Business trashes runway as BAA profits tank

Terminal decline? Photo: CC James Cridland

"I think the chances of a third runway being built are extremely remote now - I wouldn't want to say it's impossible, but really the fashion, the people, the feet are voting in the direction of no third runway."

That was said this morning on the Today programme by a senior aviation strategist at brokerage firm BGC Partners, who with the tagline "people and technology powering markets" can justifiably be called 'the voice of big business'.

He was proffering an opinion because despite managing to squeeze ever-more money out of passengers with increased charges for parking, storing baggage and food, BAA have just announced losses of £316 million quid. It turns out that no matter how much you charge for a cup of tea, you can't beat the maths of falling passenger numbers - which at Heathrow have dropped by over a million people, or 6.5 per cent. Things are even worse at Stansted and Gatwick where passenger numbers are down 14 per cent. As numbers fall, profits are evaporating to be replaced by losses.

The economic foundations of the company's business model are starting to look a bit dubious, and the bad news for BAA is that according to the guy from BGM "It's going to get worse." Just as the global financial markets over-reached themselves on the promise of constant growth in house prices, and then tanked when they faltered leading to the 'credit crunch', so BAA are wobbling as the Department for Transport's predictions of never-ending growth in passenger numbers turn out to be rubbish. With less people flying the whole edifice of aviation expansion is starting to look even shakier than it did last year, when the government were worried enough about BAA's finances to appoint auditors to check them out.

It turns out that no matter how much you charge for a cup of tea, you can't beat the maths of falling passenger numbers...

Even more embarrassing, (and just in case we were missing that the economics of the third runway are highly suspect), chief executives of some of the most prominent companies in the UK are busy writing letters to the Times blasting the plans. 13 big company CEOs, including James Murdoch and execs from Credit Suisse, Sainsbury's, Carphone Warehouse and Kingfisher who own B&Q, are now all on record as being against the third runway. Big business trashing big business? How the hell did this happen?

Well, I don't spend my mornings laying into BAA just for the hell of it. What the analysts, chief executives and city types are cottoning on to is what the scientists and economists have been telling us for quite a long time - a third runway at Heathrow would be a climate disaster, would ruin our chances of cutting our domestic emissions like the government are committed to, and wouldn't boost the economy or help us out of the current financial straights. 96 per cent of businesses don't want a third runway. Local residents don't want it. The tories and the lib dems don't want it. Apparently half of the government don't want it. Who does?

Join me in a moment of sympathy for the humble BAA press officer. Sure, it might be a bit of a tough sell to persuade us that a third runway will be 'green', or that it will suddenly solve world poverty, but surely it should be pretty difficult to end up in a situation where you're getting kicked by B&Q and market analysts, for pete's sake. Wasn't splashing all that cash to corporate lobbyists like Flying Matters or Future Heathrow supposed to prevent this kind of thing? To try and turn the tide, BAA are reduced to trotting out their chairman to make the same old boring arguments about people just 'not getting' that Heathrow is a 'hub' airport - that's a hub airport! Didn't you hear me? *yawn* It's a bit sad.

So, hello to our friends in the BAA press office. Because I have included the words 'BAA', 'Heathrow', 'Greenpeace' and 'TOP SECRET' in this blog post, it will automatically appear in your media monitoring service. Can I just take this opportunity to say: I may not agree with you, but I respect the scale of the challenge you're facing - persuading pretty much everyone you're not actually paying to have an opinion that a third runway's going to fly.