BAA future plans

BAA committed to developing its airports to support growing airline and
passenger demand

BAA, the world's leading airport company, has today published its annual 10
year traffic forecasts and current capital investment plans for Heathrow,
Gatwick and Stansted airports, its three price regulated London airports.
BAA
is forecasting average passenger traffic growth for these three airports of
3.0% per annum over this period, along with capital investment of
approximately
£9.5 billion (in 2006/07 prices), supporting passenger growth and customer
needs.

Mike Clasper, Chief Executive Officer, BAA said:

"This is an ambitious and compelling capital programme, designed to meet the
growing needs of airlines and passengers in the coming decade. It is the
product of careful dialogue with airlines undertaken in the constructive
engagement process set in train by the CAA as part of its current price
review.
Successful execution of this programme is in the interests of BAA, its
airline
customers and the UK's economic progress."

BAA's traffic forecasts and capital plans have been informed by consultation
with and feedback from airport users at Heathrow, Gatwick and Stansted.
Specifically, the formal constructive engagement process, in line with the
Civil Aviation Authority's (CAA) regulatory review process, has shaped our
plans and thinking. In addition, the ongoing dialogue we have with our
airline
customers and the passenger surveys we routinely undertake have also
contributed to our plans.

As part of the constructive engagement process, alternative traffic and
capital
expenditure scenarios have been explored at the request of airlines. The
forecasts in this announcement are BAA's `base view' of passenger traffic
growth and the associated requirements for capital investment. Discussion is
ongoing. It is envisaged that these forecasts will form the basis of BAA's
initial price controlled business plan submission to the CAA in June 2006,
as
part of the review to determine the regulatory structure and allowed
increases
in aeronautical charges for the period 2008/09 - 2012/13 (Quinquennium 5).

Passenger Traffic Forecasts

BAA is forecasting passenger traffic growth at its airports (7 UK and 2
international airports) of around 3.5% for 2006/07.

London Airports

BAA is forecasting the following passenger traffic growth at the three
London
airports for the next ten years:

Financial Heathrow % Gatwick % Stansted % Total London %
year pax (m) growth pax (m) growth pax (m) growth airports
growth
pax (m)

05/06 67.4 -0.3% 32.8 2.6% 22.2 5.0% 122.5
1.4%
actual

2006/07 69.6 3.2% 34.1 3.8% 23.0 3.4% 126.7
3.4%

2007/08 71.5 2.7% 35.3 3.5% 23.8 3.3% 130.5
3.0%

2008/09 73.6 3.0% 36.2 2.5% 25.2 6.1% 135.0
3.4%

2009/10 75.4 2.4% 36.9 1.9% 26.8 6.3% 139.1
3.0%

2010/11 77.3 2.5% 37.5 1.6% 29.0 8.2% 143.8
3.4%

2011/12 79.4 2.7% 38.2 1.9% 31.0 6.9% 148.6
3.3%

2012/13 81.5 2.6% 39.0 2.1% 32.2 3.9% 152.7
2.8%

2013/14 83.0 1.8% 39.7 1.8% 33.4 3.7% 156.1
2.2%

2014/15 84.0 1.2% 40.0 0.8% 34.4 3.0% 158.4
1.5%

2015/16 85.0 1.2% 40.0 0.0% 40.5 17.7% 165.5
4.5%


Passenger Traffic Forecast Assumptions:

Our assumptions for the development of traffic across the three London
airports
are as follows:

a. Passenger traffic demand in the London area is projected to grow by about
4%
per annum between 2006/07 and 2015/16. However, given the London airports'
existing capacity constraints and the planning challenges related to the
development of additional capacity, we are currently forecasting actual
traffic
growth at our airports of an average 3% per annum over the same period. The
compound effect of this 1% per annum unmet demand at our London airports
equates to, by our estimates, around 19 million `lost' passengers a year by
2015/16. This calculation takes account of capacity created by our current
capital investment plans.

b. UK GDP is assumed to grow on average by 2.2% per annum over the course of
the forecast period.

c. Real air fares are assumed to decline, on average, by about 1% per annum,
with the rate of decline varying between airports and markets. In addition
the
rate of fares decline in any given market is likely to vary from year to
year,
reflecting short term conditions at the time. An important area of judgement
is
the expected course of oil prices. OECD statistics demonstrate a substantial
increase in oil prices between 1998 (an average over the year of $13 per
barrel) to 2005 (an average of $55). Looking forward BAA has assumed that
oil
prices will be slightly lower (in today's prices) than the current high
levels
over the course of the next decade. With excess demand for air travel
through
the three London airports, any actual variance to this assumption would be
expected to have a minimal impact on actual passenger traffic.

d. Any new forms of commercial measures to take account of the environmental
impacts of aviation, or new taxation measures designed for the same purpose,
will have no material impact on passenger numbers at the three London
airports,
given the excess demand that we estimate will exist.

e. In addition, the Stansted forecast reflects BAA's assessment of the
impact
on customer demand of increases in airport charges during the period of Q5
and
Q6, relative to the level in Q4.

f. Major capacity development assumptions a -

* First full year of Terminal 5 operation in 2008/09 with Terminal 5 Phase
2
open in 2011/12.

* Renewal of Heathrow non-Terminal 5 infrastructure, including Heathrow
East.

* Gatwick develops to handle 40 million passengers per annum.

* Stansted develops to handle up to 35 million passengers per annum in the
period before the opening of the second runway.

* The second runway and phase 1 of the associated infrastructure at
Stansted
(Generation 2) is available from 2015/16. This reflects our views of the
most likely timing of completion of phase 1 of this development,
although
we are still targeting and working towards an earliest possible opening
date of late 2013.

g. Pending the results of the Government's evaluation of the environmental
impact of Heathrow expansion, the forecasts do not assume the introduction
of
either mixed mode or a third runway at Heathrow within the period.

h. The forecasts make full allowance for the developments described in the
airport master plans for both London City and Luton airports. The Luton
airport
master plan indicates the provision of significant additional capacity by
2012.

i. There will be no wars, terrorist incidents, or disease pandemics which
have
a material impact on commercial aviation.

j. There are no major switches in airline distribution between airports. In
particular, it is assumed that there is no relaxation of the Bermuda 2
bilateral agreement. However, it is possible that an EU / US Open Skies deal
may be agreed and implemented within the next few years.

k. There are no material impacts on traffic volumes as a result of airline
merger or consolidation.

Other Airports

At its other airports, BAA is currently forecasting the following passenger
traffic growth for 2006/07:

Airport Passenger (m) Passenger (m) % growth
05/06 06/07
Actual Forecast

Aberdeen 2.9 3.1 5.2%

Edinburgh 8.5 8.8 3.6%

Glasgow 8.8 8.9 0.9%

Naples 4.6 4.7 3.6%

Southampton 1.9 2.0 5.0%

Budapest 8.2 8.7 6.8%

Total 34.9 36.2 3.9%


Capital Investment Programme

BAA is planning to invest around £1.35 billion at its nine airports during
2006/07.

London Airports

BAA is currently planning to invest around £9.5 billion at its three London
airports over the next 10 years, as outlined below. The scale and timing of
the
investment programme is, of course, dependent on a satisfactory outcome of
the
forthcoming regulatory review.

£m Heathrow* Gatwick* Stansted* Total
(future spend in London
2006/07 prices) airports*

05/06 estimate 1,275 85 66 1,426

2006/07 1,052 105 112 1,269

2007/08 595 85 92 771

2008/09 729 96 109 933

2009/10 786 90 82 958

2010/11 695 69 89 853

2011/12 381 65 312 758

2012/13 225 102 420 747

2013/14 734 106 721 1,561

2014/15 567 70 372 1,008

2015/16 443 63 138 643

6,204 850 2,447** 9,502

* These estimates / forecasts have been rounded to the nearest £ million

** £1,839 million relates to SG2, phase 1 (including pre-spend planning and
blight and land costs and a general provision of £170 million for surface
access)

Supporting information:

Heathrow

The centrepiece of the current capital programme, Heathrow's Terminal 5
continues to make good progress on site. It is now over 75% through the
development and remains on target to achieve its net budget of £4.3 billion
(reflecting all future expenditure in 2006/07 prices). In addition, the
£0.25
billion Terminal 5 baggage system is now to be retained rather than sold on
completion.

In November 2005 BAA outlined its vision to continue the transformation of
Heathrow airport beyond the completion of Terminal 5. This vision includes a
proposal to close Terminal 2 and the Queens Building, the oldest parts of
the
airport, to enable the building of a single, state-of-the-art facility
capable
of handling up to 30 million passengers, replacing the capacity of Terminals
1
and 2. The size and location of the site would allow BAA to build without
unduly disrupting day to day operations, and allow easy connection to
existing
road and rail infrastructure.

The proposal, called Heathrow East, aims to create a new terminal to equal
or
surpass the quality of passenger experience and improved operating
environment
being created at Terminal 5. The improved terminal facilities should also be
more operationally efficient for both BAA and the airlines using it, as well
as
more energy efficient and easier to navigate as a passenger. The Heathrow
East
plans do not include any incremental increase in passenger capacity, rather
they outline an innovative way to improve Heathrow for users and make better
use of our very limited space. Cost estimates for this proposal are included
in
the current capital plan.

Continued investment elsewhere at Heathrow over the next 10 years will
support
three key strategic programmes that have been identified in consultation
with
airlines:

* Quality facilities. This programme comprises projects that seek to
create a
comparable quality of facilities for the full range of airlines at
Heathrow. It includes the delivery of terminal occupancy and airport
connectivity plans for the five terminal airport. It supports the
Memoranda
of Understanding with the two home base airlines, the three alliances
and
with the non-aligned carriers (to be co-located in T4), in order to
create
a platform for competitive equivalence. It also covers the creation of
infrastructure required to support the A380.

* The asset renewal programme comprises major and minor renewal projects
and,
in accord with the Clean, Working and Friendly focus within Heathrow, is
designed to ensure that the airport's business critical facilities are
continually renewed and refurbished. Security priorities and the
airport's
sustainability agenda are also included in this programme.

* The "growth within existing limits" programme includes projects focused
on
the longer-term development of the airport so as to maximise utilisation
of
infrastructure and achieve the best possible opportunity for long-term
growth under the present cap of 480,000 air traffic movements per annum.
It
also drives terminal, Central Terminal Area (CTA) and external airport
redevelopment, as well as longer-term commercial opportunities.

The combination of Terminal 5, Heathrow East and planned modifications and
renovations to Terminals 3 and 4 will result in a transformed Heathrow by
2012/13.

The investment programme does not include expenditure on additional runway
capacity at Heathrow.

Gatwick

At Gatwick, an investment programme of £850 million will deliver a range of
projects supporting four key strategic programmes to make maximum use of the
existing runway:-

* Airfield and runway capacity: The key elements of this programme are
changes to airfield infrastructure to facilitate the introduction of
larger
aircraft to Gatwick and to prepare for delivery of additional pier
service.
This will require changes to taxiways and aircraft stands as well as
changes within the terminal to facilitate this operation.

* Growth in capacity of North Terminal: The terminal capacity programme
focuses on North Terminal where opportunities for growth are assessed to
be
the greatest. North Terminal has the capacity to expand pier service as
required along with space to develop new infrastructure to accommodate
the
growth of passengers.

* Service quality and the provision of adequate facilities for existing
capacity in South Terminal: To improve the environment in and around the
South Terminal it is planned to invest in improvements in Pier 1 as well
as
the main check-in area. Targeted retail income growth supported by a
reduction in landside retailing and a corresponding increase in airside
retailing is already underway. Finally, the forecourt to South Terminal
will also be improved.

* Asset quality: A comprehensive and sustained programme of asset
replacement
focused on ensuring service quality and the safety and integrity of our
assets will be continued throughout the airport.

Stansted

At Stansted, current plans allow for around £600 million to be invested in
the
runway and terminal infrastructure to make maximum use of the existing
runway.
The focus of this plan is addressing the gap between the facilities that
Stansted has today versus those required in the future, as Stansted grows to
around 35 million passengers per annum off a single runway. The major
elements
of the strategy are the progressive expansion of the terminal and satellite
facilities, leading to the provision of Satellite 4 and the expansion of
facilities for arriving and departing passengers. These proposed expansion
plans sit alongside provision of surface access facilities needed to support
the airport's growth.

The remainder of the investment at Stansted is intended to support the
progression through planning and development of a second runway. Full
details
of these proposals are included in `Stansted Generation 2 : December 2005
Consultation' document.

In this document BAA published detailed options for a second runway at
Stansted, including the potential cost and impact associated with each
scheme.
We also indicated our preferred option and the reasons behind that
preference.
BAA is currently reviewing the responses it received to the consultation and
expects to announce in June 2006 its decision on the option that will be
taken
through the planning process. In the meantime, the expenditure forecasts
contained in this document are based on the development of BAA's preferred
option for a second runway at Stansted Airport and assume an opening date of
2015/16, although BAA will continue to seek to deliver the project at the
earliest possible date.

Other airports

At its other airports (Southampton, Glasgow, Edinburgh, Aberdeen, Budapest
and
Naples) BAA is currently forecasting investment of around £80 million in
2006/
07.

Capital investment: progress over the course of 2005/06

BAA Projects April 05 to March 06

HEATHROW

Terminal 3, arrivals extension

New multi-storey car park (west)

Terminal 3, Pier 5 vertical segregation

Terminal 3, Pier 6 vertical segregation

Terminal 1, International Departures Lounge

HEATHROW - Terminal 5

Opening of the M25 spur road

Dual taxi lane links to southern runway

Completion of control tower



GATWICK

North Terminal, Pier 6

South Terminal, Pier 3 segregation

South Terminal, arrivals extension

South Terminal, new air bridges

South Terminal, Pier 3 refurbishment



STANSTED

Coach station development

Runway refurbishment projects



EDINBURGH

Air traffic control tower

South East Pier

Terminal forecourt work

Airfield lighting upgrade



GLASGOW

International arrivals extension

Improved wayfinding and commercial space between main terminal and T2



ABERDEEN

Departures lounge extension

Airfield ground lighting control system



SOUTHAMPTON

International Departures Lounge extension - phase 1



NAPLES

Apron reconstruction



BUDAPEST

Southern runway rapid exit taxiway

GENERAL PROJECTS

Generic pier proto-type



Capital investment: progress over the course of 2005/06 and focus for
2006/07

BAA Projects April 06 to March 07

HEATHROW

Eastern Apron development

A380 southern taxiways

Integration of Terminal 5 into Heathrow operations

Terminal 3, forecourt redevelopment

Terminal 3, southern extension

HEATHROW - Terminal 5

Interior and systems fit-out

Continued testing and commissioning of T5's baggage system

Multi-storey car park completion



GATWICK

South Terminal Departure Lounge boundary movement

South Terminal office block redevelopment

Inter terminal transit system replacement

Multi-storey car park refurbishment

South Terminal Arrivals extension


STANSTED

Runway resurfacing and replacement of lighting infrastructure

Apron redevelopment

Arrivals extension


EDINBURGH

South East Pier - additional boarding gate capacity

Consolidated car rental facility


GLASGOW

Common user lounge facility for international and domestic passengers

Additional check-in capacity

Redevelopment of the former Abbotsinch Playing Fields, purchased by BAA in
2003



ABERDEEN

IT network upgrade

Two additional aircraft stands (15 and 16)


SOUTHAMPTON

Check-in and baggage extension

Heating and ventilation upgrade


NAPLES

Ground floor extension

Check-in extension


BUDAPEST

Development of Pier C

Terminal 2, Departure lounge expansion

Terminal 2, multi-storey car park development

For further information on BAA plc see www.baa.com


Media enquiries: Duncan Bonfield BAA plc
Tel: +44 (0)20 7932 6831

City enquiries: Sarah Hunter, BAA plc
Tel: +44 (0)20 7932 6692

The forecast annual traffic figures and forecast annual capital investment
plans included in this statement are forward-looking andinvolve risks and
uncertainties that could cause actual results to differ materially from
those
forecast. The forecasts arebased upon current data and historic experience
but
these are not necessarily indicative of future outcomes. Traffic figures,
including passenger numbers and capital investment plansare not necessarily
an
indication of the financial performance of the Group and should not be
considered in isolation; many other factors and events can impact the
Group's
operations and results.

In message ews.net,
at 09:39:12 on Wed, 3 May 2006, Miss L. Toe
remarked:
An important area of judgement is the expected course of oil prices.
OECD statistics demonstrate a substantial increase in oil prices
between 1998 (an average over the year of $13 per barrel) to 2005 (an
average of $55). Looking forward BAA has assumed that oil prices will
be slightly lower (in today's prices) than the current high levels over
the course of the next decade.

So BAA will sell me a barrel of oil for $55 (average) over the next ten
years? Why do few other people seem to agree with this prediction?
--
Roland Perry

"Roland Perry" wrote in message
...
In message ews.net,
at 09:39:12 on Wed, 3 May 2006, Miss L. Toe
remarked:
An important area of judgement is the expected course of oil prices.
OECD statistics demonstrate a substantial increase in oil prices
between 1998 (an average over the year of $13 per barrel) to 2005 (an
average of $55). Looking forward BAA has assumed that oil prices will
be slightly lower (in today's prices) than the current high levels over
the course of the next decade.

So BAA will sell me a barrel of oil for $55 (average) over the next ten
years? Why do few other people seem to agree with this prediction?

They do say "slightly lower (in today's prices) than the current high
levels" so they think todays (70USD ish) prices are a peak.

IMO Todays prices do seem to have started people looking seriously at
alternatives. So over the loooooooooong term BAA may be right.

In message ews.net,
at 13:32:24 on Wed, 3 May 2006, Miss L. Toe
remarked:
An important area of judgement is the expected course of oil prices.
OECD statistics demonstrate a substantial increase in oil prices
between 1998 (an average over the year of $13 per barrel) to 2005 (an
average of $55). Looking forward BAA has assumed that oil prices will
be slightly lower (in today's prices) than the current high levels over
the course of the next decade.

So BAA will sell me a barrel of oil for $55 (average) over the next ten
years? Why do few other people seem to agree with this prediction?

They do say "slightly lower (in today's prices) than the current high
levels" so they think todays (70USD ish) prices are a peak.

Although the way I read it $55 is the "current high level" to which they
were referring at the time of writing that particular section.
--
Roland Perry