When it comes to considering what constitutes a ‘national asset’, then a country’s airport infrastructure must be among the top contenders. Airports facilitate business activity, stimulate inward investment, and underpin the international tourist industry.
As with all national assets (read: the royal family, the Post Office and the BBC), airports – and air travel in general – evoke powerful public opinion. City bankers might like being able to hop between New York and London, but local residents express less enthusiasm when faced with congested roads, poor air quality, and noisy flight paths.
As the largest airport operator in the UK, BAA (formerly the British Airports Authority) finds itself in an interesting position when it comes to corporate citizenship. As a driver of economic growth, the positive impact of its portfolio of seven airports (Heathrow, Gatwick, Stansted, Southampton, Glasgow, Aberdeen and Edinburgh) is undeniable. With 65 million passengers every year, Heathrow alone generates an estimated 200,000 jobs around the country. Its net worth to the UK economy is put at around £5 billion a year.
Drill down a little, however, and a more realistic picture begins to emerge of the company’s direct social impacts. As an airport owner and manager, BAA’s function is essentially that of developer-landlord. The former government-run company therefore sits at the top of a complex chain of retail stores, airline companies, construction firms and a myriad of other service providers.
While one could argue that the macro benefits delivered by the UK’s airport infrastructure would never happen were it not for BAA, the company still remains a small – albeit influential – cog in a much larger wheel. The fact that the airport operator only directly employs 4,200 of the 70,000 people working on the Heathrow airport site makes the point clearly.
Community role?
So what of BAA’s role in its local communities? From the perspective of a hard-nosed economist, BAA might legitimately pull out the national asset card and claim that local community investment – even at its most generous – could only ever amount to a fraction of the company’s net social and economic impact.
True enough, but there is more to doing business than an economist’s balance sheet. It is a lesson BAA has learned the hard way during a long draw-out battle over its plans to expand Heathrow. By the time Terminal 5 comes into operation in 2008, it will be 23 years since Heathrow’s expansion was initially tabled. Recent extension plans for Gatwick and Stansted, meanwhile, went through much more quickly, without recourse to an expensive and drawn-out public inquiry process. So what was the difference?
“The Heathrow expansion process taught us that we must adopt an integrated approach to all aspects of our growth strategy if we’re going to win permission to expand”, says Liz Tooke, head of group public affairs for BAA.
In the case of Gatwick and Stansted, this meant initiating a structured period of stakeholder dialogue, focusing particularly on local authorities and interest groups. For Gatwick, which is set to welcome 40 million passengers by 2012, this resulted in the company signing a legally binding contract with the local community. The agreement obligates the airport operator to deliver on 150 separate commitments, ranging from provisions for local employment to measures on traffic congestion.
These commitments may appear negligible when set against the expected benefits to the national and regional economy of a 33% increase in Gatwick’s capacity. But Liz points out that if BAA had failed to factor in community concerns, then the economist-led debate about ‘who gets what’ would be immaterial. Gatwick’s £840 million expansion simply wouldn’t have got off the ground.
The story is the same for Stansted, where an integrated £30 million package of community benefits and environmental safeguards accompanied the expansion agreement.
Policy heaven
‘Integration’ is the word that most Liz mentions repeatedly as she lays out the numerous committees, policy statements and sub-groups that make up BAA’s governance framework.
Her description starts with the Sustainable Development (SD) policy, which gives the over-riding direction for BAA’s management of its social, environmental and economic impacts. The policy reflects BAA’s new learning about the importance of stakeholder engagement; what it describes as a “dynamic and continuous process of change and negotiation”. It is structured around four guiding principles:
- social progress for all
- high and stable economic growth and employment
- effective protection of the environment
- prudent use of natural resources
What follows, as a quick survey of the new sustainability section on BAA’s corporate website will highlight, is a string of further policy commitments and delivery processes building on these four principal themes. With respect to the local community, for example, (which falls primarily under the ‘social progress’ and ‘economic growth and employment’ banners of the SD policy), BAA has adopted an additional five-fold strategy:
- knowing stakeholders and their issues
- creatively managing the impacts of aviation
- enabling communities to benefit from and enjoy our airports
- working with others in the private and public sectors for mutual benefit
- employee volunteering
The ‘community piece’ falls to Liz, who leads BAA’s Community Affairs function. She shares responsibility for managing the group’s wider corporate social responsibility activities with colleagues in Planning and Environment. BAA also has a Corporate Responsibility board, which reports into the executive committee, as well as separate sustainability boards for each airport. Could there perhaps be a danger of ‘integration’ degenerating into ‘proliferation’?
Delivering: Heathrow
Not so, Liz insists. BAA’s latest annual report and accounts – which include a full account of the company’s achievements against its sustainable development targets – back up her confidence.
On community issues, for example, BAA engaged in 325 community projects in the last financial year. Its social spend for the period ran to £5.5 million (1.02% of pre-tax profits). A principal vehicle for these programmes is the 21st Century Communities Trust, BAA’s own charity. Each year, the airport operator invests 0.15% of pre-tax profits to the trust, which last year helped fund programmes such as BAA’s Give-As-You-Earn scheme and its 100-years-of-flight celebrations http://([url]www.baa.com/21stcenturytrust)[/url].
