Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

Up in the air

Airports - Ferrovial's buyout of BAA will have an immediate impact on the UK's airport strategy. Jackie Whitelaw finds out what we can expect to happen next.

Well that's put the cat among the pigeons!

Or perhaps more appropriately, the wild goose in the jet engine.

There we all were, blithely assuming that the UK's, and in particular London's, future airport strategy was sorted out, and that the construction industry could look forward to a multi-million pound guaranteed workload.

On the stocks was a second runway at Stansted to cope with the boom in cheap ights and help provide employment for residents of thousands of new homes planned for a regenerated M11 corridor.

And at some point in the future a third runway at Heathrow was expected, to allow London's premier airport to remain the top European transport hub for intercontinental airlines with all the added benets that ow to the economy.

BAA, the privatised operator that owns Heathrow, Gatwick and Stansted, had earmarked £9.5bn to spend on construction projects at its airports between 2007 and 2016. This would no doubt have included many of the associated transport schemes that otherwise would have lingered on the Government's books. All would have been funded by airline landing fees, consumer shopping sprees and shareholders.

But then Spanish infrastructure giant Ferrovial decided to buy BAA. And all commentators agree, if the deal goes through as expected on 26 June, there is going to be a revolution in the UK airport sector.

First to feel the effects could well be the UK government.

Even though BAA was privatised in 1987, it has for all that time been seen - not least by politicians - as a sort of extended arm of the Department for Transport (DfT). And while it is a successful commercial business it has always had a quasi public sector feel about it.

'There was always an understanding between BAA and government that BAA would operate within a set of rules Government agreed with, ' says one former BAA employee. 'And it always had a public sector view of infrastructure - what was good for the country was as important as what was good for the company.

'Things will be different now. Ferrovial is a commercial company and will operates by commercial rules. It will invest where it can see the best returns. Discussions with government will be much more robust.' Contributions to national airport strategy and construction of bolt-on infrastructure such as roads and railways are likely to be supplied by Ferrovial at a higher price than that offered by the previously sympathetic BAA.

'Ferrovial does not have BAA's social obligation whereby it could respond sensitively to DfT, ' says one consultant. 'Ferrovial is a business and will look at everything as a business.' Stansted's second runway, agree senior consultants in the airport sector, is either dead or likely to be on hold for quite some time (News last week).

'Ferrovial will take a top-down view of investment - asking What's the return? They are likely to put the second Stansted runway on ice, [along with] the public infrastructure, ' says one.

He also pointed out that the airlines will not want to pay for it, nor for the BAA-norm high spec facilities currently proposed.

There are, it is felt, maybe cleverer ways of doing things.

'In the short term, Ferrovial will be looking to get more passenger capacity out of Stansted and Gatwick with the existing facilities, ' says another consultant. 'And it can also work with other airports to offer capacity elsewhere.' Luton, for instance, is advanced with plans for a replacement runway and there are no plans to dig up the existing one, he points out.

'That's effectively a second runway just up the road from Stansted.' Of course, it is assumed that the construction industry will also rapidly feel the impact of the buyout. Apart from a halt to spending at Stansted, framework arrangements are likely to be under review (see news).

Heathrow's current £6.2bn investment plans will also be reviewed and possibly retimed.

However, the redesign of Terminal 2, for instance, is still expected to continue in the medium term as it is driven by demand from Heathrow's customer airlines.

And the extra capacity created - some 25M passengers thanks to more efcient use of space and modern, faster check in - will speed demand for a third Heathrow runway.

'Heathrow is the cash cow.

That's where I'd put my money, ' says a former employee.

'Ferrovial is far from averse to investment - it is putting £22M into Bristol and is planning a runway extension at Belfast. If it needs to spend, and can see the return, it will.' The gures bear this out.

Ferrovial has set aside £2bn for capital investment over the next ve years. It will need much more if it hopes to meet the huge ambitions for Heathrow.

Even before the deal, the Ofce of Fair Trading was already looking at breaking up BAA's London airport monopoly.

The smart money is that Ferrovial will do that without being pushed.

Most likely to be sold is Gatwick, although there are suggestions that Manchester is keen to buy Stansted. And Southampton and the Scottish airports are inevitably also set to be sold, say the experts.

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Please note comments made online may also be published in the print edition of New Civil Engineer. Links may be included in your comments but HTML is not permitted.