BAA may spread wings in South Africa

The airports operator BAA is in talks to take over the running of four South African airports, including Jan Smuts in Johannesburg, as part of plans to privatise large parts of the country's transport system.

BAA is already preparing a feasibility study for Nelson Mandela's government on privatisation of the country's main airports, including estimates of the funding required to upgrade facilities.

Apart from Jan Smuts - now known as Johannesburg International Airport - BAA is also looking at hubs in Cape Town, Durban and Port Elizabeth. The four airports, particular Johannesburg, are heavily used and likely to face even greater strains on their capacity as tourism grows and more airlines begin services to South Africa. Richard Branson's Virgin Atlantic starts flying to South Africa this autumn.

But the principal airports are underdeveloped and badly in need of commercial expertise to expand and improve facilities.

On his state visit to Britain last month, President Mandela highlighted the priority South Africa placed on privatising its transport network.

Stella Sigcau, his minister of public enterprise, is evaluating the privatisation of Sun Air and the loss-making Transkei Airways and proposals are due to be put forward by the end of this year.

BAA has ambitious overseas expansion plans. It already operates the commercial activities of Pittsburgh airport in Pensylvannia and intends to bid when Australia's main airports are put on sale in the next 18 months.

Under chief executive Sir John Egan, the group has also looked at possibilities in China and elsewhere in the US.

Meanwhile the group is seek-ing clarification from Labour as to whether its proposed windfall utilities tax will include BAA. A recent report by investment bank Goldman Sachs warned recently that the tax could cover privatised transport companies such as BAA, Railtrack and Associated British Ports as well as regional electricity and water companies

BAA executives are confident they will be able to persuade Labour that the company's record on investment, profits and service improvement will be sufficient to avoid the windfall tax. But BAA is taking legal opinion on whether it could be obliged to pay the tax if Labour is prevented from discriminating between companies.