Business Weekly - Cambridge, UK

BAA wants to start construction of a new terminal in 2011 and open it, along with a new runway by 2015.

The funding package includes £3bn to fund immediate investment projects across BAA’s UK airports and the balance will underpin long-term investment, including an escalation to 40 million passengers per year and a second runway at Stansted.

This week’s break-up call from the Competition Commission will not divert BAA’s long-term plans, according to sources. It has already received a £3.5 bn offer from a German building empire for Gatwick but insists that Stansted is not for sale, even though similarly mouth watering offers are now coming in for the Essex hub.

If the Competition Commission tries to force the issue on Stansted, BAA’s owner – Spanish infrastructure giant Grupo Ferrovial – is prepared to fight such a recommendation in court.

It cannot understand why anybody with the UK’s economic interests at heart should want to dilute the owner’s collateral, which will be required to fund future improvements.

Ferrovial will ask the question: If we don’t fund these improvements will the State and the taxpayer? The Competition Commission has to prove by the end of this year that breaking up what they call BAA’s monopoly will improve capacity and conditions at leading UK airports.
BAA is convinced it cannot possibly prove such an argument with Heathrow, Gatwick and – at peak hours Stansted – already bursting at the seams.

To cut across that argument, the Commission would have to devastate the Government’s White Paper and find a cogent argument against the irrefutable statistics proving that demand for air travel is soaring. Canute had an easier ask.

Nor will the Competition Commission find it easy to prove that consumers will get a better deal from a break-up and BAA has a fusilade of statistics that can blow any such argument out of the water.

The initial arguments themselves will take two years to go through the bureaucratic wringer, which will leave the UK two years away from a London Olympic Games, demand for travel through Stansted at record levels and the UK’s aviation policy stuck in a time warp that has held it captive since the Second World War.