Thursday, 15 January 2009
BAA & Airlines get bailout; Greens get knotted
I have mixed views on the Government's approval of this. Having grown up near Heathrow I know the pollution and noise is really very bad; at the same time we need to increase capacity as we all travel abroad more in the future. As an Island nation, getting away from it all is an issue for us...
The real difficulty is in the long term economic analysis. Looking 10 years hence is nearly impossible. You can get some things roughly right like population growth. But from today could you estimate GDP growth for the UK for 2010-2020? Could you extrapolate airline growth after the age of Ryanair and Easyjet; how likely is that to continue?
Most of all is the price of oil. Last year when oil went over $100 a barrel lots and lots of airlines went bust. Remember XL?
So what will the price of oil be in ten years? Blimey, the futures markets are struggling at the moment to guess a few months.
Hence this decision is an entirely political one at heart. Business has trumped Green issues here. BAA and the airlines get their futures more secure and lots of construction jobs are assured for the best part of a decade. The Unions will be pleased - I will be interested to see their spin on this later today.
Politically too I think this is a nice play for the Tories who can say we would not have done it, when they probably would have done if they were in Government.
Hopefully my BA shares will rise a bit today; took a pasting today along with everything else.