Thursday, March 27, 2008: it’s 5am and you are catching flight BA302 from Heathrow to Paris. You’ve already checked in online and, as you head up the ramp to Terminal 5, an automatic text message tells you the flight is on time and confirms that you are sitting in your favourite exit-row window seat. You walk straight to one of the 160 bag-drop desks, dump your suitcase and head for security, where every scanner machine is working. New rules mean you can now take two bags as hand luggage. Fifteen minutes after you arrive, you’re settling down to Gloucester Old Spot bacon with eggs in the Gordon Ramsay restaurant and using the free wireless internet service to download a Paris travel guide.

Through the glass floor beneath your feet, you can see passengers stepping off the unusually quiet new Boeing 787 Dreamliners to be greeted by electronic “Welcome to London” signs in the language of the country they have come from. The passengers clear the 45 passport-control desks in less than 10 minutes and walk into the cavernous nave of the airport to pick up their bags. While they wait, they use their mobile phones to take photographs of themselves and send them to a giant TV screen in the arrivals hall with a message for waiting relatives.

“Welcome to the future of flying,” says David Bartlett. “It’s only a few months away.” It is 9am on a damp summer’s morning and the head of design at BAA, Britain’s airports operator, is standing in the half-finished check-in area on the top floor of the new £4.3 billion T5. He’s describing how, when it opens next March

T5 will ransform Heathrow from a teeming slum of puke-fleck carpets and endless queues into a new shining city on the hill. “This is about putting the wonder back into flying,” he says.

Bartlett has been obsessed with Heathrow since he celebrated his seventh birthday watching planes from the observation deck of the Queen’s Building at Terminal 2. That day, 46 years ago, Heathrow looked to his young eyes like the gateway to the future. “I couldn’t stop thinking about all the glamorous places the planes were going to,” he remembers. If Bartlett is right, the opening of T5 will mark the beginning of a new era of civilised aviation.

T5 boasts a number of world firsts. It is the first “skyscraper airport”, 10 storeys tall, with two vast atriums. It is the first “flow-through” airport, with check-in terminals arranged like supermarket tills to enable passengers to walk straight ahead to security and the departures hall, rather than doubling back as they do now. It will be the first to deliver every bag to arriving passengers no later than half an hour after their plane reaches the gate, the first to offer business and first-class passengers hotel-style rooms to catch up on sleep, and the first to keep cluttering signs and annoying announcements to a minimum. T5 is also – gasp! – the first big British infrastructure project in living memory to be built on time and within budget, thanks to its unique contract, which has put the onus for timely completion on BAA rather than contractors – which has avoided the squabbling among builders that delayed other grands projets, notably the new Wembley stadium, by years.

T5’s firsts are impressive, but there is also a “last” – and it is not just any last. The move to T5 is the last chance that BAA and BA have to shed the serious and long-standing problems that have plagued Heathrow. If they fail, T5 will become little more than a brighter, airier version of Terminals 1 to 4.

The uncomfortable reality for Bartlett and the BA boss, Willie Walsh, is that Heathrow is the last bastion of old-style planning and infrastructure, outdated “Spanish” working practices and muddled management. Whenever the slightest problem arises – let alone a big one, such as last winter’s fog or last summer’s liquids-in-hand-luggage ban – BAA’s operations groan to a halt. For its part, BA has been hit by a series of internal and external shocks, including baggage-handling chaos, wildcat strikes, and allegations of fuel-surcharge price-fixing which could cost it £350m in Competition Commission fines. Even Bartlett and Walsh concede the problems are serious. Bartlett likens the current Heathrow to “a Third World gateway to a First World country”, while Walsh rates BA’s customer service at its hub at a meagre 6 out of 10.

Building a new terminal and handing it over exclusively to BA is a once-in-a-lifetime opportunity to create a new future every bit as bright and modern as T5 itself. While BAA has a chance to make an airport building that actually works, Walsh has an opportunity to root out restrictive practices, introduce new technology, cut the workforce and transform BA’s management culture.

