Corporate Responsibility Report 2006/07referentiel.nouvelobs.com/file/725/342725.pdfaround our...

Corporate Responsibility Report 2006/07www.baa.com/corporateresponsibility

We report on each issue in the same way:• The issue – what the subject is about

and why it matters• Our approach – how BAA is

addressing the issue, including objectives, policy and management systems where appropriate

• Our performance – an overview of our performance over the last year including relevant data

• Our plans – specific targets and more general plans for the future.

ScopeThe information in this report relates to the financial year 2006/07 (ending 31 March) unless otherwise stated. It covers our UK operations including our 50:50 property partnership with Morley Fund Management. It does not cover our international operations.

We include a range of performance data in this report. We aim to report meaningful indicators to allow readers to assess our progress. Some of the data is obtained from third parties (for example the Department for Transport (DfT)) and some is from internal management sources. We make clear in each case where the data is sourced from.

Reporting standardsWe use the Global Reporting Initiative (GRI) to guide our reporting. The substantial GRI update – Generation 3 (G3), was published in autumn 2006. We plan to integrate the revisions into our report over the recommended phase-in period of two reporting cycles.

Assurance (see also page 60)Our assurance programme is designed to assure senior managers and external

stakeholders that we are addressing material issues, delivering against our policies and report accurate and comprehensive information on our performance. It includes regular internal audits and ISO 14001 certification for Stansted Airport and Heathrow Express and independent assurance of selected information within our corporate and airport corporate responsibility reports.

This is the fourth year that Environmental Resources Management Limited (ERM) has been our external assurance provider. This year, ERM provided assurance over selected information in this report. This included assuring whether, on the basis of the agreed scope of work, the following areas have been appropriately reported: • Our corporate level approach to

identifying our material issues and the outcome of these processes

• The environmental KPIs for air quality, climate change, energy, noise, surface access and waste

• Progress against selected airport level environmental targets.

Further informationWe aim to provide current and relevant information for all our stakeholders and recognise that a range of communications is needed. In addition to this report we publish individual airport reports with a local focus. These are all available on our website www.baa.com/corporateresponsibility

Future reportingFrom 2008, we will align our reporting period with Ferrovial, our parent company. This means our reports (both at group and airport level) will cover the 12 months from January to December.

About BAA 1

Q&A with Stephen Nelson, BAA’s CEO 2

Stakeholder engagement 5

Material issues 9

Climate change 10

Local community impacts 16

Airport expansion 16

Community investment 18

Noise 20

Air quality 24

Surface transport 27

Delivering for passengers 30

Safety and security 30

Passenger experience 34

Our people 36

Economic benefits 40

National economic benefits 40

Regional and local economic benefits 42

Other environmental impacts 44

Biodiversity 44

Environmentally sensitive materials 46

Waste 47

Water and land quality 49

Water consumption 50

Health and safety 52

Managing corporate responsibility 56

Performance summary 58

Assurance statement 60

Case study: Pier 6, Gatwick (front cover image) Gatwick’s Pier 6, which opened in May 2005, is linked by the world’s largest air passenger bridge to span a live taxiway. Designed and built with environmental impacts a key consideration, the pier is used by some 3.5 million passengers a year and offers fantastic views of the airfield. By enabling passengers to reach their plane on foot, rather than coach, over 50,000 coach journeys a year have been saved. As well as improving customer service levels for arriving and departing passengers, the building has strong energy-efficiency credentials, with a high level of natural daylight, energy efficient heating, lighting and air-conditioning systems, and its travelators operate at reduced speed during quieter periods. For airlines, Pier 6 reduces the need to tow aircraft and makes it easier to service and refuel aircraft.

This report describes the policies which guide us and how our Board and Executive Committee implement them in our business. It details our performance: what we said we would do over the last 12 months to 31 March 2007, what we achieved, and what we plan to do.

About this report

BAA Corporate Responsibility Report 2006/07 | 1

About BAA

About BAA

Nearly 20 years ago, BAA became the first major airport operator to be privatised. Since then, we have been committed to strong financial performance, delivering a high standard of public service, and managing the environmental impacts of our airports.

In 2006/07, over 148 million passengers passed through our seven UK airports – Heathrow, Gatwick, Stansted, Southampton, Glasgow, Edinburgh and Aberdeen. Global aviation continues to grow, which is why the UK Government published an Aviation White Paper in 2003, setting out its plans to increase UK airport infrastructure in the coming decades (see ‘Airport expansion’ page 16). All our UK airports have since published master plans detailing expansion to 2030.

We believe expansion in aviation can be compatible with action on climate change and concern for communities and that it is possible to have responsible growth which balances the social and economic benefits with the social and environmental costs. This report describes how we aim to maximise our positive impacts and minimise our negative ones.

In June 2006, BAA was bought by a consortium led by Spanish company

Ferrovial, one of the world’s leading construction groups. The company is involved in four lines of business: aviation, construction, transport infrastructure and services. It employs around 100,000 people and has activities in the UK, Spain and ten other European countries. Ferrovial came top in its sector in the Dow Jones Sustainability Index and is also included in the FTSE4Good Index for socially responsible companies.

The efficient running of BAA’s operations has been maintained with continuity in our core policies and management systems. The only departure from existing strategies has been the decision that we will be concentrating on the UK market.

For further information on BAA, visit our website www.baa.com

Our businesses

* Sold in June 2007.

UK airports Rail Retail Property International airports

We own and operate seven UK airports: Heathrow, Gatwick, Stansted, Southampton, Glasgow, Edinburgh, Aberdeen.

We own and operate two public rail services: • Heathrow Express services

run to all four terminals at Heathrow Airport

• Heathrow Connect services run to Terminals 1, 2 and 3 at Heathrow Airport.

