By Michael Northcott Monday, 15 October 2012

BAA name finally grounded

The airport operator formally known as BAA has said its airports will operate under individual names in future.

BAA has decided to drop its name in favour of using the individual names of all of the airports it owns. In the UK, BAA runs Heathrow, Glasgow, Aberdeen, Southampton and Stansted airports, which will all assume their given names as trading names in the move. The chief executive of Heathrow, Colin Matthews, said: ‘We are a different company today from when BAA was formed. The BAA name no longer fits. We do not represent all British airports; we are not a public authority; and practically speaking the company is no longer a group as Heathrow will account for more than 95% of the business.’

From a leadership perspective, it is rather off-key from Matthews to essentially dismiss all of the other airports when he is effectively running them. Saying that they don’t really count anyway because of the dominance of Heathrow is unlikely to win him any friends elsewhere in the company. Still, the part of the business currently known as BAA will now be called simply Heathrow. Whether or not this marks a move towards getting rid of the rest of the airports in further sales is unclear, but it certainly sounds like a possibility with this naming strategy…

BAA was originally formed by the government back in the ‘60s as the British Airports Authority, but was privatised in the ‘80s, and then bought out in 2006 by a Ferrovial-led consortium. But in recent years competition rules have forced the company to sell Gatwick and Edinburgh (and soon Stansted), presumably prompting senior management to reassess what the focus of the company should be. With Heathrow now generating 95% of the firm’s revenue, dumping the other operations no doubt looks increasingly attractive. 

Interestingly, BAA also admitted that Stansted could probably be run on a budget £5m smaller than it currently does. The figure was disclosed in an ‘information memorandum’ sent out to bidders interested in the airport. Bosses think that freeing the airport from BAA management will create the saving by reducing management costs. The airport has begun to struggle in recent years as passenger numbers have declined from their peak of 23.8 million in 2007 to a forecast 17.1 million in 2012. This is partly down to Ryanair’s move to divert some flights to other airports avoiding what it sees as excessive landing charges. Today’s memo does predict though that traffic will jump back up to 24.6 million passengers by 2019.

Anyway, many thought it pretty controversial that BAA had kept its name in the first place: the semblance of somehow being a privately owned ‘authority’ was an uncomfortable arrangement for many. Changing the name is also perhaps an attempt to demonstrate the fact that it is no longer a monopoly or near-monopoly operator…

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