Terminal illness

Civitas, 23 December 2010

Hands up who thinks BAA stands for British Aviation Authority?  Well put them down, you’re all wrong. The acronym has meant nothing after BAA was privatised in 1986 and since 2006, it has been owned by the Spanish consortium Ferrovial. The arctic chaos of this week has clearly shown that there are some infrastructures too important to abandon to private companies who prioritise profit before performance.

Heathrow’s Spanish owners for the last five years have proudly declared that they invested £500,000 in snow clearing equipment this year. Big deal – this is a 2/3 cut from the £1.5 million invested the year before. This reduction occurred despite the predictions and precedents of the pre-Christmas rush to fly abroad. Ferrovial knew the perfect storm of heightened passenger volume and snow could occur, but it consciously avoided planning for this eventuality.

The result has been clear to everyone and attracted the attention of media more intensely than Sauron’s eye to the One Ring.  Britain’s principle airport, boasted to be the busiest and best airhub in the world, has become an international laughing stock and infuriated thousands. The reason for all this has been very simple – a failure to invest when this might lower short-term profits.

Of course, this is a very narrow perspective, especially since BAA has missed almost a week’s revenue from flights that never took off and gate slots that were not used so in reality it has lost out as much as anyone hoping to use the airport. In a way, it’s has had its own comeuppance.

Heathrow may technically be a private interest, so some would argue the Government should keep its dead hand away from interfering with it. Like it or not though, the airport still retains a national and very public existence so the Government has every right to punish BAA/Ferrovial and it should do so with a lesson they will never forget.

Infrastructure hubs are a strategic asset and too important to not regulate closely or give over to the free market entirely. If Heathrow is seen as a poor place to land planes, the UK as a whole could lose business revenue with future activities transferred to Paris, Berlin or New York rather than London. If other countries can work their way through the snow, why should anyone have to put up with the incompetence of Heathrow?

This trade cannot be risked and it should be part of the deal that the private owner has to maintain investment at a level proportional to the size and value of the holding. When the owners fail, the penalties should be constructive and force this investment to take place, rather than simply punitive and failing to address the problem.

Such action is already needed: Heathrow had fewer snow ploughs than Gatwick, a neglectful state of affairs which the Government should strongly condemn. Ferrovial knew when it bought BAA for £10 billion that it was buying some of the world’s greatest airports, so it can hardly excuse itself from shirking its responsibility.

This perhaps raises the question of if there are some parts of national infrastructure which are simply too valuable to risk handing to the private sector. It would appear though that such arrangements can be perfectly agreeable to all parties.

The American private owners of Gatwick have invested £8 million in snow clearing equipment and during the intense snow acquired three new ploughs in three days, a rapid response that appears the opposite of BAA/Ferrovial’s happy-go-lucky attitude. Clearly, when these companies are responsible, they embody everything positive about private ownership. Gatwick’s success is primarily down to the wise investing of its owners, but this doesn’t mean the Government shouldn’t be waiting in the wings for when things do go wrong.

The troubles may be over for this year, but we can be certain this isn’t the last time snow falls on the UK. Next time, there better be a Plan B.