BAA rings death knell for Stansted expansion

If 2008 went down in the history books as the year of airport expansion plans, then 2009 will be long feted as the year those plans crashed back down to earth. Confirming rumours we've been hearing for several month now, BAA have finally conceded defeat and asked the Government to delay the public inquiry into Stansted Airport's expansion. Although BAA won't admit it yet, this means that the inquiry, and proposed expansion, won't happen. Is that champagne corks tins of cider I hear opening?

There are a few reasons for this, all of them good news for environmentalists. Firstly, BAA has no money and can't afford the inquiry. They are inches from having their credit status downgraded, which would leave them unable to secure their enormous debts. In economics speak, this leaves them "proper fucked"; so fucked, in fact, that the Government has initiated plans to nationalise them should the receivers get called in.

Secondly, BAA has been ordered to sell Stansted by the Competition Commission. In a rising market, with more and more people flying each year, BAA would be aggressively seeking permision to expand, and able to charge a premium for having bullied local objectors out of the way. But in this market, with fewer passengers than before, no one will pay more for someone else's expansion plans. The market for airports has been decimated: BAA wanted £2b for Gatwick, but has only been offered £1.3-1.4b.

The other, more political reason, is the general election next year. The last remnants of the Labour party may remain dedicated to expansion, but short of the whole Tory front bench being exposed as peadogrants, the next Government will be more blue than red. The Tories claim they won't allow expansion at Stansted or Heathrow (although they also claimed they weren't fiddling their expenses). Assuming they aren't lying scumbags then even if the inquiry inspector supported expansion it should be overturned by whoever becomes the Minister for Airport Expansion.

So pity BAA, who flew too high and came unstuck. A lesson in hubris for us all. Oh, and to make matters worse, British Airways, BAA's main client and ruler of all things Heathrow, is also going down the pan. Last year they lost £401 million, and there are no signs that they won't lose the same amount (or more) this year. These losses are despite their having fired around 20,000 staff, but outspoken boss Willie Walsh plans to fire some more in a desperate attempt to keep making money. I'm sure that he'll be doing his bit by taking a big cut in bonus... stop laughing, I'm serious.