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BAA cuts Stansted expansion costs by 30%


SYDNEY (Centre for Asia Pacific Aviation) - BAA announced its 'Stansted Generation 2' project, including the development of a second runway and associated facilities. The first phase of the project would be completed in 2013.

The UK Government originally estimated the new runway would cost GBP3.7 billion to develop, but BAA has revised this estimate to approximately GBP2.7 billion. (The revised estimate comes a day after BAA confirmed it had lodged a GBP1.3 billion bid for a majority shareholding in Budapest Airport).

But the move has drawn criticism from airlines. easyJet stated Stansted has flourished in the past few years because BAA took “an enlightened approach” to airport charges. New easyJet CEO, Andrew Harrison, stated “launching a consultation exercise having already announced the final price will be a further waste of everyone’s time and money…BAA’s allowable return on capital projects is capped at 7.75% - so it can grow its profits by increasing the scale of its investments. Put simply, it is incentivised to over-build its terminals and runway infrastructure”.

The Stansted proposal follows one month after BAA outlined its vision to continue the transformation of Heathrow Airport beyond the completion of Terminal 5. BAA revealed the early stages of the “Heathrow East” proposal, which considers the demolition of the oldest parts of the airport, to build a single facility capable of handling up to 30 million passengers at an incremental net cost of up to GBP1.5 billion, according to initial estimates.

BAA seems to have forgotten that Stansted was an unloved white elephant until the charges were dropped to attract the likes of easyJet and in the last few years it has been one of the great success stories of European aviation. But now, BAA seems determined to kill the goose that lays the golden eggs. In the case of Stansted this is a polar opposite to the requirements of the airport users”, Andrew Harrison, CEO, easyJet.

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