Vowing End to 'Heathrow Hassle,' London Expands Bursting Airport

British Airways (BAY) and Spanish-owned BAA promise the new building will eradicate not only queues and lost bags, but ease delays and general travel stress too.


ABN Amro analyst Andrew Lobbenberg, who visited the facility, said he found it "very impressive," if not radically superior to other new airport terminals in Europe, such at Madrid Barajas' Terminal 4, home to national airline Iberia, which can handle 20 million passengers a year and cost 6 billion euros ($8.8 billion) to build.

He describes T5 as a "truly giant leap forward" and said the new terminal will offer a "far improved customer experience." In the medium term, it will mean "material operating-cost benefits" for British Airways, thanks to a more centralized operation, shorter taxi times for aircraft and better reliability in terms of baggage and punctuality, he added.

Poor record on punctuality, lost luggage

In the busy summer period, British Airways ranked 24th among 25 European airlines that detailed lost baggage statistics, according to the Association of European Airlines. British Airways also ranked 26th out of 28 European carriers for punctuality.

BAA didn't fare much better. The association data show that Heathrow and Gatwick, also operated by BAA, had the worst record for delayed flight departures among all leading European airports this summer.

These statistics help explain why BAA, which was bought last year by Spanish infrastructure giant Grupo Ferrovial (016260101) , has faced a barrage of criticism this year.

In the wake of rising complaints from passengers and airlines, Britain's Competition Commission got involved. The regulator is now investigating whether BAA's ownership of seven U.K. airports may inhibit competition and investment.

Attacked on many fronts, BAA hopes T5 will help restore its reputation.

Perhaps the most impressive feature of the new building is the top-floor departure hall, which has unobstructed views of one of the airport's two runways, said Mark Bullock, who took over as Heathrow's CEO following Douglas's departure. On a clear day, passengers will be able to see as far as the Canary Wharf financial center in east London to the British royal family's Windsor Castle in the west.

"From the departure lounge, there are fantastic views across the airfield and you will feel the buzz of travel," Bullock added.

Passengers should get a chance to enjoy those views, he said, as 96 automatic check-in counters, twenty security lanes and new X-ray machines reduce the time it takes to get to the gate.

More retail space; hope for higher charges

Airport authorities hope less time queuing means more time shopping at one of the terminal's 144 stores, or eating at one of its 25 restaurants. The food venues include 'Plane Food,' the latest venture of Michelin-starred chef Gordon Ramsay.

T5 will increase Heathrow's total retail space by 50%.

BAA hopes that passengers will come to the airport early to shop and eat, rather than coming early because they're consumed with the fear that, stuck in an immobile check-in or security queue, they'll miss their flight.

Retailers competed ruthlessly for T5 space, giving BAA, which gets 38% of its income from retail operations, the opportunity to select those willing to go the extra mile by doing something a bit special.

British fashion designer Paul Smith, for instance, will decorate its shop with travel memorabilia from around the globe. Magazine and book retailer WH Smith Plc (SMWH) , meanwhile, is installing self-service checkouts to cut queues.

And Coach International (COH) , a U.S. accessories store, will be launching its first European shop at Heathrow, hoping to use the outlet to establish the brand in the U.K.

But T5 is not just about getting travelers to shop.

BAA has been using the expansion as a springboard to lobby its regulator, the Civil Aviation Authority (CAA), for an increase in the fees it charges airlines to use Heathrow. Those fees are lower than at most leading airports, including New York's JFK and Paris' Charles de Gaulle. But the regulator last month didn't recommend the price increases BAA wanted.

Without additional investment and a third runway, BAA has warned that capacity constraints -- 98.5% of its flight slots are already filled -- mean it risks losing its dominance to competitors such as Paris' Charles de Gaulle and Schiphol in Amsterdam, which run at about 70% capacity.

British Airways' Walsh made the same point in a speech to the Guild of International Bankers in London last week.

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