Hardly a day seems to pass at the moment without Gatwick Airport (LGW) being in the news, but the latest developments are a much more positive story than the drones that dogged operations at the south London airport just before Christmas.
US investment firm Global Infrastructure Partners (GIP) has been looking to sell part of its interest in LGW for some time, and has now announced that multi-national airports operator VINCI Airports will acquire 50.1% of the business for £2.9bn. The French firm already runs a portfolio of 46 other airports across 12 countries which handled 228m passengers last year, and the deal is expected to close around the middle of next year.
A GIP-led consortium originally bought Gatwick in 2009 after the Competition Commission ordered BAA (formerly British Airports Authority) to sell one of its London airports. GIP will reduce its holding in LGW to 21% while Abu Dhabi Investment Authority's interest will also drop (to 7.9%) along with Australia’s sovereign wealth fund (8.6%), and pension funds in California (6.4%) and South Korea (6%). The new majority shareholder has already pledged to maintain the investment program outlined in the airport's latest master plan and intends to push on with the proposals to open up LGW's second emergency runway to regular traffic. If approved by the local planning authorities, the project could be completed ahead of Heathrow's third runway and enable Gatwick to handle 70m passengers per annum in 2025.
French firm VINCI Airports is acquiring a 50.1% share in Gatwick Airport. (Gatwick Airport)
Minimal changes to the running of the facility are expected in the short term. Gatwick Chief Executive, Stewart Wingate, said: "Our Chairman and I, along with our senior management team, will all remain at Gatwick and look forward to improving services further for our passengers. There will be no changes to the immediate running of Gatwick and we expect the transaction to complete by the middle of next year. This is good news for the airport as it will mean both continuity but also further investment for passengers over the coming years to improve our services further. We currently fly to over 220 destinations around the world and are ambitious to do even more in the years ahead."
Nicolas Notebaert, Chief Executive Officer of VINCI Concessions and President of VINCI Airports added: “Creating synergies and sharing best practices being at the core of our values, the whole VINCI Airports network will benefit from Gatwick Airport’s world-class management and operational excellence, which has allowed it to deliver strong and steady growth in a very constrained environment. As Gatwick’s new industrial partner, VINCI Airports will support and encourage growth of traffic, operational efficiency and leverage its international expertise in the development of commercial activities to further improve passenger satisfaction and experience.”
Notebaeart continued by saying that the looming uncertainty created by Brexit had enabled VINCI to acquire a majority shareholding in Gatwick Airport for "a very reasonable price."
The Aviation Oracle agrees with Wingate and believes deal is good news for Gatwick. VINCI has a good track record. It already manages airports such as Lisbon and Faro in Portugal, Lyon-Saint Exupéry and Nantes Atlantique in France, Osaka Kansai and Osaka Itami in Japan, Phnom Penh in Cambodia and Santiago in Chile. Gatwick will be its largest though. The firm has also recently taken on the concession to run Belgrade Airport in Serbia, and has completed an extension to Santiago Airport with an additional pier. The backing of a global organisation with extensive experience in the business will enable Gatwick to compete even more effectively with the other airports in the London area.
It is however somewhat bizarre that, post Brexit, UK airlines will have to be majority owned by UK interests, while it seems fine for a UK airport to be majority owned by an EU firm. The Aviation Oracle can't help but wonder what the EU's position might be if a British firm acquired a majority share in say - Paris Orly, Milan Linate or Berlin Schönefeld.
Text © The Aviation Oracle