[Anonymous]

[transtraxman]

Seen in TRAVEL WEEKLY dated 3 June 2013
“Luton airport faces takeover bid”

http://www.travelweekly.co.uk/Articles/2013/06/03/44232/luton-airport-faces-takeover-bid.html

This article states that AENA (the Spanish State body controlling the airports) which has a 10% stake in Luton airport has first refusal and has agreed to take over the 90% remaining shareholding of ALBERTIS (a large Spanish conglomerate). Though not said in the article this will be TBI plc. which is the management company for the airport with a contract running to 2028.

My question is if AENA should be allowed to increase its stake? AENA runs almost all the Spanish airports(47?) and makes scandalously huge losses on them. The group is supported by its income in its investments in foreign airports and control of Spanish air navigation.

Would such a takeover mean that Britain is accepting there is no level playing field? (i.e. Can British companies take over Spanish airports?)
Would it not mean there would be a further creaming off of profits to satisfy cash-flow demands at home?

I do not think it too necessary to remind everybody that FERROVIAL (another massive Spanish conglomerate) took over BAA plc..at an inflated price the cost of which proved difficult to finance. It has subsequently been forced to sell off Gatwick, Stansted and Edinburgh airports by the competition authorities. FERROVIAL has also been forced to reduce its holding(by economic circumstances) in the resulting company, Heathrow Airport Holdings Ltd. to 33.65%.

My view is that the British government should step in to make sure that TBI Ltd and Luton airport do not suffer from under investment, which is precisely what happened with BAA plc in all its airports.

[VintageKrug]

Does BAA really underinvest in all its airports?

It recently announced an additional £3bn for Heathrow, in addition to the £11bn already spent since 2003:

http://mediacentre.heathrowairport.com/Press-releases/Heathrow-announces-3bn-of-new-private-sector-investment-in-UK-infrastructure-45b.aspx

Investment must come from the Private Sector; government should stay out of it.

[transtraxman]

VK
I do not dispute what you say.

You do have have to admit, however, that BAA had to be pushed into investing more to unblock bottlenecks. It did this only in Heathrow under severe economic pressure. That is the reason FERROVIAL had to concede the sale of three top airports and reduce its shareholding in the remaining group(HAH Ltd.).

Do not twist the argument as I am not talking about BAA – which is now HAH – but about TBI(which includes Luton and Belfast International).

With the experience of BAA/HAH is it true that there is a grave danger of the holding company for Luton airport, TBI, being subject to a creaming off of its profits for other purposes than investment in the airport? I fear so.

[NTarrant]

Whilst I would agree that investment should come from the private sector, I’m not comfortable with the idea that foreign companies can own major shareholdings in certain types of infrastructure such as an airport in the UK.

[transtraxman]

I do not dispute the the ownership of an airport being in foreign hands. What I do object to is that the government turns a blind eye to “companies unfit to run an airport”(or any other major infrastructure) being allowed to do this.

What do I mean by “.. unfit to run..”? Well as I stated before if it means that the company taking over the infrastructure has other priorities, then they should not be allowed to do so. This can mean creaming off profits away from the airport to shore up the conglomerate company, as was the case with FERROVIAL and would be with AENA.

However, one should not forget conflicts of interest. Here I would object to “Airports of Paris” or Frankfurt Airport taking over ANY London airport.Any potential competitor would fall into that category.

Reciprocity is another important factor. How is it DELTA was permitted to purchase 49% of Virgin Atlantic when the reciprocal condition in the USA is only 25% maximum of any airline. Like for like is my view.

Thus I think the UK government should stand up more vigorously to protect the interests of the country. It can be done more openly or more subtley – just as our competitors do.

[SimonS1]

The government here will never stand up for the interests of UK. We are far too busy following the diktats of Europe for that. We are quite happy for our trains to be built in France or Germany, however can you imagine Germany ever building their trains in UK? Of course not.

This is the exactly the same scenario as the way in which we are more worried about the human rights of criminals, immigrants etc and not about the victims or people who have paid taxes all their lives. I received a leaflet at home the other week from the local council, with it was another leaflet pointing out that if I needed the first leaflet translated into Urdu, Arabic, Polish or one of about 10 other languages then they would be happy to spend my taxes doing it. Utter nonsense.

I completely agree with your point transtaxman. Plenty of examples – why should the likes of SNCF come here, trouser nice subsidies on the railways and then reinvest their profits in their own systems. Bonkers.

