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Cab4one investigates: The billion pound battle for Stansted Airport

With the first round of bidding for Stansted airport now closed, cab4one rounds up what is known about the contenders in a deal set to be pivotal for the success of local businesses.

It’s the main transport hub in the East of England, employs about 10,000 people and is worth around £1.3bn.

But Stansted Airport faces an uncertain future.  After a three-year legal battle, the airport’s owner BAA was told to sell the UK’s fourth busiest airport in August 2012.

As cab4one provides Stansted airport taxi services to and from the airport, we have a vested interest in who takes over the airport.

In particular, we are keen to know whether the new owners plan to resurrect plans to expand an airport that has seen a decline in passenger numbers in recent years.

In addition, will the new owners want to expand the services on offer there, to move Stansted from a European business hub to a long-haul airport of choice?

While only one group has publically confirmed it is to bid for Stansted airport, the battle of the bidders is set to begin in earnest.  Here cab4one outlines the main contenders in this pivotal deal.

Manchester Airports Group (MAG)

Earlier this month, MAG confirmed it is to make a joint bid for Stansted, backed by Industry Funds Management (IFM). 

The company – which owned by the 10 council authorities of Greater Manchester - currently owns Manchester, East Midlands and Bournemouth airports. 

Manchester recently replaced Stansted as the third busiest airport in the UK.

If successful in their bid, Australian-owned IFM would take a 35% stake in the group.

Speaking to the Financial Times, MAG’s chief executive Charlie Cornish said they would be looking to improve the airport’s retail offering and build better relationships with the airport’s airline customers, such as Ryanair.

But, Mr Cornish played down the prospect of big improvements to capital infrastructure, such as a new train line into London.

MAG would also not seek, in the short-to-medium term at least, to expand Stansted beyond a gateway to Europe. 

Morrison & Co.

Although not a publically confirmed bidder, Reuters news agency have said Australasian consortium Morrison & Co has entered the race to run Stansted airport.

According to the Telegraph, the consortium, which operates out of New Zealand, Australia and Hong Kong, is leading a bid team which also includes the New Zealand Superannuation Fund and Infratil, a Wellington-based infrastructure investor.

Infratil is an experienced airport operator with a 66% stake in Wellington Airport in New Zealand. 

It has had a difficult foray to date in the UK airport sector, and as such is in the process of selling its two other British airports – Glasgow Prestwisk and Manston in Kent.

Other interested parties

While neither party has confirmed for certain, industry rumours have suggested two other interested parties may be considering a bid for Stansted.

The first, Macquarie Group, is another Australasian firm interested in the transport hub.  The investment fund unsuccessfully bid to take over Qantas airlines in 2007.

The second, US-based private equity firm TPG, is also rumoured to have submitted a bid.

Cheung Kong Holdings, backed by Hong Kong billionaire Li Ka-shing, was thought to be interested in bidding.  Reuters sources now claim the infrastructure company wanted to form a consortium with MAG but lost out to IFM. 

Dual hub

Somewhat controversially, there could be greater plans afoot in the future of the East of England’s busiest airport.

Late in October, plans by Make - a team of architects - emerged to link Stansted with its sister airport Heathrow to create a ‘dual hub’.

Under the plans, the two transport gateways would be linked by a spur from the £15bn Crossrail project, due to open in 2018 to link east and west London.

Make also believe Stansted itself could be expanded, perhaps to include four runways catering for 150 million passengers a year, although the mere thought of this is likely to send shivers down the spines of those at Stop Stansted Expansion who campaigned so hard against plans for a second runway.

Supporters of the idea, including Make’s founder Ken Shuttleworth, believe a linked Heathrow and Stansted which be a quicker and cheaper way of solving the growing problem of airport capacity in the south-east.

One of the other options considered is the construction of an airport in the Thames estuary, known to many as ‘Boris Island’ after the support lent to the project by London Mayor Boris Johnson.

But there are major obstacles to be overcome if such a project were to be viable.

Rail links into London would have to improve.  Even if Stansted could be linked to Crossrail, Make estimate the journey time would still take about an hour.

José Leo, Heathrow's chief financial officer, told the Guardian the idea is a “commercial risk” because it would take too long to transfer passengers between airports to connecting flights.

Local opposition to any expansion plans would be well-organised, well-funded and fierce.

The Financial Times reported this week that Stansted would have to change its business model, to become a gateway for long-haul flights as well as a European hub.

The FT added that the owners would have to attract at these one of the three global airline alliances to locate operations at the Essex airport.

With Oneworld Alliance (including British Airways) firmly rooted at Heathrow, Stansted’s bosses would have to attract either SkyTeam (including Delta and Air France) or Star Alliance (including Lufthansa and United).

Ryanair

What is certain is Irish low-cost airline Ryanair will not be bidding to run Stansted airport, despite accounting for 70% of their air traffic.

The company was excluded from the bidding process earlier in October 2012 by Ferrovial, BAA’s controlling shareholder.  Ferrovial have not cited a reason.

A spokesman for Ryanair branded the move “anti-competitive and anti-customer”, however added the company would not participate any further in the sale process or seek a minority stake in any consortium.

Ryanair boss Michael O’Leary is a firm advocate of a second runway for Stansted and said he would have pushed “as soon as possible” for the expansion, were he to be part of a successful consortium.

Bigger picture, viewed through long grass

Political inertia over the whole UK airport development took a further step into the long grass when Prime Minister David Cameron appointed Sir Howard Davies, former executive chairman of the Financial Services Authority (FSA) to investigate airport capacity in the UK. His report is expected in 2015, but the decision on whether to support its recommendations will be taken after the next general election meaning that politicians will effectively be able to ignore the politically incendiary issue.

This deferred decision making has incensed the ever vocal London Mayor Boris Johnson, who opposes expanding Heathrow, but has advocated a new airport in the Thames Estuary, and has previously described setting up the commission as a "fudge". Boris appears to have made an ally in Lord Heseltine who’s report No Stone Unturned, commissioned by the Chancellor of the Exchequer, makes 89 recommendations to help industry. Amongst the key points is a demand that the UK should rapidly determine how airport capacity be addressed as part of a coherent strategy for growth and wealth creation. Speaking on the BBC Today programme, Boris Johnson said he felt the Howard Davies decision-making process was too slow and represented a "policy of utter inertia".

Whatever the outcomeComputer Technology Articles, cab4one will be looking at any new opportunities a new airport operator can bring. 

Source: Free Articles from ArticlesFactory.com

ABOUT THE AUTHOR


cab4one offer Stansted Airport Taxi to and from London.

We provide airport transfers from many airports in the UK including Stansted taxi.

Check us out today and email me if you have any questions.



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