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BAA chief paid £2.6m as air travellers face £20 fare rise
Robert Lea and Jonathan Prynn11.03.08
The man in charge of airport operator BAA was paid almost £2.6 million in a year when millions of passengers were forced to suffer "Heathrow Hell".
The revelation came as passengers were told they face higher airfares to pay for upgrade work at Heathrow and Gatwick.
The higher fares, to be phased in from next month, will see passengers paying £20 more at Heathrow and up to £10 at Gatwick.
Departing BAA chief executive Stephen Nelson's bumper package included an unexplained £1.5 million one-off "bonus", the company's 2007 accounts reveal today.
They come after a year of criticism for Europe's busiest airport, particularly over long queues at airport security.
The rise in airfares is a result of the airlines being charged more to use the airports. They say passengers are effectively being asked to bail-out BAA's heavily indebted owner, Spanish construction group Ferrovial.
British Airways said it was furious at the "overly generous" charges which were being passed on to the consumer and said they "far exceeded what is required to upgrade facilities".
The latest row over Heathrow comes ahead of the departure of Mr Nelson at the end of the month. BAA's 2007 accounts show the unnamed highest-paid director - almost certainly Mr Nelson - received salary and other remuneration totalling £2.594 million.
A note to the accounts says that "the highest-paid director was given a non-recurring payment of £1.5 million". BAA would not comment on the payment.
The accounts also show that Heathrow made an operating profit of £438million last year, up 10 per cent.
The size of the profit will further fuel resentment over the increase in charges that BAA is being allowed to levy on airlines.
Airlines angrily predicted that British travellers would be priced out of the air and demanded that the BAA London airports monopoly be broken up. Behind the higher charges is a Civil Aviation Authority ruling today that BAA, creaking under £10billion of debt, could raise it charges to airlines by 23.5 per cent from next month and by more than 10 per cent per annum for the next four years.
That effectively leaves passengers to pay for increased security and the building works at London airport. According to calculations by Heathrow's second largest airline bmi, charges will soar by 86 per cent by 2013 to nearly £20 per passenger per flight. On top of large rises over the last five years, bmi said Heathrow's BAA's charges will have gone up 300 per cent in a decade. A price increase at Gatwick will see charges jump by about 50 per cent at Britain's second largest airport.
But BAA said the rises did not go far enough.The company said: "BAA believes the price review does not recognise sufficiently the scale of the task we have embarked on, the pressures of handling such large infrastructure projects, the full cost of of the increased security requirements as well as the impact of the credit market turmoil."
Reader views (8)
So we're being screwed. So, what's new? Tube fares, council tax, energy charges, water charges, parking charges, airport charges - they are all costs that we, the consumers, have to pony up because there is no way to effectively put pressure on these organisations due to their monopolistic positions. Meanwhile, the fat cats like Nelson laugh all the way to the bank after having delivered poor service (or even no service).
- Karl Kazmi, Singapore
Passengers will be asked to stump up more money for the "privilege" of using Heathrow so as to help BAA out with their debt problems. This airport is not being run for the benefit of the customers. The pay-out to Nelson is an insult bearing in mind what passengers had to endure at Heathrow last year. Time to end BAA's monopoly by forcing them to sell off Gatwick and Stansted; hopefully competition might improve the service customers get at our airports and time indeed to end the nonsense of further expansion at Heathrow.
- Dave Robins, West Drayton,UK
Air fares are getting to such a ludicrous level - not because of the air fare itself but the mountain of airport taxes loaded on top. A recent ticket I bought to Africa comprised nearly 3/4 of the fare over and above in taxes!!! Then to be treated like cattle at UK airports! Enough. Not only that, but travel agents collect all these taxes and get no payment for their efforts. BAA and it's Spanish owners should be controlled a little more by our useless government!
- Jackie Ebdy, Smallfield, Surrey
I have no problem at all paying higher costs to fly, providing the money goes to security and safety. About time the airlines stopped half-drunk and loud noisy people from getting on board. Also, there should be a minimum one year in jail AND £20,000 fine for anyone causing any commotion on board. Frankly, air fares are generally far too low, making folks treat flying like going on a bus. To pay only a couple hundred pounds return to New York is ridiculous.
- Jimmy North, North, UK
There is no reason to fly domestically in the UK in most cases. Why don't we have a high speed rail link between London and Scotland via Birmingham, Manchester and Liverpool? It is up to 3 times more environmentally friendly to travel by rail and causes considerably less noise pollution and disruption to residents in SE England. The freed up slots can be used for international travel.
- Sam, London, England
More money for BAA a company that some city people believe won't be around for too much longer.
- Mike Melbourne, Bedford, England
Well if nothing else, this will reduce air travel! Even if you manage to get a £50 flight from Easy Jet or whoever the charges will easily double it. Nice to see the Government agreeing for a monopoly to be run like a Civil Service department as well, can't do your job? Just keep charging stakeholders more until you can.
- Mark Curtis, London, UK
The case for a national high speed rail network grows by the day. Rather than the environmentally and socially disastrous third runway and 6th terminal for Heathrow, this government needs to build the £31bn high speed rail network (WS Atkins report) to create £63bn benefits and reduce this country's environmental emissions.
- Peter, Kingston, England