[Shearer]

The reason why Germany won’t build trains in the UK is because Germany supported it’s industry – round about the same time the Tories were waging war on UK industry – and therefore Germany still has a train building industry.

But why does it matter? This is how privitization works. It makes UK plc leaner, more agile does it not?

When people were queing outside to get their windfalls from Alliance & Leicester, Bradford and Bingley etc. were we not giddy on the wonders of modern business? When our utilities were privitised, it could only bring competition and lower prices. And when I switch on the gas, I wonder at the efficiency with which it is delivered to my home.

AENA can buy any airport they like, I really don’t give a shit.
It’s the free market at work at work.

[TimFitzgeraldTC]

Transtaxman

Your point about the US allowing foreign investment in airlines is intersting. As part of the Open Skies accord once Heathrow was opened up to US carriers the reciprocal agreement and stage 2 should have been for overseas airlines to have higher stakes in US airlines (ADDED – and for foreign airlines to operate point to point services domestically in the US). For some reason this has hasn’t happened and people seem to have gone quiet on the issue. People mentioned it should not have happened unless both happened simultaneously.

Your other point is valid. Whilst NIRscot is right in that is how the free marlet is supposed to work (in theory) in obviously doesn’t happen in practice. I thought Cross-subsidy was illegal but then how do you prove that. But yes it does seem odd that they can run foreign investments at a profit to subsidise domestic goods & services (if that does indeed happen) and we let them get away with it.

As for the railway observation – well bonkers – and it is Tories and Labour who are equally responsible for this. The answer – vote for someone who will do something about it if you don’t like. Problem – not sure there is any mainstream party who will do anything about it.

[canucklad]

Isn’t it odd that with the forced sell on of the BAA airports we are now in a position where another operator or……or operators are close to monopolistic tendencies..

MAG…..Manchester, Stanstead, East Midlands, Bournemouth
G.I.B…..Gatwick, City and Edinburgh

And as is already pointed out these firms are shareholders are primarily owned by foreign investment funds or pension funds…

I wonder how many UK based investment and pension funds invest in foreign airports?

[BugAdvisor]

Is this the same Luton Airport that just increased the already scandalous £1 for 15 min drop-off charge to £2? Or is it the same Luton Airport that doesn’t provide a free shuttle from Luton Parkway railway station? Or perhaps it’s the same Luton Airport that doesn’t provide enough seats in the terminal building – they play music in the terminal and when it stops everyone has to rush for a seat!

[SimonS1]

NIRscot – 04/06/2013 08:49 GMT

A free market implies there is room for supply and demand. Reality is the airport model is nothing like it. Heathrow is in a monopoly position, that’s why they are attempting to put their fees up by 41% over 5 years whilst being shamed into spending money on winter equipment. Switch to Gatwick? No can do, it’s also full in peak times.

Same as all that guff the Tories fed us about competition on the railways. In reality there is no competition and the companies will increase their fares as much as possible whilst doing as little as possible in return for the highest fares in Europe.

[Shearer]

There are four other airports serving London.

[canucklad]

NIRscot……Your point is valid regarding the 4 other airports and your previous point about free market, although crudely put is also relevant to the discussion…….

Trouble is the 4 other airports are not free to go out and seek growth opportunities….any infrastructure investment can only happen within the parameters of the existing boundaries…hence severely limiting growth…..

Adding in the continual government interference (Sabotage) for a whole variety of self serving interests…Ironically in the week that lobbying has come to the fore, is it any wonder that once again Schipol seems to strive ahead….

The investment that seems to happen in this country, has no real vision, I don’t know why how planners do not have the foresight to future proof projects…as soon as something is built it is almost always out of date and needs to be re-invested in order to compete….Sad but True…We are just plain hopeless at delivering big capital projects….

When T2 opens are year from now…how long before it takes for a need refurbishment or upgrade to compete?

We then have a whole host of busy body legislators that live in cloud cukoo land…..So when a monopoly is broken they assume prices will fall…Classic example of nonsense thinking…

When BskyB had exclusive rights to show football how much did you pay to watch all the footie…?

Now you have to pay upto 3 different subscriptions apx trebling the cost to see the same amount….

now consider the disaster thats our railways….same principle!

[SimonS1]

NIRscot – 04/06/2013 12:37 GMT
“There are four other airports serving London.”

In theory yes. In practice the whole structure of alliances, interlining, connecting flights etc means it doesn’t happen.

If you asked BA to operate half their flights from Stansted what do you think they would say? They have certainly never made much of an effort at LGW.

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