Friday, 28 November 2014


A great vist to Gatwick yesterday to see the senior management team.  Some idle thoughts.

1. here's what we said on the CC when we broke up BAA (from the provisional findings), para 6.21

6.21 It is not possible to predict fully what additional outcomes might flow from the unleashing of a dynamic process of competition between independent airports in the South-East (with some competition at the margin from airports in other regions). However, we would expect the increased rivalry that separate ownership will bring to result in a constant pressure on airports for innovations in the way in which infrastructure is developed to meet the particular needs of their customers. This will reveal opportunities to win business through superior design, lower costs, higher quality, greater flexibility or better delivery of capacity and may uncover ways of reducing the lumpiness of capacity expansions.

2. The new runway.  The problem with the new runway is that two things are needed. First, a new runway.  Second, knowledge now of the right place that runway should be.  Now, we don't have that knowldge since the world is so uncertain, we cannot predict future traffic, businesss structures.  So what do we do?  Really, we want then to invest in both a new runway but also a mechanism for discovering that knowldege. That mechanism is competition.  So where should we invest?  Where competition will be encouraged which is LGW.  

This is analyticaly similar to a policy of buying insurance against uncertaintly by not having all your eggs in one basket.  Now, that policy goes wrong if eggs like being in one basket, i.e. network effects.  These would have to be very very strong, and exist across airline allicances, to go for Heathrow.