Apron strings: When airports are liberated
Remember BAA plc, the privatised successor to the British Airports Authority?
Seven years ago, it was fiercely battling to dissuade the Competition Commission from splitting it up.
It tried to tell us that Edinburgh and Glasgow airports, then both under its command, were not really in competition. Neither was held back by being part of a larger group, said BAA.
Its lobbying failed. In London, it sold Gatwick pre-emptively. It was later forced to sell Stansted.
It was told to sell either Edinburgh or Glasgow. It chose Edinburgh, making a whacking £805m out of it, and then sold off Glasgow anyway, along with Aberdeen and Southampton.
The Competition Commission has also been re-branded, to the Competition and Markets Authority (CMA). And under that branding, it has returned to find out what happened.
The long haul
The findings are sometimes a bit frustrating, for what they don't tell us. But there's plenty to get your interest, not least the porkies that were being told by BAA back then.
The CMA report, published this week, tells us that management at Edinburgh felt constrained by BAA's management.
Bosses at Heathrow did not want Edinburgh to get too much outbound leisure travel. That was steered towards Glasgow, while Edinburgh was supposed to specialise in the business travel market.
"Edinburgh told us that, under BAA ownership, negotiations with airlines were conducted at a Scottish level as opposed to airport level, which left no room for price competition between airports," reports the CMA.
BAA had more spare capacity at Glasgow, which is why it usually got the long-haul flights. Emirates flies one such link between Clydeside and Dubai twice a day, and very valuable it is to the Scottish city's economy.
Edinburgh only had one long-haul route in 2012. Freed to compete, it has eight this summer (though with a change in aircraft range and route developments, at least some of that change could have happened anyway).
Before the break-up, Edinburgh had one person and the chief executive working to attract new routes. It now has four full-timers on that role and significant input from two others.
Express queues, espresso options
Retail is a more important part of running an airport than the owners would like to admit. Roughly half of profit comes from non-aeronautic income.
Edinburgh has pushed up retail space by nearly 50%. And whereas BAA negotiated exclusive access to one coffee chain across its airports, Edinburgh passengers now have a choice of four.
The capital's airport managers told the CMA that it has been freed to optimise income from car parking (to what can seem breathtaking prices), but giving customers more choice of long and shorter-stay, with off-peak pricing.
Instead of an expansion plan judged by BAA to be too expensive, the experience of Gatwick's reforms brought an understanding of how to bring down queuing times.
Using unstaffed check-in points, people move through the check-in hall to accommodate far more people than before (though customer satisfaction dipped for a while due to long delays at security).
Six out of every ten passengers now use self service and mobile kiosks. With fewer staff behind desks, airlines are charged less.
Where Edinburgh did invest in expansion, the new owners claim to have achieved it in 18 months, compared with five years for the previous growth phase under BAA.
Now, here's a thought: if that lack of autonomy and constraints on investment and growth was true of airports owned and controlled at a distance, how much could it apply to other organisations?
One striking aspect of this CMA report is the contrast between the view from Glasgow Airport and Edinburgh's enthusiastic, if not boastful, claims for the liberation of 2012, when it was bought by Gatwick's private equity owners.
As related by the CMA, ownership by a Spanish infrastructure investor and an Australian-based investment fund has not sounded all that happy for Glasgow Airport's management.
Having been kept within the Heathrow group until 2015, it suffered from prolonged uncertainty about its future. In being split from Edinburgh, it lost specialist skills in infrastructure maintenance and economies of scale. And on the west side of the city, without a train link or a tram like Edinburgh's, it's kind of in the wrong place.
Passenger numbers have been rising, after some sharp declines. But the best this CMA report can offer is that Glasgow has "focused on the customer experience... Other strategic change appears to have been incremental".
With the aid of a consultancy's econometric number-crunching, the report concludes that Edinburgh and Gatwick have thrived through their independence from Heathrow dominance. That's over and above the growth they might have seen.
And customers appear to have benefited from the BAA break-up, with 9% more take-offs and landings than in a group of other UK airports, and at least as high a premium in passenger numbers. A customer value is placed on that of £35m.
And what about Aberdeen Airport? It was put into special measures by the Competition Commission. That was partly because it serves a catchment area too small to support a rival airport to keep it sharp, and because it seemed there had been under-investment under BAA, with profits running unusually high.
The Civil Aviation Authority (CAA) was given the task of monitoring developments at the Dyce hub for helicopters as well as fixed wing, to see if it was responding to the competition regulator's targets for it.
The management's consultation on expansion plans brought hardly any responses. And just as it got its freedom from Heathrow, the oil price tanked, taking a lot of passenger traffic with it.
What the CAA did find was that revenue per passenger remains unusually high by comparison with other small city airports.
While Glasgow and Edinburgh both had revenue of £12 per passenger passing through in 2014, Aberdeen's figure had fallen, but was still 50% higher than for the central belt rivals. Only Heathrow and London City were higher.
The report justifies the BAA break-up, though results have been mixed. And it also points out that the benefits of competition are limited while London's capacity is constrained by indecision over runways.
That may not surprise much. You might expect the Competition and Markets Authority to produce a report that shows how positive more competition can be. The clue is in the name.
But as an occasional user of these airports, and an interested spectator as direct routes keep climbing, it does feel as if the break-up and competition has been good for choice, and bad for complacency.
As the SNP government is pledged to lower Air Passenger Duty by as much as half, the next such report may also be able to reflect on how much difference that makes.