BAA Demand Softens, Heathrow Traffic Falls

November 12, 2011

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Passenger traffic at BAA airports fell last month compared to October 2010, as demand softened, reflecting weakness in the wider economy.

The company, majority owned by Spanish infrastructure group Ferrovial, on Friday said 9.6 million passengers flew from its UK airports last month, down 1.3 percent on the same month last year.

It said London's Heathrow, Europe's busiest airport, served 6 million passengers, also down 1.3 percent, its first monthly fall since December 2010. Excluding the domestic market, Heathrow's traffic increased marginally, with European traffic up 1.7 percent and North Atlantic up 0.3 percent.

"The reduction in passengers at Heathrow is indicative of the softening in the global economy," chief executive Colin Matthews said.

"We remain cautious about predicting growth in the coming months."

BAA last month said third-quarter earnings rose, helped by continued growth at Heathrow, where business-related traffic is holding up despite global economic uncertainty.

Business travel is traditionally more resilient than leisure travel during a downturn as cash strapped consumers cut down on discretionary spending when times are tough.

BAA has, in recent months, reported a steady rise in long-haul business traffic, especially to emerging markets such as China and India, and said growth in US traffic had also helped.

Traffic at London's Stansted airport, which is heavily exposed to short-haul economy travel, was down 4.9 percent on last year.

Industry body IATA last month said the outlook for airline traffic growth was bleak with airlines likely to suffer a weak end to the year and a tough 2012 due to waning consumer confidence, sluggish international trade and high fuel prices.

BAA, which owns Glasgow, Edinburgh and Aberdeen airports in Scotland, as well as Heathrow, Southampton and Stansted in England, said its Scottish airports saw passenger numbers up 2.1 percent. Edinburgh saw traffic up 1.8 percent, helped by the opening of 20 new routes since the start of the year.

BAA last week put Edinburgh airport up for sale, bowing to a UK watchdog's order to sell a Scottish airport in order to pave the way for better competition.

US asset management company Carlyle Group has confirmed it is part of a consortium preparing to bid for the airport.