BAA points way for air policy-makers

A NEW airport terminal ahead of schedule and on budget. An airport operator that welcomed 6% more passengers last year, with revenues up 7% and operating profits up 9%.

“Great retail performance, in spite of adverse conditions, smart use and development of assets and improved customer service, all supported by a strong focus on innovation,” said the chief executive.

It may sound like an airport on Fantasy Island, beyond the wildest dreams of the Irish Government or the Dublin Airport Authority. But in reality this is close to home at London Heathrow, where BAA, the former state-owned airports authority, reported better-than-expected results yesterday.

Ireland’s transport decision-makers may have nodded as BAA chief executive Mike Clasper had his gripe about “adverse conditions”, but may have been silently appalled that none of them stood in the way of “smart use” of airport property, a “strong focus on innovation” and, God forbid, “improved customer service.”

Aer Lingus may have pulled a rabbit out of the hat by finding a top executive from a leading airline like Emirates to replace new British Airways kingpin Willie Walsh, but it’s a fair guess that Mr Clasper’s caller ID is unlikely to show a Dublin number next time there’s a vacancy in the former Aer Rianta quagmire.

Ireland dithered for months before deciding that its three main airports - Dublin, Cork and Shannon - shouldn’t be run by a single agency. Now it’s having trouble working out if, for Dublin airport, just one operator is enough.

The Government is expected to announce a super-fudge in the coming days that reconciles Fianna Fáil’s commitment to a state-owned second terminal at Dublin with the Progressive Democrats’ appetite for competition driven by a privately-owned terminal.

Instead of choosing between one model and the other - and they can’t both be right - Dublin will get the best, or worst, of both worlds. Eventually.

Latest reports suggest there’ll be a state-owned mini-terminal by 2009, with a privately-owned, full-sized arrival scheduled four years later.

Contrast this with the BAA example: one authority, listed on the stock market; owns and runs seven airports, including London’s big three of Heathrow, Gatwick and Stansted. Heathrow alone has four terminals and a fifth under construction.

BAA also has the contract to manage 10 airports outside Britain and has retail management contracts at leading American airports.

Dublin, on the other hand, aims to be ideologically perfect, even if it’ll be years before it works.

Transport minister Martin Cullen said last week that competing terminals at a single airport were a bad idea and had been “an abject failure” in Toronto, the example trotted out by most experts as a way in which Dublin could go wrong. The Canadian authorities bought the privately-owned third terminal at the city’s airport six years after it opened, which critics said was down to relatively high passenger charges and an acceptance that the experiment hadn’t worked.

Mr Cullen is also conscious of the lessons of letting control of vital infrastructure pass into private hands, as happened in the Eircom privatisation. The flipside, as portrayed by Tánaiste Mary Harney, suggests continuing the public sector monopoly in Dublin is also a recipe for failure and that those who have failed to learn from the inefficiencies of the past are doomed to repeat them.

Private sector good, public sector bad. Competition is good for the consumer, monopolies less so. And so it goes on. But BAA shows that it remains possible to run an airport - or even several. And it can be done efficiently, profitably and without excessive delays in decision-making.