BAA’s work is almost done. It has hired the best – the architect Richard Rogers – and stuffed contractors’ mouths with silver – T5 electricians earn over £50,000 a year. Standing on the half-finished top floor, it looks as if it’s all been worth it. The vaulting single-span roof seems to draw you forward to the vast departures atriums, where you will be able to see almost every departing and arriving plane. The floors are stone, not carpet, the chairs leather, not plastic, and there is no giant yellow M in sight: McDonald’s is banned. Architectural critics, notably Stephen Bayley, have hailed the new structure’s “clarity and legibility”.

Every system in the building is now being tested and tested, and the signs are good. Just a handful of bags have gone missing in trials of the 18-kilometre-long baggage-handling system. The high-speed trains that take bags and passengers to remote gates, the lifts, lights and loos all work, and top retailers, including Prada and Gucci, are buffing their baubles. BAA still has to demonstrate that it has new agreements in place to ensure security scanners are staffed all the time. But the signs are that London’s business elite, who never tire of issuing dire warnings that the cost of the chaos at Heathrow threatens London’s continued success as the new centre of the financial world, will have to find something else to complain about.

For BA, the signs are less encouraging. It continues to suffer chronic industrial-relations problems. Earlier this year, Walsh was forced to cancel over 1,000 flights after cabin crews voted to strike. The threatened stoppage came after unofficial action by some Transport and General Workers’ Union (TGWU) shop stewards to support sacked Gate Gourmet catering workers, and a wildcat strike by check-in staff in protest at attempts introduce a new swipe-in, swipe-out clocking-on system. Competition is getting tougher. Budget airlines continue to attack the airline’s soft underbelly, offering flights to the Continent and now further afield for as little as £1 plus taxes, while a raft of new business-class-only carriers, notably Maxjet, Silverjet and Eos, are taking on BA at the pointy end of the aircraft, by offering flights to the US from Stansted and Luton for less than a third of the BA Club World fare. And now bosses are struggling to contend with the backlash against flying altogether, amid growing concerns about global warming. Small wonder that BA executives joke darkly that in recent years the company has had “a lot of luck – all of it bad”.

Bolshy unions are responsible for many of BA’s internal problems. One former BA chief executive – speaking privately – describes some union officials at the airport as “f***ing dickheads, bullies in the basement with baseball bats, who care more about f***ing up BA than serving customers”. Progressive union officials agree. When it was reported recently that BA had appointed a crack team of experts to ensure the opening of T5 went smoothly, one TGWU moderniser noted ruefully: “Yes, and the unions have a crack team to f*** it all up.” A whole series of “Spanish practices” bedevil BA’s operations. Until relatively recently, some BA staff rarely worked a full shift, and sick leave was almost three times the national average.

But boneheaded BA management is also to blame. Managers, the airline’s critics say, fail to anticipate problems, and when relations with staff break down, they lurch from confrontation to appeasement, prolonging unrest. During the recent cabin-crew dispute, BA managers tried to play hardball, first by cancelling more than 1,000 flights, then by highlighting the staff’s woeful sick-leave record. BA finally settled, but not in time to resell the seats. When cancelled flights took off empty, the result was angry workers, even angrier passengers and a loss of £80m.

BA managers have also made bungles that have infuriated passengers. Penny-pinching has left economy-class travel on short-haul flights little better than budget airlines, but much more expensive. BA lost more bags per passenger last year than any large airline in Europe, according to the Air Transport Users Council. Bosses recently introduced rules that mean passengers will have to pay hundreds of pounds extra if they want to check in two suitcases.

The causes of Heathrow’s and BA’s problems are complex and include bad planning, 9/11 and 7/7, protectionism, nationalisation, heavy unionisation and many other local and global changes. But to understand the background, you need to know about blazers and tea dresses, about roast beef served off starchy-tableclothed trolleys by starchy hostesses, and about slices of Dundee cake washed down with earl grey tea.

