A 7% rebound in Ferrovial's share price on Tuesday told the story the Spanish owner of BAA has wrung a substantially better deal from the Civil Aviation Authority, said Nils Pratley in The Guardian.
From 1 April, the airports operator can hike landing charges at Heathrow by a bigger than expected 23.5% and by 21% at Gatwick rather more than the CAA initially proposed last November. BAA will get an extra £400m from airlines over five years.
Indeed, the new fees are almost enough to pay "the entire interest bill" on its £10bn debt pile, noted Patrick Hosking in The Times.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
So is BAA delighted?
Sadly, despite two and a half years of work, the new charges please no-one, said Fiona Maharg-Bravo on Breakingviews. BAA attacked the CAA's "stinginess", although the increase gives it "additional wriggle room" to invest £4.8bn in its airports over five years. And, privately, chairman Sir Nigel Rudd must be "cock-a-hoop", said David Prosser in The Independent.
Meanwhile, the airlines accuse it "of giving in to pressure from BAA". While the Authority cited higher security costs for its largesse, they suspect it is alarmed by the 40% slump in Ferrovial's share price over the past year and "gone soft", said Pratley. Indeed, the group has proved you can "overpay for a business, gear it up as much as possible, then wait for the regulator to bail you out", said the FT's Lex.
Any other implications?
Plenty. BAA isn't alone in questioning the UK's regulatory regime, which charges all airlines the same landing fees, said Prosser. So British Airways, taking possession of modern facilities at Heathrow's Terminal Five, pays no more than rivals stuck with crumbling buildings elsewhere on the site.
And passengers "already subject to one of the worst travelling experiences anywhere" must now pay more, said Alex Brummer in the Daily Mail. Blame the CAA, which should be actively involved in creating a competitive airport environment, not "encouraging cosy monopolies".
-
UK-US trade deal announced: US cuts tariffs on UK car imports to 10%Keir Starmer and Donald Trump have announced a UK-US trade deal, but the US president has refused to lift baseline tariffs on most UK goods. What does it mean for the UK?
-
How to use mid-caps to diversify from the USMedium sized companies are overlooked by investors but could offer an attractive ‘sweet spot’. We consider the case for mid-caps amid market volatility.
