David Robertson
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Heathrow’s revenue has soared in the airport’s first year under foreign ownership but investment has dropped, despite airline and passenger concern over the poor state of its terminals.
Capital expenditure at Heathrow was £252 million in the year since Ferrovial, the Spanish construction company, bought the airport’s parent, BAA. This is 15 per cent lower than the £298 million BAA spent in its last year as an independent company. The drop in spending on Heathrow’s infrastructure, revealed in group figures released by Ferrovial, has raised concerns about how the Spanish company is managing its £10.3 billion airport division.
One of the concerns raised when Ferrovial acquired BAA last July was that it would take profits but not invest in one of Britain’s most important strategic assets. Sir Michael Bishop, chairman of bmi, said: “Ferrovial has come into this infrastructure asset thinking they are immune to competition but their customers are not. BAA and Ferrovial have to be encouraged to do more.”
The decline in Heathrow’s investment comes as the airport, the world’s busiest international hub, is under fire over the poor state of terminals and long queues at check-in and security. Ken Livingstone, Mayor of London, last week said that Heathrow shamed the capital. Kitty Ussher, Economic Secretary to the Treasury, has also claimed that Heathrow is discouraging business executives from travelling to the UK.
The Competition Commission is expected to announce this week that it will look at breaking BAA’s monopoly of London airports, amid concern that lack of competition is putting off investment in Heathrow, Gatwick and Stansted. A spokesman for Virgin Atlantic said: “It is now more essential than ever that the Competition Commission look at the current system of airport ownership and ask themselves how it can be done better – because it can be done so much better.”
In the year since Ferrovial bought BAA, revenue from Heathrow has grown to £1.232 billion from £1.077 billion, according to the Spanish company’s accounts. It is unclear how much profit Ferrovial has made from Heathrow compared with the previous management, as it reports using a different method. The capital expenditure figures do not include £800 million spent this year on Terminal 5.
Last year BAA spent £977 million, but expenditure was expected to fall as the terminal nears completion.
BAA said: “It is not the case that we are taking money out of Heathrow. The capital expenditure figures don’t take account, for example, of the extra £20 million we have put into security to reduce queues.”
According to data from FGP Topco, the vehicle used by Ferrovial to acquire BAA, capital expenditure including Terminal 5 costs during the first six months of Ferrovial’s ownership fell 20 per cent to £508 million.
The FGP accounts also show that airline charges for each passenger travelling through the airport rose 7.5 per cent to £304 million. Retail contributed £124 million and the Heathrow Express train service £38 million.
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Another example of G Brown's inability to deal with real business actuality rather than academic theory ie incompetent outcomes in areas of key national interest. Just as with massive taxes delivering near zero health service improvements; destruction of UK pensions, etc
How long can it go on?
English Democrat , whitehaven, long suffering England
Do you know that exactly the same arguments for the state of Heathrow can be advanced for the lack of investment and shortage of capacity on our railways? Perhaps we are just unable as a country to plan ahead.
Or is it that the unspeakable is true and that we are grossly over-populated and should actively set out to reduce our population to a more manageable 25/30 million? Some of us have anticipated this for decades but it is now probably too late to prevent the final collapse of our infrastructure and the final despoiling of our erstwhile beautiful country. I am a 72 year-old pessimist!
BENBOW, Andover,
Hear hear Charlie - funny that we all could see it would happen this way, but apparently not those in higher places, who allowed it to happen. Here in the U.S. we would never allow such an important piece of infrastructure to fall into foreign hands.
Bill Atkins, Rehoboth Beach, USA
agree, we have no-one but ourselves to blame. Our major airport should not be allowed to be foreign owned.
sheila graham, guangzhou, china
To Charlie, Isle of Man,
The problems with London's airports date back to well before Ferrovial's acquisition. Whilst Ferrovial's lower capital expenditure is to be deplored, the issue has nothing to do with 'foreign investors' and everything to do with the regulation of this monopoly.
David, London, UK
"The capital expenditure figures donât take account, for example, of the extra £20 million we have put into security to reduce queues.â
The person who wrote or said this could be in high demand as a comedy writer for TV
Minnie Ovens, LA, CA, USA
As a regular international traveller from South Africa I make every effort to avoid Heathrow like the plague. To echo Ken Livingstone Heathrow is shameful. It is shoddy, slow and dirty. I have found that to avoid all the hassle it is better to fly to Zurich or Frankfurt, which are highly efficient airports, and then fly into London City Airport where the staff and immigration officials just seem to be more friendly and more efficient and the airport is far more congenial. The perception is that since the Spanish Company took control the situation has deteriorated, notwithstanding the extra security requirements. It is significant that capital expenditure has declined while income has increased.
Gavin Morley, Durban, South Africa
The answer is simple: take BAA back into public ownership. Heathrow is, by definition, of major strategic importance. The Spanish company are unwilling to treat it as such -- why should they have the strategic interests of the UK a heart? -- and invest in the infrastructure so we should renationalise BAA and its strategic concerns. It's capitalistic zeal gone mad, just like the railways.
Michael Anthony, Birmingham, UK
Like any british company that operates in other countries, Ferrovial is looking for profits. Heathrow is in poor conditions because BAA under British administration let it get this way. Or do you think that Heathrow became that way in only one year? We should put pressure on Ferrovial, yes, but is not realy their fault.
Fabio C, London, UK
Seems as if it was a great decision after all for BAA's previous shareholders to agree to sell out to Ferovial!
Mark, London, UK
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