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Tue, May 26, 2009

Airlines Ask for Cutbacks in Gatwick Improvements

Questions The Logic While The Airport Is For Sale

Three airlines are asking British airport company BAA to cut back on improvements at Gatwick airport, saying the airports' passsenger load does not warrant the project's $1.4 billion price tag.

The Guardian of London reports that British Airways, easyjet, and Ryanair have sent a joint letter to BAA, which operates three London airports, saying they would eventually have to pass along the costs of the improvements to their passengers. The airlines said the business plan supporting the improvements was unproven, citing Gatwicks' 12 percent decrease in passengers in 2009.

The improvements are taking place even as BAA is trying to sell Gatwick. In 2008, the company was ordered to divest its self of some holdings by Britains' Competition Commission, and the airport was put on the market in September of last year. In the letter, the airline executives say the eventual new owner may have a less expensive plan for airport improvements. The airlines are specifically targeting a $318 million plan that BAA says would allow 95 percent of Gatwicks' passengers to board airplanes from the terminal rather than using shuttles.

Two groups are involved in the bidding for Gatwick: Manchester Airports Group and Global Infrastructure Partners. The Guardian reports the expected price to be in the neighborhood of $2.2 billion.

Meanwhile, BAA announced earlier this month that it plans to appeal the Competition Commission's order to sell the airport. In a news release on the company website, BAA said there were ties between a member of the Commission and one of the companies bidding on Gatwick and other airports they were ordered to sell. The Commission responded that one of its members was an advisor to Greater Manchester Pension fund, which is part of MAG. BAA also says forcing the sale in the current economic climate will have an adverse financial impact on the company.

FMI http://www.baa.com/, http://www.competition-commission.org.uk/

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