Liz also points to a range of activities designed to mitigate the issues that local residents have identified as the most annoying – namely, aircraft noise, emissions and heavy traffic. Car-share schemes, improved rail links such as the Heathrow Express and a new emissions incentive programme for the airlines give a taste of the responses that BAA is adopting. A good example of a community-led solution is the annual BAA Heathrow Environment Awards, which aim to encourage local groups to deliver projects that improve the local environment (http://www.baa.com/community).
Heathrow also provides an excellent case study for how BAA is looking to ensure that the local community enjoys some of the benefits of having the world’s busiest airport on its doorstep.
Despite the fact that BAA can only provide relatively few direct employment opportunities, job-creation and local business development remain the most evident ways that it can utilise its ‘landlord’ function for the good of the airport’s immediate neighbours. Given the steady decline in West London’s traditional industries of manufacturing and defence over the last 30 years, the employment potential of Heathrow’s Terminal 5 takes on even more importance.
In response, BAA Heathrow has developed an impressive range of education and training programmes. The airport boasts its very own Economic Development and Regeneration Strategy: 2003-2008, replete with objectives, targets, timescales and delivery mechanisms. BAA has earmarked £1.5 million over a ten-year period to fund its access-to-employment projects.
Ever conscious that BAA remains a relatively small player (British Airways, for example, employs eight times as many people at Heathrow as the airport operator), Liz stresses the vital role that partnership plays in implementing her company’s economic development strategy. Enter another repeated feature of BAA’s policy materials: long lists of partner organisations. Through a mixture of cajoling and convening, Liz and her colleagues enjoy a host of alliances with contractors, business partners, industry bodies, charities, borough councils, schools, Business Links, to name but a few.
The best example of such cross-collaboration is the Employment Forum at Heathrow. “The Forum is set up to help identify the up-and-coming employment needs of the airport and try to turn these into a labour supply from local area”, Liz explains.
The first substantive response from the Forum was to set up four training centres in 2003 for 14 to 16 year-olds, with a fifth opening in summer 2004. The initiative’s objective is to deliver vocational training that enables young people from the local area to enter the construction industry.
The Forum’s flagship project is the new Heathrow Construction Training Centre. The project builds on the basic training centres by providing the next step into the construction industry. The centre, which opened in September 2003 and is operated by Carillion Construction Training, accepted 80 apprentices in summer 2004. Participants go through a 14-week intensive training programme, followed by hands-on work experience on local development sites or Heathrow. The scheme currently concentrates on bricklaying and carpentry skills, although BAA is in discussions with the engineering companies at Heathrow about offering additional apprenticeships in steel erection later this year.
Another important strand to BAA’s economic development strategy is the promotion of local enterprise. For the last seven years, BAA Heathrow has facilitated an annual two-day event that brings small and medium-sized from the surrounding area into contact with the airport’s large purchasing companies. The initiative, which other BAA airports have since copied or are in the process of doing so, has generated an estimated £80 million in local trade since its inception (see factfile, page 31).
Ready for take-off?
For all its comprehensive management strategies and community development programmes, BAA is still faces with vocal opposition from residents’ groups at all its airports. Nor are the company’s growth plans guaranteed.
Mike Clasper, chief executive of BAA, is frank about the challenges. “We have to maximise, in a responsible way, the economic and social gains of air transport, and minimise the environmental impacts”, he says in response to the suggestion that a proposed third runway at Heathrow “sounds like an environmental disaster”.
Liz and her team are unlikely to be short on work over the years to come as BAA tries to demonstrate to its local stakeholders that the positives of air travel outweigh the negatives. The company’s own community and environment programmes will go a small way towards this. But it will take all the big players in the air travel industry begin to work together if local groups are going to be persuaded.
Employment and enterprise development mark the two most obvious areas on which air transport companies have an interest in working together. Conveniently, they also represent two of the most direct ways the local community can benefit from having an airport for a neighbour.
BAA finds itself in a unique position to facilitate the necessary cross-sector partnerships that will deliver on these development objectives. Examples such as the Heathrow Construction Training Centre and Meet the Buyers demonstrate that BAA has not been slow to use its muscle as a convenor and broker.
The positive economic impact of BAA’s airports at a regional and national level is probably sufficient to ensure that the company’s planned trajectory for expansion stays on course. Whether that journey will be a comfortable or bumpy ride, meanwhile, depends in no small part in its ability to deliver demonstrable social and economic benefits at a local level.
Corporate Citizenship Briefing, issue no: 76 – July, 2004
Liz Tooke
Head of BAA group public affairs
Liz joined BAA in 1991 and has held a variety of posts in the planning, retail and public affairs functions. Her current job includes managing BAA’s community programme and leading the company’s wider CSR activities. In her previous role as head of issues and campaigns, she won an International Association of Business Communicators’ Award for a staff campaign promoting sustainability.
Liz has a Masters degree in transport planning and management and is a member of the Chartered Institute of Logistics and Transport. She is a member of the Corporate Responsibility Group.