Monday, August 25, 2008

BAA Sell Off - Good News For All?

I've taken a little time to reflect on the announcement regarding the recommendation that BAA sell off of one of it's threee Scottish airports.

It is almost universally accepted that Glasgow would be most likely to be the preferred sell off option if BAA are indeed forced to sell.

Tom Dalrymple, chairman of the Flyglobespan airline, was quoted in The Scotsman and said he was firmly in favour of a break-up and would like to see two of the three Scottish airports sold off, particularly Edinburgh."This is the only way we can guarantee competition and the most competitive prices for our customers," he said. "If there is to be an airport sold it should be Edinburgh as Glasgow already has a measure of competition on its doorstep from Prestwick. Competition will be of benefit to passengers."

He certainly has a good point with regards to competition in the west coast. Prestwick in Ayrshire has provided an increasingly competitive edge over the past ten years and whilst Globespan chose Glasgow eventually as its preferred departure point over Prestwick the competition has meant and increase in flights from Prestwick with Ryanair and undoubtedly increased the sharpness of Glasgow's pencil when it comes to negotiating with other operators.

The catastrophic scenario for the Ayrshire economy would be the releasing of Glasgow from BAA's hands into an aggressive operator resulitng in a direct challenge to Prestwick Airport's existence. Doomsday scenario? Well yes but not the impossible scenario that some in ayrshire seem to think. Ryanair have been responsible almost single handedly for the increase in tourism numbers in Ayrshire over the past decade - it has not been destination driven; the growth has been access driven. The problem with Ryanair now is that their methods are well known and whilst they undoubtedly enjoy being the main player at Prestwick they have expereince of shaping strategy at larger airports - see Dublin and Stansted - and I can see a whole host of reasons why the could (not would) transfer the whole shebang up the M77 to Glasgow. It will certainly be high on the agenda of any of the prospective purchasers of Glasgow Airport from the BAA.

Is it worrying business in Ayrshire? Well that depends on who you speak to. The local papers ignored the annoucnement completely with a journalist indicating that should something actaully loom then it may then cover it. Non story from that point of view.

Bob Leitch from the Chamber of Commerce was at some odds with his Edinburgh and Glasgow colleagues (who are currently opposing the sell off) when he stated, "That anything which increases competition is good for business. The possibility of another Scottish Airport being sold to another company I think as much increases the prospects for Prestwick as it does deter. Over the past five years and more remarkable progress has been made by Prestwick and greater competition will only lead to greater opportunity as there are many other airlines flying to those other airports who might consider Prestwick in a more competitive environment. Changing market conditions always creates new challenges and I am sure Prestwick and Ayrshire will be ready to deal with such a situation if and when it happens."

However, one prominent hotelier in the area sees it potentially differently and understands from airline insiders that there is a genuine worry about the reliance on Ryanair and any potential loss of that business to Glasgow. It was felt that while Ryanair can exert real influence at Prestwick and they recognise other benefits such as landing fees, two runways and greater reliability of weather these still may not be enough in the long term to ensure their tenancy.

So here's hoping that the optimism of the Ayrshire Post journo is not unfounded but perhaps, and without scaremongering, business in Ayrshire should be looking a little more strategically at the proposed sell off and deciding whether a more pro-active, less laissez faire attitude may be required to ensure that one of its most influential economic drivers continues to flourish. The management of Prestwick Airport are to be congratulated for what they've done over the decade for the local economy often without the recognition of those they've benefitted and it really is pretty critical to the economy of South West Scotland that it continues to flourish and that Ayrshire fights to maintain its excellent accessibility for both tourists and business.

By coincidence, the Ayrshire Chamber of Commerce are hosting an open forum on September 4th in Kilmarnock to examine the key performance indicators for the Ayrshire economy and the structures needed for growth for the future. It's an agenda free afternoon so putting forward discussion topics maybe defeats the purpose but on access could the following be worth being rasied from the floor?

Accessibility to Ayrshire - Maintain and increase accessibility
- based on the above Ayrshire business and public sector should actively campaign for the sell off by BA of "Edinburgh not Glasgow." This will truly make Scotland's three central airports more competitive and have a generally bigger impact on competition for the flyer and airlines. It may help avoid displacement. From a purely Ayrshire perspective the sell off of Edinburgh is a potentially "less worse" option than the sell off of Glasgow and therefore the interests of business and residents in the Ayrshire should be sacrosanct.

Sea - refocus on the Irish markets with the ferry operators coming into Troon; examine development of creative seasonal routes such as Troon - Campbeltown - Ballycastle.

Road - continue the campaign fro further upgrading of routes from the south on the A77.

Rail - examine increased integration and highlight the plusses of integrated rail ticketing with the good practice at Prestwick Airport.

The subject of why doesn't a county with the population of Ayrshire have a single council instead of the triplication of North, South and East must surely be raised but maybe that's for another post...

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