BAA chief says cap on flights will not threaten £2bn Terminal Five project

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The airports group BAA claimed yesterday that its £2bn project to build a fifth terminal at Heathrow will be viable even if stringent limits are imposed on the number of flights in and out of the airport.

Opponents of Terminal Five believe the inspector who chaired the long-running public inquiry into the project will recommend the go-ahead but will cap air traffic movements at around their current level.

Mike Hodgkinson, chief executive of BAA, rejected suggestions that this would wreck the economics of the project and said that the extra terminal would still enable Heathrow to grow from 64 million passengers last year to 80 million. Mr Hodgkinson said that BAA would accept a limit on flights in line with the figures contained in its own statement of case to the T5 inquiry in 1994. This forecast that by 2013 the number of flight movements at Heathrow would have grown to 473,000 ­ of which 453,000 would be passenger aircraft.

However, that number has nearly been reached already and, on some calculations, surpassed. Last year Heathrow handled 466,000 flights, nearly all of which were passenger aircraft. Mr Hodgkinson said: "We have always maintained that T5 would not result in a large number of incremental aircraft movements. I believe T5 will go ahead and the conditions imposed on it will make it viable."

He added that T5 was vital to maintain the position of London and the UK as world-class locations, saying: "We are not good at building Fiestas or Vectras but we are good at knowledge-based industries. If we don't build T5 we will be in serious decline."

Mr Hodgkinson also denied that building T5 would inevitably mean a third runway at Heathrow, saying that BAA had expressly asked the T5 inspector, Roy van der Meer QC, to rule this out in his recommendations. He said T5 was in the wrong place to serve another runway. Mr Hodgkinson also sought to allay fears among residents living near Stansted airport that an emergency runway being built there might be turned into a second runway.

The Government has had the inspector's report since before Christmas but is not expected to announce its decision until the autumn. Late next year it is due to publish an aviation White Paper setting out the options for additional runway capacity in the South-east.

Dermot Cox, a spokesman for the Heathrow Association for Control of Aircraft Noise, ridiculed BAA's claim that it could increase passenger numbers by 16 million with just 7,000 additional flights, saying that this worked out at an average of 2,300 passengers per aircraft. But he welcomed the fact that BAA had conceded for the first time that an absolute cap should be put on flight movements. "We are pleased that BAA is ready to keep to the figures set out in its statement of case. The essential thing will be to ensure those limits are not broken as has happened in the past, for instance when Terminal Four was built."

Mr Hodgkinson said that the huge increase in passengers at Heathrow could be accommodated within the ceiling on flights because aircraft were getting larger. But he said that even if T5 was approved this autumn, it would not be ready until 2007 ­ 18 months after the Airbus super jumbo, the 555-seater A380, has entered service.

BAA's profits rose 15 per cent last year to £530m. The improvement was due to a 6 per cent rise in passenger numbers to 125 million and a 6 per cent increase in retail income to £470m. Retail income per passenger is now only 6 per cent lower than it was before intra-EC duty-free sales were abolished in July 1999 and this year total retail sales will surpass the figure reached in 1998-99.