Heathrow and BA were born in a very different era from today’s consumer-focused world: the imperial era. Heathrow began life in the 1930s as the Great Western Aerodrome, which was privately owned by the Fairey aircraft manufacturing company and used largely for military test-flying. London’s commercial flights took off from Heston, Hanworth Park and Croydon airfields. In 1944 the aerodrome was requisitioned by the Air Ministry to be developed as an RAF base, but before the work was completed the war ended.

With the end of hostilities came the prospect of a huge expansion in civil aviation. London needed a large airport with modern equipment and the partly built Heathrow site was the best option. With a single army-surplus tent serving as a “terminal”, Heathrow struggled to cope from the very first day in 1946. It has been the same, sorry story ever since. The growth of flights, routes and passenger numbers has consistently outpaced the airport’s expansion as London has become Europe’s air hub. Terminals, roads, runways, security screening, shops, restaurants, lounges and hotels have all been added willy-nilly. Only at Heathrow could Terminal 2 have been built before Terminal 1. About 70m passengers now groan their way each year through creaking terminals built to handle half that number.

The worst example of Heathrow’s make-do-and-mend development is the most recent. Terminal 4 was originally built for small Middle Eastern airlines. The idea was to move these “mid-haul” airlines out of Terminals 1, 2 and 3 to free up space for larger airlines, such as BA. It was never intended to be BA’s long-haul hub, because the south runway separates it from Terminals 1, 2, and 3, which means that BA aircraft can wait for up to 15 minutes to cross the tarmac when they take off and land, and transfer passengers connecting to T4 have a lengthy, awkward journey from Terminals 1, 2 and 3. But, at the last minute, BA’s former boss, Lord Marshall, insisted that he wanted all BA’s long-haul services in the most modern building.

BA’s birth was every bit as muddled as Heathrow’s. On August 25, 1919, Aircraft Transport and Travel Limited (AT&T), BA’s forerunner, launched the world’s first daily international air service between London and Paris. A de Havilland DH4A biplane took off from Hounslow Heath, with a single passenger and a cargo that included Devonshire cream and grouse. In 1924, Britain’s four main airlines merged to form Imperial Airways Ltd. Imperial later combined with a rival, British Airways Ltd, and the two firms were nationalised in 1939. The new British Overseas Airways Corporation (BOAC) operated long-haul services from Heathrow, serving what was then the British empire, and a new airline, British European Airways (BEA), took care of the less glamorous continental European and domestic flights. BOAC and BEA merged in 1974 to become British Airways.

The BOAC/BEA division has left BA with a split personality. BA is now effectively a two-tier carrier. It offers a high-quality service on its glamorous long-haul services, but BA short-haul is now far worse than that offered by smaller airlines, including Lufthansa, Air France and Emirates. Phil Davies, editor of TravelMole.com, says: “BA’s service can be patchy. You can have a great flight one day on, say, long-haul and a lousy one the next on short-haul. That’s very confusing to customers and damaging to the brand.” Moving all BA’s services under one roof is a one-off chance for BA to offer a single, high-quality standard of customer service across its network.

BA’s imperial past has created another damaging legacy which it must use the move to overcome. Since BOAC was the airline’s flagship division, most of its managers have, historically, been drawn from its ranks. They have, analysts say, brought with them old-style imperial attitudes that endure to this day. Talking and acting as if Britannia rules the clouds may once have kept staff in line, but it is ill suited to the modern age. One BA former manager explains: “BA managers are jumped-up blue-blazer types who think that, whatever they say, everyone will bloody well fall in line. That doesn’t work with staff any more. Look at the row over that check-in lady who wanted to wear a crucifix.” (BA banned Nadia Eweida from wearing the cross, but later relented after a national row.)

Now that BAA has created a world-beating building, the questions for BA are: can it use

the move to create a modern corporate

culture? Can it negotiate new agreements with the unions that will reduce their ability to disrupt services in future? Or will BA stick to its old ways and mess the whole thing up, just as it messed up the move to T4?

