BAA angers airlines with subsidy plan for Stansted

The airports operator BAA was facing a battle with some of Britain's leading airlines last night after indicating that the £4bn cost of a new runway at Stansted would be met partly by passengers using other London airports.

Current regulatory rules governing airport expansion say that any increases in capacity should be self-financing and based on what airlines and passengers using that airport are prepared to pay.

But Mike Clasper, BAA's chief executive, said yesterday that passengers using Heathrow and Gatwick could have to pick up part of the tab to reflect the benefit that air travellers across the south-east would derive from a second runway at Stansted, due to be in operation by 2011-12.

"The people who should pay are the airlines who use Stansted but we also believe that passengers across London will also benefit from a new runway at Stansted," he said.

He added that BAA would work with the regulator, the Civil Aviation Authority, to get the "right balance" between what Stansted's passengers and those at other airports should pay.

The CAA said in a statement that it would be prepared to depart from so-called "stand-alone regulation" of each of the three south-east airports only if there was "compelling evidence to demonstrate that users in aggregate were genuinely better off as a result and that the impact was not unduly distortionary or discriminatory as regards other airports in the South East."

But airlines at Heathrow, already smarting from a 40 per cent increase in landing charges to fund the new Terminal Five, warned they would oppose cross-subsidies fiercely. Sir Michael Bishop, chairman of bmi British Midland, Heathrow's second-biggest user, said: "We do not believe BAA can fund such investment without cross-subsidy from its Heathrow operations. But I can promise that we will fight such a threat every step of the way."

He added that if cross-subsidy did look likely then bmi would call for the break-up of BAA's south-east monopoly.

Sir Richard Branson, chairman of Virgin Atlantic, also warned that he remained "totally opposed to cross-subsidisation between London's airports", saying he would look to the CAA to make sure those who benefited from Stansted's expansion also paid for it.

Stansted made an operating profit of £42m on revenues of £132m last year, and although its passenger numbers have grown from 7 million five years ago to 19 million this year, there are severe doubts about whether it could finance the huge investment needed to grow to 80 million passengers by 2030 under its own steam.

Mr Clasper said BAA had learned the lessons of the past when it attempted to expand Stansted too quickly. He said the new expansion of the Essex airport would be carried out in a phased manner to ensure that capacity kept pace with demand. The initial phase will involve investment of about £2bn on the new runway and associated terminal, apron and parking to increase Stansted's capacity to 50 million passengers - 35 million using the existing runway when it is operating at full tilt and 15 million from the new runway. Only when the 50 million figure was reached would BAA increase investment to the full £4bn.

Mr Clasper also rejected fears that an increase in landing charges would undermine the business models of the low-cost carriers such as Ryanair and easyJet. By 2008 landing charges would rise by only £2 a passenger to £5, and even further rises after that would not be enough to make a big impact on ticket prices.

PROMOTED VIDEO
Life and Style
techCould new invention save millions in healthcare bills?
Sport
David Moyes gets soaked
sport Moyes becomes latest manager to take part in the ALS challenge
Voices
A meteor streaks across the sky during the Perseid Meteor Shower at a wind farm near Bogdanci, south of Skopje, Macedonia, in the early hours of 13 August
voicesHagel and Dempsey were pure Hollywood. They only needed Tom Cruise, says Robert Fisk
News
peopleEnglishman managed quintessential Hollywood restaurant Chasen's
Life and Style
food + drinkHarrods launches gourmet food qualification for staff
Arts and Entertainment
Michael Flatley prepares to bid farewell to the West End stage
danceMichael Flatley hits West End for last time alongside Team GB World champion Alice Upcott
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Life and Style
Horst P Horst mid-fashion shoot in New York, 1949
fashionFar-reaching retrospective to celebrate Horst P Horst's six decades of creativity
News
Members and supporters of the lesbian, gay, bisexual, transgender (LGBT) community walk with a rainbow flag during a rally in July
i100
Life and Style
Black Ivory Coffee is made using beans plucked from elephants' waste after ingested by the animals
food + drinkFirm says it has created the "rarest" coffee in the world
Arts and Entertainment
Jamie T plays live in 2007 before going on hiatus from 2010
arts + entsSinger-songwriter will perform on the Festival Republic Stage
Life and Style
food + drinkThese simple recipes will have you refreshed within minutes
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Junior Quant Analyst - C++, Boost, Data Mining

£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...

Junior Quant Analyst (Machine Learning, SQL, VBA)

£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst (Machine Lea...

C#.NET Server Side Developer (C#, XML, WCF, Unit Testing,SQL)

£30000 - £40000 per annum + benefits+bonus+package: Harrington Starr: C#.NET ...

Junior Database developer (SQL, T-SQL, Excel, SSRS)

£20000 - £30000 per annum + benefits+bonus+package: Harrington Starr: Junior D...

Day In a Page

All this talk of an ‘apocalyptic’ threat is simply childish

Robert Fisk: All this talk of an ‘apocalyptic’ threat is simply childish

Chuck Hagel and Martin Dempsey were pure Hollywood. They only needed Tom Cruise
Mafia Dons: is the Camorra in control of the Granite City?

Mafia Dons: is the Camorra in control of the Granite City?

So claims an EU report which points to the Italian Mob’s alleged grip on everything from public works to property
Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Once the poor relation, the awards show now has the top stars and boasts the best drama
What happens to African migrants once they land in Italy during the summer?

What happens to migrants once they land in Italy?

Memphis Barker follows their trail through southern Europe
French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

The ugly causeway is being dismantled, an elegant connection erected in its place. So everyone’s happy, right?
Frank Mugisha: Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked

Frank Mugisha: 'Coming out was a gradual process '

Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked
Radio 1 to hire 'YouTube-famous' vloggers to broadcast online

Radio 1’s new top ten

The ‘vloggers’ signed up to find twentysomething audience
David Abraham: Big ideas for the small screen

David Abraham: Big ideas for the small screen

A blistering attack on US influence on British television has lifted the savvy head of Channel 4 out of the shadows
Florence Knight's perfect picnic: Make the most of summer's last Bank Holiday weekend

Florence Knight's perfect picnic

Polpetto's head chef shares her favourite recipes from Iced Earl Grey tea to baked peaches, mascarpone & brown sugar meringues...
Horst P Horst: The fashion photography genius who inspired Madonna comes to the V&A

Horst P Horst comes to the V&A

The London's museum has delved into its archives to stage a far-reaching retrospective celebrating the photographer's six decades of creativity
Mark Hix recipes: Try our chef's summery soups for a real seasonal refresher

Mark Hix's summery soups

Soup isn’t just about comforting broths and steaming hot bowls...
Tim Sherwood column: 'It started as a three-horse race but turned into the Grand National'

Tim Sherwood column

I would have taken the Crystal Palace job if I’d been offered it soon after my interview... but the whole process dragged on so I had to pull out
Eden Hazard: Young, gifted... not yet perfect

Eden Hazard: Young, gifted... not yet perfect

Eden Hazard admits he is still below the level of Ronaldo and Messi but, after a breakthrough season, is ready to thrill Chelsea’s fans
Tim Howard: I’m an old dog. I don’t get too excited

Tim Howard: I’m an old dog. I don’t get too excited

The Everton and US goalkeeper was such a star at the World Cup that the President phoned to congratulate him... not that he knows what the fuss is all about
Match of the Day at 50: Show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition

Tom Peck on Match of the Day at 50

The show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition