British Airports Operator, BAA has posted a 15 per cent rise in quarterly profit, squeezing more growth from its busy London Heathrow hub.
The business owned by Spanish group, Ferrovial reported earnings of £231 million (USD $373 million) in three months with revenue up 11.5 per cent, boosted by higher tariffs and retail income.
Heathrow, Europe’s busiest airport handled 15.7 million passengers in the quarter, up 4.4 per cent in the same period last year, but BAA’s chief financial officer, Jose Leo warned that growth at the hub, which is operating at almost full capacity was not finite.
“For the next five years we can deliver modest growth at Heathrow but after that it will be tough to grow”, Leo said in an interview.
BAA, prevented by the government from building a third runway at Heathrow because of environmental concerns has seen traffic to emerging markets rise in recent years and believes it is now falling behind rival European airports in the battle for these lucrative routes because of the constraints on growth.
“We do not have ability to add new routes to emerging markets such as China to drive growth. Heathrow cannot generate the levels of growth some of our European peers in places such as Armsterdam and Frankfurt will deliver,” said Leo.
Rival London airport, Gatwick aims to take advantage of Heathrow’s capacity constraints by adding more long haul routes to emerging markets that will boost traffic in the next decade.