BAA celebrates go-ahead for Terminal Five as battle hots up with other major hubs to grab lion's share of market

Last week's green light for London Heathrow Airport's Terminal Five (T5) comes as Continental European hubs, prodded by the medium-term demands of global alliances, pursue their own expansion plans.

The UK Government granted approval for development of the £2.5 billion ($3.54 billion) terminal on disused land between the airport's parallel runways after a lengthy evaluation process, which included a four-year public inquiry.

The delay has cost Heathrow and its biggest user, British Airways, dear as their principal European rivals have rapidly expanded.

Air France's Paris Charles de Gaulle (CDG), number three in European traffic terms (behind Heathow's number one) with 45 million passengers last year, saw traffic grow 12% in 2000. Next year, it will modify its four-runway system to allow both its southern and northern runways to work in concert. When a new terminal opens in 2004, the airport's capacity will grow by 10 million passengers. The potential is enormous, with Germany's Commerzbank predicting the airport could expand to host as many as 100 million passengers. The French Government has also laid plans for a third Paris airport, 125km (78 miles) north of the city.

Lufthansa's Frankfurt Main, Europe's second largest hub with 50 million passengers last year, says there is room for growth until 2005. A fourth runway, pending approval in a public consultation process ending in 2004, is due to be operational in 2006. It will raise air transport movements (ATMs) from 78 to 120 per hour, potentially increasing passenger numbers to as many as 80 million by 2010.

There is even hope for KLM's Amsterdam Schiphol hub, which has long been suffering from environmental constraints. It will be commissioning a fifth runway next November that will allow aircraft to avoid flying over urban areas, a factor that has constrained the use of existing runways. This will boost ATMs from 420,000 to 550,000-600,000. The airport, helped by additions to the capacity of its terminal, will be able to accommodate passenger demand until 2010, when it is expected to hit around 55-60 million compared to last year's 39.6 million.

For major airlines in mainland Europe the expansions will help them fulfil promises of seamless global networks as they increase connections. Already, 60% of the traffic going through the Frankfurt hub is transferring as Lufthansa - leading the alliance game for now - processes passengers from its Star Alliance partners to put onto its own network and vice versa. Paris CDG, where only just over a third of passengers connect, is also likely to see a growth in transfers as its SkyTeam alliance expands.

For now British Airways, years away from new capacity at its hub, continues to go in the opposite direction as it struggles with its own global alliance. Former BA chief executive Robert Ayling had the long wait for T5 in mind when he initiated a plan four years ago to reduce capacity and aircraft size in search of increased yields, drastically reducing low-end connecting traffic and increasing the focus on origin and destination traffic. A strategy based on low volumes of premium passengers travelling from point-to-point matched the reality, one which will remain unchanged at least until the new terminal opens in 2007/8.

BA plans to raise the proportion of point-to-point traffic it carries, mostly to medium- and long-haul destinations, from 60% to 70%.

Many would agree that this strategy was astute. Yet by the time T5 comes on stream, it is possible it will change. "BA will only revisit the idea of being a hubbing airline - and the ultra large Airbus A380 - when T5 is up and running," says Andrew Light, analyst at Schroder Salomon Smith Barney in London.

Source: Flight International