By Howard Davies Monday, 01 October 2007

The MT Diary

Quite an eyeful at Heathrow; Booker a business-free zone; banking's non-cuddly side.

Nigel Rudd is one of the most successful British businessmen of the past 20 years. After a career at Williams, he chaired Pilkingtons and Boots. He is also one of the most relaxed, genial and amusing of our corporate chieftains. As the new chairman of the Spanish-owned BAA, he will need all those qualities and more.

I wonder if Ferrovial knew quite what it was getting into when it bought Heathrow and Gatwick. Since it did so, it has had nothing but grief. Some of the opprobrium heaped on it is unjustified. BAA cannot be held to blame for Britain's exotic planning procedures, which mean that it takes a decade or more to agree a new terminal or runway. The word manana conveys a sense of urgency quite unknown to the inspectors who hold appeals. And BAA does not control the immigration service, which works in mysterious ways.

A couple of months ago, I signed myself up for the 'iris recognition immigration system' (Iris), which supposedly allows you to enter the country by peering into a screen inside a glass box. Signing up was an odd process. I spotted a side-room in Terminal 1 with two dozing officials in it, who seemed surprised to have any business. But within a couple of minutes I was snapped and stored on their system. On return the same evening, I strode through immigration with a superior glance at the queue of passport-holding losers.

The problem is that only once since have I found the machinery in working order, and even then it seemed to take an age to recognise the attractive grey-green irises of the woman in front. Maybe tinted contact lenses fool the technology. Whatever the reason, this new wheeze does not shorten the queues.

If I were to invest in Ferrovial, my major concern would be whether the ancestral business model of international airports is now fundamentally flawed, in the light of the terrorism threat and the security response. Airports today are designed primarily as a means of getting you into an airside shopping mall, where bored passengers are held for so long that even a pair of silk boxers or a tin of Harrods humbugs seem irresistible purchases.

Does that approach still make sense? Wouldn't a better plan be to work to minimise the time from arrival to boarding, with a lot of separate entrances leading directly to the gates, without passing go or spending £200?

Of course, the consequence would be that shopping profits would fall and landing charges would go up - and probably fares, too. But I suspect I'm not the only traveller who'd cheerfully accept that trade-off and exchange the opportunity to buy an overpriced Pink shirt in return for a faster passage through the airport. What it would do to the P/E multiple of Ferrovial and other airport companies I dread to think. That is a problem on which Sir Nigel and his colleagues can reflect in the risibly named fast-track queue.

I read quite a few of the entries for this year's Man Booker Prize, which I'm helping to judge, while waiting for my miniature toothpaste tube to be examined in a Heathrow line. Some days this summer, there would have even been time to write, never mind read, a novel.

Sadly, there's no evidence that our novelists have been inspired by the experience, and I've not yet been sent for appraisal the great Heathrow security saga.

I was incautious enough the other day to note, in the pages of the Pink 'Un, that in this country, in contrast to the US, few good novels have been written about business. Since then, the LSE postroom has been submerged under a wave of thrillers about shenanigans in the Square Mile, with catchy titles like My Word Is My Bonus.

So has my thesis been exploded? I think not, as all of these late submissions were published privately, or self-published. It seems that commercial publishers think there is just no market here for novels set in a business context. Perhaps they're right, but in the past, Dickens' or Galsworthy's publishers did not think so, and nor does Tom Wolfe's today in the US.

Perhaps MT might be induced to get into the market by serialising a racy treatment of love among the arb traders, or a novella on how structuring a synthetic collateralised debt obligation in the small hours can lead to steamy romance.

In truth, romance has been in short supply in the financial markets in the past couple of months. The boys have been falling out with each other, big time. A lot of warm and cuddly relationships have cooled dramatically as formerly friendly banks have declined to lend to each other. For a time, the interbank market more or less dried up. Individually, the banks are clinging on to every cent of cash they have: collectively, they think it is a frightfully poor show and that the Bank of England should step in and help them out, preferably at a discounted rate.

These are tricky issues, on which Bagehot wrote eloquently in Lombard Street. So far, though, the credit crunch seems not to have hit the real economy hard. Manufacturers, indeed, are more bullish than for some time, according to the EEF, and professional services are prospering. As usual, the lawyers are benefiting from the misfortunes of others.

But consumer spending, particularly on leisure and travel, is flat, and I suspect the winter may be chilly: a slowdown, if not worse. Another reason to shut up some of those unnecessary Heathrow shops.

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