This was published 13 years ago
Want a snow-proof airport? You'll pay for it, says Heathrow
London's Heathrow airport's 66 million annual passengers will ultimately have to foot the bill for making Europe's busiest hub snow-proof if Britain's winters turn permanently colder, according to owner BAA.
Airlines concerned about a four-day shutdown after 90 minutes of snow last month need to renegotiate Heathrow's emergency plan with BAA, leading to an increase in operating fees that carriers will probably pass to customers, Chief Executive Officer Colin Matthews said today in an interview.
Europe's busiest airport recorded a 9.5 per cent drop in passengers as Britain's coldest December on record shut runways across the country at a cost of 24 million pounds ($A38 million) to BAA. Matthews said carriers can't escape blame because they signed up to a recovery plan that wasn't designed for deep snow.
"The only source of money to pay for such facilities in the long run is passengers," the CEO said by phone. "Therefore we and the airlines have to take decisions, in the end, based on what is a reasonable cost for passengers to bear in order to support having, say, 10,000 beds, or 100,000 or 400,000 in the event of substantial disruption. That's not an easy question."
Spending Plan
BAA has already pledged to spend 10 million pounds on new equipment at Heathrow after heavy snowfalls last winter and in the past two months showed that current measures - based on years of lighter snow - were insufficient, Matthews said.
While BAA is "sorry" that flights were cancelled after the most recent snowfall on December 18, the blizzard, though short, produced 16 centimeters of snow, more than twice the maximum for at least 30 years "and possibly ever," he said.
"If Heathrow stops for a day it costs us several million pounds and that will buy you a lot of snowplows," Matthews said. "So anyone who thinks that penny pinching caused us not to buy equipment would be wholly irrational."
Virgin Atlantic, Heathrow's second-biggest operator, said this week the closures cost 10 million pounds and that it will withhold landing and parking fees to help prompt BAA to take a "robust" approach in a probe into the breakdown.
"Passengers benefit when airlines and airports collaborate and suffer when we fight, so we'll not fight in public," the BAA CEO said. "I'll talk to Virgin and we'll resolve it in private."
Matthews said there's no legal basis for carriers to withhold charges and that the snow-clearance plan discussed several times with them through the year was "explicit" about the degree of disruption that would accompany heavy falls.
'Interesting Challenge'
"Virtually no decisions are taken in isolation," he said. "It's an interesting challenge to get companies who compete so fiercely with each other to agree on common approaches at Heathrow, but that's the thing we have to do."
The snowfalls wiped 50 million pounds from earnings at British Airways, Heathrow's biggest customer, and Flybe Group, the UK's largest domestic carrier, said today that it lost about 6 million pounds. BAA's own losses provide sufficient encouragement to fix the situation, Matthews said.
"The cost of any disruption to BAA's airports is significant and a strong financial incentive for us to continue to make Heathrow more resilient," he said. "We must carefully examine the snow plan agreed with airlines and strengthen it to protect against such unprecedented weather."
Traffic at all six of BAA's U.K. airports fell, resulting in a decline of almost 11 per cent overall, the company said.
In terms of reduced earnings, BAA said, 19 million pounds was lost at Heathrow, 1 million pounds at London's Stansted and 4 million pounds across four other terminals. The biggest declines in traffic were a 22 per cent drop at Southampton on England's south coast and one of 18.4 per cent in Edinburgh.
Full-Year Decline
Of the profit reduction at Heathrow, 40 per cent came from extra operating expenses, including caring for passengers, with the rest from the reduction in revenue, BAA said. The company's inquiry into the disruption is being chaired by non-executive director David Begg and will be published in March, it said.
For 2010 as a whole, passenger numbers fell 0.2 per cent to 65.7 million at Heathrow and 2.8 per cent to 103.9 for the group.
Demand was hurt by strikes at British Airways Plc and the eruption of an Icelandic volcano, as well as bad weather, and on an underlying basis Heathrow traffic increased 3.4 per cent, with December "broadly flat," said BAA, a unit of Ferrovial SA.
"The year showed a modest level of underlying recovery at group level from the recessionary trough of 2009," the company said in a statement. "Within this picture there was clear evidence that Heathrow, with its greater exposure to faster- growing markets, was on a more rapid path of recovery with all of the months from July to November experiencing record totals."
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