BELFAST International Airport has been blocked from acquiring its smaller rival Belfast City Airport by the British Monopolies and Mergers Commission (MMC).
British Competition and Consumer Affairs Minister, Mr John Taylor, said he accepted the MMC report's conclusion that any proposed acquisition "may be expected to operate against the public interest and should not be permitted".
The move has raised some speculation that Aer Rianta might become involved. However, a spokesman for Aer Rianta said last night that it had not lodged a bid for Belfast City Airport. The company would look at all opportunities, he said, although it does not appear that Aer Rianta is actively looking at an investment at this stage.
The political difficulties of such a move by Aer Rianta were highlighted last night when Ulster unionists threatened to oppose any moves by Aer Rianta to acquire the airport.
Mr John Taylor, deputy leader of the Ulster Unionist party. said a bid from Aer Rianta "would not be welcomed. I suppose they would refuse to fly the Union Jack at the airport," he said.
The British Competition Minister, also Mr John Taylor, said the "possible benefits" of a merger "do not outweigh the adverse effects identified in the report". The MMC report warned that a merger of the two airports could lead to reduced competition between airlines and higher fares for travellers.
Belfast International is one of up to five companies interested in buying the much smaller Belfast City Airport which is owned by the aerospace company Shorts. After it lodged its bid Belfast International Airport made a submission to the British Office Of Fair Trading to check whether a merger would be allowed if its offer were accepted. The bid was later referred to the MMC.
A spokesman for Shorts said yesterday that the findings of the MMC report would have no impact on the bidding process which is continuing.
Belfast International Airport, which is 15 miles from Belfast at Aldergrove offers flights to British, European and two US destinations, while the City Airport near the harbour in the east of the city has flights to Britain.
Mr Taylor said he had asked the head of the British Office of Fair Trading to seek undertakings to prevent Belfast International Airport from proceeding with an acquisition.
If satisfactory undertakings could not be given by April 9th, he would then have to consider using his powers to make an order enforcing the decision, Mr Taylor added.
The managing director of Belfast International Airport, Mr Jim Dornan said the company was disappointed with the MMC announcement. "We will be considering our options with respect to the Harbour (City) Airport," Mr Dornan added.
However informed sources said that Belfast International Airport did not appear to have any option other than withdrawing from the bidding process.
Mr Taylor said that he accepted the MMC's findings that the proposed merger may be expected to operate against the public interest.
"The MMC found that the two airports have sought to compete vigorously under separate ownership but that this competition could not be expected to continue under common ownership," he said.
Belfast International Airport made an unsolicited bid for the City Airport last April after heads of agreement had been signed between Shorts and local consortium, Sarcon Diamond. Sarcon Diamond had agreed to pay £24 million sterling for the airport and an adjacent site.
But in the course of due diligence procedures the Sarcon Diamond consortium withdrew its bid. Following the collapse of the Sarcon Diamond offer Shorts engaged the London-based merchant bank BZW to handle the sale of the airport. Up to five groups - including Belfast International Airport - are understood to be interested in buying Belfast City Airport.
