Sky News business editor Michael Wilson

There will be happy faces around the BAA offices today. Happier than the passengers in the security queues and in no way matching the furious red livery of the country's main airlines. They're already calling the airport operator 'the next Northern Rock.'

Why? – well,very much against expectation, the Civil Aviation Authority has awarded the airports operator the ability to lift its landing fees by over 23% at Heathrow and by slightly less at Gatwick.

BAA is saying it isn't enough, but that's as you'd expect in from one side of a regulatory decision.

It will please BAA's Spanish parent company Ferrovial. The giant construction company borrowed £9bn to buy BAA for £10bn in 2006.

Since then, as you'll be aware, there's been something of a squeeze on those who have borrowed large amounts, and Ferrovial are also locked into paying for £6.5bn rebuilding work at Heathrow and Gatwick, and as the company announced this morning, there's the small matter of the bid for another South East airport, the first new one since the end of the Second World War.

But their immediate clients, the five major UK airlines, are now in open rebellion. At their news conference they, who normally compete tooth and nail each day, united to say that BAA's business model is 'shaky' and that the CAA has effectively saddled the government with more debt by allowing BAA to continue in its present structure.

When Ferrovial bought them, the CAA said they would not be influenced by Ferrovial's high debt levels. According to British Airways, ' they have ignored their own policy and caved in to intense pressure from BAA by setting excessive price increases.'

Said Paul Charles from Virgin Atlantic, 'In fact call it 'Southern Rock' – BAA should be broken up. In principle its finances are shaky. We need a moratorium on this decision, a time to look at the figures. But every single part of the present system is flawed. It needs overhauling completely. Enough's enough.'

All this comes at a time when the Competition Commission is investigating BAA, which handles 60% of the UK's air travellers.

But for the moment, that's a side issue for airlines. They will now pressure the CAA on its regulatory role.

Passengers, wait over there, please.

Comments

[Rick, Sweden 19 Mar 2008 17:36:49]

I remember when I started my working life in Aviation at Heathrow in the late sixties when the BAA was a not very good government agency. Now the BAA is a not very good Spanish owned company that exploits its monopoly to the detriment of is customers - both airlines and the travelling public. At Stansted not only is Ferrovial the owner of BAA but it also owns the biggest Ground Handling Agent - Swissport. In any other situation the Competition Commission would have forced the break-up of BAA long ago. Its seems that in the case of BAA that Ferrovial is using the threat that it would collapse if it was forced to sell off one or more of its London area airports. So now we have a 'BAA Rock' with the airlines and ultimately passengers, paying for Ferrovial's bad management aided and abetted by the CAA. In the not too distant future, Ferrovial will want to divest itself of its airport business when its shareholders realise that it does not have the funds required to make the ongoing investment required to maintain and expand a business where returns are always long term term. Then it will be the UK taxpayer that ends up footing the bill.

[Alan, Germany 12 Mar 2008 15:11:09]

I think that this permission is, beyond doubt, one of the most weak-kneed responses that I have seen.
The fact of the matter is that the Spanish company who are now the owners of BAA are only that because they incurred massive debts to finance the acquisition.
If I recall correctly, 9 Billion pound!!
These landing fee increases will not be used to improve facilities for the travelling public, the income will be used to service the level of debt.
In other words, the British travelling public will be paying for the poor decisions of a group of managers who could not afford to take the course of action they decided upon.
In my view, they should be allowed to go into recievership and then maybe, just maybe, BAA will be run by a competent team.

[Khalid 11 Mar 2008 19:18:48]

Sir
It does not come as a surprise to learn that over the past 10 years our divine nation has been led by a bunch of air heads with little or no knowledge, let alone decorum surrounding business.
The recent spate of green related demos if viewed from another angle provide for the assumption that they may have been staged in order to somewhat justify such cost rises.
Governments are elected to protect and serve the electorate and not line their own or chosen pockets, a trend we have all witnessed over months past.
Insofar as the matter of landing fees and the emergence surroundig the business ethics of many a European enterprise, its ironic that a natural with a debt of say £5K is scrutinised before he is lent a penny, yet this government has [Bent] over backwards and sold everything and everything that was built to serve our interest. Thus far as the landing fees, and the debt of its owners, surely if logic was applied, the sale should have been halted at source if the debtor did not have the means o repay his liability. None the less, [I Can't Beleive Its Over] for cheap landings!
The CAA needs to step in and curtail the illicit and arroganct stance it promotes thus far as the welfare and freedom of the travelling public alongsie its commitment to bring business prosperity!

[Edward London 11 Mar 2008 15:06:17]

BAA Is runing a monopoly and there has always been concerns from all corners on the current situation with them dominating their part of the industry BAA needs to be broken up because with them having a big share of the market they can influence prices and with more competitors there will be less play with controling our money but how long before a deep look into the matter and action, Who knows