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London airport to get a makeover

The North Terminal is seen at Gatwick Airport in London on Wednesday. Global Infrastructure Partners is buying the airport from BAA Ltd. for $2.5 billion. Michael McGhee, the GIP partner who led the acquisition, said, “We will upgrade and modernize Gatwick Airport to transform the experience for both business and leisure passengers." AP Photo by Matt Dunham

The North Terminal is seen at Gatwick Airport in London on Wednesday. Global Infrastructure Partners is buying the airport from BAA Ltd. for $2.5 billion. Michael McGhee, the GIP partner who led the acquisition, said, “We will upgrade and modernize Gatwick Airport to transform the experience for both business and leisure passengers."AP Photo by Matt Dunham

Jane Wardell
AP Business Writer

London — London’s Gatwick Airport is poised for an extensive revamp after BAA Ltd. agreed Wednesday to sell the hub to New York-based Global Infrastructure Partners, beginning the breakup of BAA’s monopoly in Britain’s airports.

The $2.5 billion sale of GIP, which already owns London City Airport, was welcomed by airline and transport group officials who say BAA has failed to properly invest in the country’s second-largest airport, favoring Heathrow instead.

But local community and climate change group members were wary of GIP’s plans to expand the airport, fearing a noisy, polluting second runway.

GIP, an infrastructure fund backed by Credit Suisse and General Electric, has recorded a 38 percent increase in passenger numbers since it bought London City three years ago, according to GIP. Officials promised to also improve the new purchase substantially.

“We will upgrade and modernize Gatwick Airport to transform the experience for both business and leisure passengers,” said Michael McGhee, the GIP partner who led the acquisition. GIP has a 75 percent stake in London City, with Highstar Capital holding the remaining 25 percent.

The Gatwick sale, which is subject to regulatory approval from the European Union, is expected to be completed by December.

Paul Charles, director of communications at Virgin Atlantic Airways, the largest long-haul airline using Gatwick, said Virgin Atlantic officials look forward to working with GIP.

“For years, the airport has suffered from a lack of investment and the new owner now needs to work closely with the airline users to turn Gatwick into a world-class facility,” Charles said.

Stephen Joseph, director of the Campaign for Better Transport, said group members want the new owners to provide “better service for passengers at Gatwick than that provided by BAA.”

Gatwick, already the busiest single-runway airport in the world with 34 million passengers each year, is bound by a long-standing regulation that there be no second runway before 2019. But environmental campaigners said they fear another runway at the airport 26 miles south of London is among GIP’s future plans.

“The new owners of Gatwick should be under no illusions, the challenge of preventing dangerous climate change means that further expansion of the airport cannot be permitted,” said Richard Dyer, aviation campaigner for Friends of the Earth.

The sale ends BAA’s monopoly over London’s three main airports, rounded out by Stansted, and follows a Competition Commission inquiry into the company’s dominance across Britain, where it owns seven airports.

The commission ruled in March that BAA, owned by a consortium headed by Grupo Ferrovial S.A. of Spain, had to sell Gatwick, Stansted and either Edinburgh or Glasgow airports.

BAA officials have stressed that they had unveiled plans to sell Gatwick in September 2008. BAA is appealing the commission’s ruling on the sale of the other airports.

“It is vital for the future of Britain’s air transport and tourism industries that the high cost, inefficient BAA monopoly be broken up as recommended by the Competition Commission report,” said Michael O’Leary, chief executive of Ryanair Holdings PLC.

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