BAA's boss would turn the air green. But over at the airlines, they're turning it blue

The chief executive of the airports operator talks to Clayton Hirst while storm clouds gather over his plans for new runways
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Mike Clasper has finally succeeded where many before him have failed. At 10am last Wednesday, the chief executive of BAA, the world's largest airports operator, managed to unite the entire commercial airline industry.

Mike Clasper has finally succeeded where many before him have failed. At 10am last Wednesday, the chief executive of BAA, the world's largest airports operator, managed to unite the entire commercial airline industry.

Ryanair's pugnacious Michael O'Leary agreed, as did British Airways' plain-speaking Rod Eddington. So did Virgin Atlantic's publicity-hungry Sir Richard Branson, as well as easyJet's more understated Ray Webster.

This cacophony of egos and vested interests united on one thing - that what BAA had proposed was wrong. Or, as O'Leary indelicately put it, that BAA was "talking bullshit".

A day after delighting the City by reporting full-year pre-tax profits of £637m at BAA, Clasper dropped what the airlines interpreted as a bombshell. He called for a major review of the way in which the proposed £4bn new runway and expansion of facilities at London's Stansted airport should be funded.

The choices he offered were stark. First, stick to the current plan under which both BAA and Stansted users pay for the development, but push the project back - at least a year past the proposed 2013 completion date. Alternatively, BAA could require customers at Heathrow and Gatwick airports to cough up an extra 50p to £1 per air ticket to pay for Stansted.

"This doesn't seem an inappropriate contribution," says Clasper. "Will 50p to £1 fundamentally affect the demand at Heathrow when a lot of tickets are £300 and £400? That is the public-interest question."

BAA must get approval from its regulator before it can consider cross-subsidising its airports. As yet, there is no sign that the Civil Aviation Authority will agree.

But Clasper's proposal has opened up old wounds. The low-cost carriers that use Stansted believe BAA is "gold plating" its development plans. Instead of investing £4bn in the airport, the carriers think that BAA should spend no more than £200m on expanding the facilities.

"Look at BAA's sums - crazy stuff - pissing away £4bn," says O'Leary. "This is like gold plating the Taj Mahal."

But Clasper, who is used to "fairly robust" discussions with O'Leary, says Ryanair's argument is simplistic. "You could probably build the runway for £100m if you had a flat piece of ground, were not worried about where you parked the aircraft and were not worried about how to get the passengers on and off the planes."

He also argues that spending extra money on new retail space to go with the development will actually benefit the likes of Ryanair, as the extra rental income will be used to offset the airlines' landing charges.

Despite their differences, O'Leary has respect for his BAA sparring partner. He says: "Personally, I couldn't find anyone straighter than Mike Clasper. He's a clever guy, running a monopoly company for the benefit of his shareholders."

Clasper joined BAA in 2001 as deputy chief executive and was promoted to the top job a year later when Mike Hodgkinson retired. He is no airline industry veteran, having spent the previous 23 years at consumer goods behemoth Procter & Gamble. Today he actually spends less time waiting around in departure lounges than he did at P&G. "I worked out that I flew over 1,000 times and visited over 100 airports."

It was during his time at P&G that Clasper was awarded a CBE for services to the environment, after promoting a system for separating the different plastics in household rubbish. Moving into aviation - one of the least-regulated and least-taxed sectors when it comes to the environment - may seem to go against his green credentials. But Clasper has been leading calls for the industry to clean itself up with the introduction of a Europe-wide airline emissions trading scheme.

"There is a limit to how much CO 2 the environment can carry. We have got to meet our economic and social ambitions while putting ourselves in harmony with the limit," he says.

On the surface his stance is surprising, as it will lead to new costs being heaped on the industry. But there is a heavy dose of pragmatism in his argument.

Aviation emissions trading has the backing of both the Prime Minister and the Chancellor of the Exchequer, who are expected to lobby for the scheme to be introduced in 2008 when Britain takes the presidency of the European Union in July this year.

The alternative, as proposed by the German government, is a new tax on aviation fuel. So emissions trading is the lesser of two evils.

"The problem of pollution doesn't get solved with blind taxes," Clasper argues. "The UK has massive taxes on car use. Do we have an air-quality problem? Yes we do."

This issue is looming large at Heathrow. The Government has told BAA that it can build a third runway and a sixth terminal once the new facilities at Stansted are complete. But the Secretary of State for Transport, Alistair Darling, has said the expansion can take place only if Heathrow meets strict European rules on air pollution. At present it doesn't, but the biggest problem isn't emissions from the aircraft, but from the nearby motorway. A recent report for the Department for Transport concluded that, to meet the EU's anti-pollution targets, the Government would have to build a tunnel over a four-mile stretch of the M4.

"The first thing to look at is where the issues are arising from. The worst site in BAA's portfolio for pollution is not Heathrow, it is outside our London office near Victoria," says Clasper. "There is a lot the aviation industry can do - better taxiing, aircraft with lower emissions. But the big issue is with the Government and its plans to cut road emissions."

Tomorrow, the case for a third runway will be pushed to the fore with the launch of a new campaign group, Future Heathrow. This will be headed by the newly ennobled Labour peer Lord Soley and will include major airlines, the CBI and the trade unions. Critically, the Transport Secretary will endorse its launch. Future Heathrow will try to stop the expansion plans getting kicked into the long grass by protesters.

BAA hasn't joined the group - "We are not a Heathrow-only company," insists Clasper - but it has its implicit support on the grounds that new runway development is essential to Britain's economy. "There are almost no peak-time slots available at our major airports in the South-east, which is home to a load of global companies and industries that have got to connect to the world. In Britain we will not have the strength of economic development if we [don't build new capacity]."

Developing runways and offering new landing slots is something all the airlines agree on. With the industry still recovering from 9/11 and the downturn in the global economy, they are desperate for space at BAA's major airports.

The problem for Clasper is they all agree on something else too - that BAA's proposals for funding the new runways are wrong.


Mike Clasper

Born: 1953, Sunderland.

Education: St John's College, Cambridge - MA in engineering.

Career (1974): graduate trainee, British Rail.

1978: brand manager, Procter & Gamble.

1985: advertising director, P&G.

1989: general manager, Holland, P&G.

1991: managing director, UK and Republic of Ireland, P&G.

1995: regional vice-president, P&G.

1998: president of European fabric and home care, P&G.

1999: president of global home care, Brussels, P&G.

2001: deputy chief executive, BAA.

Since 2002: chief executive, BAA.