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Passengers face increased airport charges to help pay BAA takeover.

Airline passengers could be forced to pay part of the cost of the takeover of BAA through increased airport charges to help its new owners repay debt, the industry warned yesterday.

Global airlines lobby group IATA said BAA had not been adequately regulated and that it would probably pass on higher debts inherited from its planned acquisition by Ferrovial.

"If there is inadequate input from airlines and their passengers, you can get an ugly outcome," said IATA's outgoing chairman Robert Milton, head of the parent firm of Air Canada.

"In the case of BAA it would result in a company with added debt and cost burden, and that is going to have to be borne by airlines and the public. So it is hard for us to paint a happy picture at this time."

IATA's director general, Giovani Bisignani, said regulators in Britain had struggled to keep tabs on BAA.

"It is a wake-up call to the regulators. We presented them with all the numbers - this is embarrassing."

IATA is critical of UK regulators whose price caps on BAA's trio of London airports have made it a tempting takeover target.

"The UK price caps set in 2003 which run through 2008 have so far allowed BAA to raise charges an average of 8.7 per cent a year," said IATA spokesman Tony Concil. "The regulator has allowed this airport operator to become cash rich under their watch," he said.

Tension between airlines and airports dominated a two-day annual meeting of IATA's 261 carriers, with the BAA sell off overshadowing a second day devoted to airlines' fuel price woes.

"For shareholders, it's a good idea. For customers, there is some concern that Ferrovial is overstretched in the way that it plans to finance the deal, and they are asking will that mean higher charges?" said Rigas Doganis, former head of Greece's Olympic Airways. Airlines want airports to account for their earnings from landing fees and retail activities in the same accounting box and to have their fees set by an independent European body.
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Publication:The Birmingham Post (England)
Geographic Code:1CANA
Date:Jun 7, 2006
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