Airline pilots flying into turbulence are trained to gain height to avoid a bumpy ride. It’s a procedure that Willie Walsh knows well. For 18 years, BA’s boss flew Air Lingus Boeing 737s on the choppy London to Dublin, Cork and Shannon routes. The flinty-eyed Irishman with the no-nonsense haircut is applying his old flight training to management. He hopes to soar above BA’s woes and land smoothly at T5. He has thrashed out working practices that will begin next March, while trying to energise BA managers and staff to raise their game.

Sitting in his “office”, which is not really an office at all but one corner of BA’s executive floor at Waterside, near Heathrow, Walsh concedes that BA has suffered at the hands of a volatile workforce. But he insists that, thanks to the advent of T5, the airline’s industrial-relations woes are behind it. “We don’t have a [workforce] problem,” he says. “I don’t believe we will face unofficial or illegal industrial action on British Airways ever again. We dealt with it. That’s something that’s consigned to history.”

Could this summer really be the first in recent memory when the newspapers are not full of pictures of endless lines of weary holidaymakers? Will T5 open without a hiccup? Yes and yes, says Walsh. In return for a management pledge that there will be no compulsory redundancies in the move to T5, and a commitment not to contract out key services – other than catering, which is already in the hands of Gate Gourmet – the unions, Walsh insists, are signing up to radical change. The TGWU, he says, has agreed to a 25% reduction in the number of its members who load and unload baggage and drive the jet push-back tugs and the passenger buses, as well as a range of new efficiency measures. He predicts that the GMB union, which represents a large number of check-in staff, will follow suit. Some 90% of BA staff have, he says, formally agreed new working practices at T5.

When it comes to his own back yard, Walsh disagrees that poor management is to blame for BA’s woes but acknowledges that customer service must improve. Asked to give BA’s current Heathrow service a mark out of 10, he replies: “Six.” Chief executives of FTSE 100 companies rarely talk down their product – his assessment is an extraordinary admission of failure. Top executives also rarely praise rivals, but Walsh goes on to acknowledge that Singapore Airlines and Cathay Pacific offer better customer service. “Customer service in BA… may not be as strong as some of the Asian carriers,” he says. “Everybody stepping on board a British Airways aeroplane should feel valued and should get the service that they expect, and that applies whether you are sitting at the front, the middle or the back of the aircraft.” Walsh is “not proud” of the airline’s record on baggage-handling and pledges it will get better at T5. “We have disappointed a lot of customers and I am sorry for that, and it is definitely something we are very focused on.”

New union agreements? A searingly honest appraisal of this firm’s shortcomings? A fresh start? It sounds as if T5 really could be the saviour of the airways. But is Walsh right? Are the reforms in place and will they stick? Will the world’s busiest airport become the best, and will the national carrier regain its title of the world’s favourite airline?

One of the biggest unions at Heathrow, the TGWU, confirms it has agreed job cuts and new working practices. Brendan Gold, the union’s national secretary for civil air transport, says strike action is unlikely this year or next. But it is a very different story at the GMB. Its London regional secretary, Ed Blissett, puts the chance of strike action before T5 opens as “two bob each way”. The GMB remains opposed to any redundancies – even voluntary – in the move to T5 and rejects BA proposals to change work rosters. BA, Blissett says, “is appallingly run [and] has the worst industrial relations in Britain”.

Walsh may trumpet concessions made by the TGWU, but he is less keen to admit that BA has made some of its own – some of which may cause problems at T5. BAA sources say that BA caved in to union demands over check-in technology at T5. Originally, BAA and BA had planned to install a single bank of highly flexible check-in/fast-bag-drop desks, instead of a line of automatic check-in machines, followed by a second line of staffed fast-bag-drop desks. But unions complained that the desks left staff too vulnerable to angry customers, so the two-stage system, with bigger baggage desks, was cobbled together. Senior BAA staff fear the two-stage check-in will create the very queues T5 was designed to eliminate.

