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Competition – So What?

  • October 16th, 2010

Stansted Airport will be sold after the High Court upheld the Competition Commission’s decision that BAA should divest the airport. Part of the rationale for the Competition Commission’s ruling was that “Common ownership of the three BAA London airports is a feature of the market which prevents competition between them,” the implication being that new ownership will lead to competition. But will it automatically?

Stansted has established a clear market position as a leading airport for Low Cost Carriers. However, if it is to compete with Heathrow it needs to establish itself as a credible long haul, full service airport. This is something it has been consistently unable to do, the most recent examples being the failure of Eos and Maxjet’s business class only services, and American Airlines transatlantic services in 2007 and 2008.

This is not to say that Stansted cannot become a premium airport combining a short haul low cost network with longer distance full service airlines, offering a potent alternative to Heathrow. Its relative proximity to the City and Canary Wharf, the continued growth of Cambridge and a large and increasingly affluent residential catchment area suggest that it might.

However, bringing in new ownership will not be sufficient to achieve this. The key question will be whether new owners bring in a new philosophy to diversify the airport away from its current “low cost” focus. Central to this must be:

  • Creating true partnership with airlines. New owners must address current tensions and shift focus to joint marketing, dedicated facilities and “on time performance.”
  • Establishing a real commitment to improving access, especially by public transport, working with the rail industry to improve services from London, Cambridge and Birmingham and supporting more “business class” coach and shuttle services to the City and Canary Wharf.
  • Enhancing facilities and services for business travellers, including improvements to the lounges and fast tracks at security and immigration.
  • Working with the business communities in the City and Canary Wharf, as well as the travel management companies and travel agents, to better market of the airport and its services.

    If the new owners can achieve this, then there may be real choice between London’s airports. And if the Competition Commission wants to achieve actual competition rather than just a change of ownership and market concentration, it must ensure that the winning bidder has a vision that delivers this.