BAA 'inflating figures' to justify extra runway

Stansted airport's biggest users claimed yesterday that its owner, BAA, had massively overestimated future passenger demand to justify spending nearly £3bn on a second runway.

The Stansted Airline Consultative Committee, a coalition of passenger and cargo airlines and travel bodies such as IATA, said BAA had deliberately chosen to "gold plate" the project and inflate traffic forecasts so that it could maximise landing charges at the airport to pay for the runway.

The committee, which includes Stansted's two biggest airlines, Ryanair and easyJet, said a second runway, terminal building and associated facilities could be built at Stansted for about £1bn - a third of the £2.7bn that BAA is proposing to spend. With new surface transport links, the total cost could be £4bn.

A report prepared for the committee by the airport consultants York Aviation says passenger numbers at Stansted will rise from 22 million a year to up 62 million by 2030, assuming airport charges remained at current levels. If they increased by the amount that BAA proposes from £3.30 a passenger to more than £8 then demand by 2030 would fall to 49 million passengers. That compares with BAA's forecast that 78 million passengers would be using Stansted's two runways by 2030.

BAA plans to bring the second runway into service by 2015. But the committee says that based on its calculations, Stansted would have sufficient capacity with its existing single runway until 2020. If BAA went ahead with its proposed increase in charges, it would depress passenger demand, meaning a second runway would not be needed until 2028.

BAA is being taken over by the Spanish construction group Ferrovial for £10.3bn. The new owner has had talks with the Department for Transport and the Civil Aviation Authority, the airport regulator, about "an alternative capital expenditure plan" for Stansted which involves building the second runway more cheaply. But David O'Brien of Ryanair, the chairman of the Stansted committee, said he was still cautious about the attitude Ferrovial would take towards the project and was waiting to meet it.

"I don't have the sense that we're pushing at an open door. Rather we are talking in a vacuum," he said.

The York report also advocates building the second runway closer to the existing one, and shortening it on the grounds that the airlines using Stansted are mainly low-cost ones using smaller aircraft. York said this would still allow bigger aircraft to use the existing runway.

Altitude Assets fails to take off

Hopes that BAA would live on in the shape of a new quoted airports company when Ferrovial completes its takeover were dashed yesterday after the Spanish company said there had been insufficient investor interest.

Existing BAA shareholders had been given the option of accepting "stub equity" in a new AIM-listed vehicle, Altitude Assets, in exchange for up to 10 per cent of their holdings as opposed to the 935p cash offer. But the plan had depended on at least 5 per cent of shareholders opting for the stub equity. In the event, less than 1 per cent showed any interest.

Investors needed to tender a minimum of 123 million shares in exchange for the stub. In the event, only 10 million shares, or 0.4 per cent of BAA's equity, was tendered.

Citigroup, Ferrovial's advisers, said it had decided not to proceed with the creation of Altitude Assets.

The decision means there will no longer be any stock market-listed airports company for shareholders to invest in, after the earlier takeover of TBI, the owner of London Luton, by Spain's Abertis.