AADHIKARonline quoting [8 August 2007] another CRASSrail hole plugger outlet, the Financial News [Wliliam Wright 67 August 2007] presenting a corrupting lying plug for CrossRail even when the facts of the particular event show that there is no logic in their lunatic craze for CRASSrail
QUOTE
The parable of Heathrow AirportWilliam Wright, Editor
06 Aug 2007
For an airport that describes itself as the world’s busiest international airport there are remarkably few signs at London’s Heathrow in any language other than English. Asked about this last year, a senior executive of the airport’s owner replied: “Well, we’ve never had any complaints.”
The reply said a lot about how Heathrow and its owner, BAA, are run. It did not occur to the executive that someone who had difficulty understanding the signs might have equal difficulty composing a letter of complaint.
This lack of thought for passengers is returning to haunt the airport and its owner Grupo Ferrovial, with passengers, politicians and business leaders – particularly in the City of London – queuing up to criticise the airport over its delays, overcrowding and under-investment.
The shoddy way in which the airport has been run – confirming that monopolies tend to behave as economic theory suggests they should – is apparent in the first glimpse of the airport’s performance we publish today. This analysis, based on reports by Ferrovial, BAA and an acquisition vehicle, FPG Topco, shows that in the 12 months since BAA was taken over in a highly leveraged £10.3bn acquisition, its revenues have jumped 14%, operating profits have increased by more than a third and capital expenditure appears to have fallen.
At the same time, passenger numbers have continued their slide of the past three years as travellers do what they can to avoid the unpleasant experience of travelling through London’s largest airport.
The numbers will do nothing to calm critics who argue its owner is continuing where the old one left off in milking the airport because it can although, in Ferrovial’s case, it needs to do so to pay the eye-watering interest bill on the debt it took on to finance the deal.
Apart from the unpleasant experience that bankers and investors share with everyone else, what has Heathrow got to do with the City of London?
First, bankers at Citi, HSBC, Lazard, Macquarie, Rothschild and UBS – with their lawyers, accountants and PRs – should be forced to use in perpetuity Heathrow for all their air travel to remind them what their deal has done for customers.
Second, it underlines the potential reputational risks that banks could find themselves running as they pile into mundane infrastructure assets and private equity. Goldman Sachs must be thrilled that it was comprehensively outmanoeuvred when it tried to buy BAA last year. In the feral hostility towards the private equity industry, just imagine how much louder the criticism of Heathrow and BAA would be if it were owned by a buyout firm, and Goldman at that. It also shows the limits of what can be extracted from such assets at a time when infrastructure returns are falling.
Third, and perhaps more important, Heathrow is a parable of the long-term risk the City could face.
Just as Heathrow is the self-declared “hub of world aviation”, so the City is the self-declared “world’s leading international financial centre”. The speed with which New York has fallen from grace and the rapid growth of financial centres in the Middle East and Asia show that London should not take this position for granted.
This is not because people will stop coming to the UK or banks will move because Heathrow is such an ordeal.
On the contrary, in the spirit of innovation that has characterised the securities industry since its earliest days, rivals will spring up. Airports in Paris and Frankfurt are catching up. Business class-only airlines are taking off from London Stansted, a much more convenient airport for financiers. City Airport is tiny but booming. Private jet use is soaring.
It would be lovely for the City – and for everyone else – to have a good airport at Heathrow and the Crossrail train service – delayed again last week – to ferry people across town.
The way to achieve that is to take the traditional financial markets approach and open the running of London’s airports to full competition – before it is too late.
UNQUOTE
AADHIKARonline unquoting [8 August 2007] another CRASSrail hole plugger outlet, the Financial News [Wliliam Wright 67 August 2007] presenting a corrupting lying plug for CrossRail even when the facts of the particular event show that there is no logic in their lunatic craze for CRASSrail
