial in 2006, with improved security, baggage delivery and flight punctuality as a result.

Even so, there are few, if any, commentators who believe that BAA can avoid the sales. "It would be absolutely astonishing if there were even a further review, let alone if it came to a different conclusion," Bob Atkinson, of TravelSupermarket.com, said.

The central issue for BAA is how much Stansted is worth. Ferrovial paid more than £10bn for BAA. Since then, the financial crisis and recession have slashed the value of its assets. BAA has already delayed any sales as long as possible, in the hope the market will recover.

But many experts consider Stansted's expected price tag of £1.2bn still too high, given that there are no longer plans for a second runway, and that a consumer spending squeeze is felt particularly hard at the airport.