Critics also point out that while BA is quick to accuse unions of Spanish practices – a term they will, presumably, swiftly drop now that BAA has been taken over by a Spaniard, Rafael del Pino y Calvo-Sotelo, boss of Madrid-based Ferrovial – the airline presides over its own in-house fiddles, notably a staff perks system that means some employees end up breaking the law. BA staff can buy discounted “hotline” tickets and are warned not to sell them on to third parties, because it is unlawful for anyone without an ATOL (Air Travel Organisers’ Licensing) licence to sell tickets. In practice, many do.

When it comes to customer service, observers and long-suffering travellers welcome Walsh’s frank assessment of BA’s shortcomings but they say he still has a mountain to climb. Tyler Brûlé, founder of Wallpaper* magazine and editor of Monocle, who uses his newspaper and magazine columns to act as an arbiter of airline service, says: “In the days of Concorde, BA was a leader but it now trails Japan Airlines, Singapore, Emirates, Etihad, Qatar and India’s Jet. BA has to start doing the fundamental things better in all classes of travel: everything from better food, to making sure the loos are clean all the time. It also needs to create business- and first-class cabins that are as innovative as Concorde.”

And what of Heathrow? Will T5 stay shiny and new, reflecting a warm glow on the national carrier? The evidence in the long run is not encouraging. Norman Foster’s Stansted was a fine concept when it opened 16 years ago. You parked outside and walked through to your plane, which you could see through the glassy exoskeleton. Now, thanks to over-expansion, inadequate parking, clunky security and the tumbleweed of Starbucks and Sunglass Huts, Foster’s vision has been reduced to an inefficient, dingy shopping mall. One critic who has seen T5 says: “BAA needs £6 billion to invest in redeveloping the rest of Heathrow over the next five years. How long before the airy atriums look more like Bluewater?”

What’s more, BA and BAA have agreed to split T5 into two zones. One side of the airport will be for short-haul services and will have faster food, cheaper shops and simpler executive lounges.

The other side will be for long-haul flights and will boast the Gordon Ramsay restaurant and the kind of business and first-class lounges that will give Virgin’s Clubhouses a run for their money. BA and BAA insist the split will be more efficient, but it is hard to see how it will help to bridge the quality gap between BA’s long-haul and short-haul services.

Few doubt that the T5 building itself will work near-flawlessly when it opens next March. What nobody can be sure of is whether BAA, BA and their staff will. If BA reaches agreement with the GMB and shakes off its “chicken or beef?” service, and if BAA hires the right number of security staff and resists the temptation to stuff every corner of its new cathedral with Claire’s Accessories, T5 has a fighting chance of becoming the golden gateway not just to Britain but to a new era of glamorous air travel.

If not, T5 will, in spite of all its promise, turn out to be a flight of fancy. It’s the £4.3 billion question and the clock is ticking. There are only 298 days left until BA302 to Paris pushes back and the Airbus A320 lumbers down the runway

The plane facts

•Terminal 5 is five times the size of BA’s current long-haul hub, Terminal 4

•The new Heathrow will be the fifth largest airport in Europe, with the capacity to handle 90m passengers

•T5 will have the first Prada store in a British airport and the first Tiffany boutique in a European airport. A Paul Smith Globe store will offer one-off clothes and accessories

• Shortly after T5 opens, Terminal 1 will close, Terminal 2 will be demolished and rebuilt as Heathrow East, and Terminal 3 will be redesigned and refurbished. The total cost of the work, expected to be completed by 2012, will be almost £8 billion

•An innocuous white door on the right just after the long-haul security check is a fast access to BA’s first-class lounge. It is for ‘VVIPs’ – the Queen and the prime minister – only

•There will be no McDonald’s or Burger King in Terminal 5 when it opens – but there will be a Starbucks coffee shop