Airlines already see this as raising costs to passengers who will "pay
more" than what are already high and rapidly rising fees to cover the
acquirer's cost of capital.
Private capital's opportunity cost will always be higher, its efficiency
argued to offset the added burden.
This would be the case (and the argument) with any of the proposed
infrastructure privatizations - airports, highways, ATC, ports, etc.
The irony is airlines are lining up against privatization of airports at
the same time they rail for privatization of ATC and against regulation
in any form affecting the business.
OK, folks, so which is it?
- RWM
----------
Airlines say passengers could pay for BAA deal
By Tim Hepher and Jason Neely
PARIS (Reuters) - Airline passengers could be forced to pay part of the
cost of a 10.1 billion pound takeover of airports operator BAA through
increased airport charges to help its new owners repay debt, the
industry warned on Tuesday.
Global airlines lobby group IATA said BAA <BAA.L> had not been
adequately regulated and that it would probably pass on higher debts
inherited from its planned acquisition by Spain's Grupo Ferrovial <FER.MC>.
BAA <BAA.L> agreed to a 10.1-billion-pound takeover bid from a
consortium led by Ferrovial, rejecting a higher offer from Goldman Sachs
<GS.N>.
"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 on this at this
time," he told a news conference.
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 percent a year," said
IATA spokesman Tony Concil.
"The regulator has allowed this airport operator to become cash rich
under their watch," he said, adding BAA had a profit margin of more than
40 percent at its biggest airport, Heathrow. BAA was not available for
comment.
BAA's biggest customer British Airways <BAY.L> reacted more cautiously,
however.
Chief Executive Willie Walsh declined to comment on the specifics of the
deal, but told reporters he was optimistic it would increase the chances
of building a third runway at Heathrow to cope with escalating demand.
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?,"
Rigas Doganis, former head of Greece's Olympic Airways, told Reuters.
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.
Air France KLM chairman Jean-Cyril Spinetta said BAA's core
profitability was four times higher than that of most airlines.
The issue is also topical in France where airlines accuse the government
of fattening airports operator ADP for privatisation in 10 days' time by
allowing it to bump up fees.
<http://newsbox.msn.co.uk/article.aspx?as=adimarticle&f=uk_-_olgbbus&t=4188&id=2962066&d=20060606&do=http://newsbox.msn.co.uk&i=http://newsbox.msn.co.uk/mediaexportlive&ks=0&mc=5&ml=ma&lc=en&ae=windows-1252>
Post by David MR"Just like picking farm crops." There's money in that. It's just that employers have a loophole (illegal, but none the less a loophole) that allows them to hire cheap labor. Americans WILL take those jobs if they are paid a decent wage.
Airports can be managed by Americans if airport and other government officials weren't so short-sighted as to see only dollars and cents saved in the short term.
David R
-------------- Original message ----------------------
Post by Agarwalla, NirajSent: Tuesday, June 06, 2006 11:49 AM
<snip>>
Let's face it. Airports in the USA, can be managed by American
companies. There is no reason for them to be managed by foreign
companies.
There must be some reason, or it wouldn't happen. I suspect there's not
enough money in it for Americans. Just like picking farm crops.
Gerry