World Duty Free is BAA’s wholly owned tax and duty-free business comprising 65 stores.

We also lease premises to around 600 retail outlets and 160 restaurants.

BAA Lynton is our commercial property arm that acquires, develops and invests in real estate on and around our airports.

It has £910 million of property interests and its main role is managing the Airport Property Partnership, a 50/50 joint venture with Morley Fund Management.

We manage the following airports: Hungary (Budapest Airport*), Italy (Naples), Australia (Melbourne International, Perth International Airport, Launceston Airport Tasmania, Northern Territories Airports), USA (Indianapolis International Airport).

We manage retail operations at the following airports: USA (Baltimore Washington International Airport, Boston Logan Airport, Pittsburgh International Airport).

2 | BAA Corporate Responsibility Report 2006/07

Q&A with Stephen Nelson, BAA’s CEO


This has been a significant year for BAA. The £11.6 billion acquisition of the company by a Ferrovial-led consortium in June 2006 was followed by major disruption at our UK airports after August 2006’s alleged terror plot. In March 2007, the UK’s competition authorities started a review of the UK airports market. And the climate change agenda has moved centre stage. Here’s what Stephen Nelson had to say about the year gone by and the challenges ahead.

What does ‘corporate responsibility’ mean to you?

It’s about managing our business in a way that enhances the positive and minimises the negative impacts of our activities. It means running airports which are safe and secure, treating our employees fairly and with respect, and minimising our environmental impacts.

For an airport operator, that’s a challenging agenda. We find ourselves caught between three of the most powerful forces currently shaping our world; globalisation, which propels growth in demand for air travel; climate change, which raise acute concerns about that growth; and the spread of terrorism, which sees aviation as a choice target.

Our long-term success depends upon the skill with which we read and manage these trends. We believe expansion in aviation can be compatible with action on climate change and concern for communities, as well as to have sustainable growth which balances the social and economic benefits with the social and environmental costs. That’s why BAA continues to place such a heavy emphasis upon managing a close dialogue with all its stakeholders. Under its new ownership, and under my leadership, BAA will continue to play its part.

At the same time, I will also ensure that we don’t lose sight of the essentials – delivering an experience that airlines and passengers have a right to demand and one that allows us to deliver a full commercial return to our shareholders.

You mention your new shareholders. What does the sale of BAA to the Ferrovial consortium mean for your approach?

Our new owners have a strong track record on corporate responsibility. That track record has been recognised in the prestigious Dow Jones Sustainability Index, where the company is top of its sector. So Ferrovial clearly recognises the importance of this agenda to running a successful business, and since the acquisition they have reaffirmed their commitment to our approach. In March, for example, I discussed our environmental strategy with our Board and agreed a series of 2020 goals for some of the key issues that we face, which you can read more about in this report.

You’re focusing on making BAA more efficient – won’t that force you to cut corners on corporate responsibility?

BAA will need to become more efficient and more effective: that will mean finding innovative ways to improve service, using fewer resources. But I don’t accept there’s a trade off between achieving strong business performance and being responsible. On the contrary, I think they go hand-in-hand. Our shareholders are clear that they expect us achieve both and to deal with the issues that will help us secure our future licence to grow.

Once again we’ve been recognised externally for our efforts through an outstanding result in this year’s Business in the Community’s Corporate Responsibility Index. We scored 99% and were ranked in the top-scoring ‘platinum’ category.

Many commentators are saying that 2006 is the year that climate change really went mainstream… what’s your views?

I have no doubt that the political and public response to climate change will reshape the context in which our industry works, reshape the fiscal and commercial framework for our business, and alter the way our customers think about flying and their expectations of the aviation industry.

I’ve read the Stern Review, and the key point I took from it is that the cost of action is much less than the cost of inaction. On climate change, we are past the point of no return. There will be action. It’s simply a question of whether or not it will be timely action. BAA took the view several years ago that we need to play an active part in developing solutions, which is why we’ve been so proactive in supporting aviation’s inclusion in the EU carbon trading scheme. I was very pleased


at the end of last year to see the European Commission publishing draft legislation to achieve that – a real milestone.

The big question for the aviation industry as a whole is emissions from flights. But there’s still a lot that we can do as airport operators to reduce our carbon footprint. I’m proud of our work in this area over the last year and I’m pleased to report that one of the environment goals that the Board agreed was to reduce our CO2 emissions from energy use by 30% by 2020. Given the growth in passenger numbers over that period, that’s a challenging goal for us, but it’s the right thing to do.

But some say that aviation growth just can’t be sustainable given concerns about climate change?

The economic case for investment in aviation infrastructure remains powerful. Aviation is a vital industry in its own right, and it is also a catalyst for a modern, open, trading economy. Good aviation links to the rest of the world attract businesses to the UK. Without a dynamic aviation industry, the UK’s track record on inward investment record would not look nearly so good.

But that doesn’t mean that growth should be met at any cost. We’re clear that aviation should pay its external costs. We think the best way to do that is through a carbon trading system, which will deliver the environmental outcome that we all want – lower overall emissions – in the most economically efficient way. I don’t believe that emissions trading will stop the growth of aviation. People value mobility. They want the benefits of being able to travel on holiday, on business, to see friends and family. But they also want to know that they’re travelling in a responsible way. So I believe that people will be prepared to pay to cover their

environmental costs. In that way, carbon trading will allow aviation to continue to grow and to meet its emissions obligations – by funding reductions in other sectors.

So where does that leave you on the 2003 Aviation White Paper?

I think the White Paper was a well judged document when Alastair Darling published it in 2003 and it remains so today. The Government published a ‘Progress Report’ on the White Paper at the end of 2006 which reaffirmed the overall approach. It’s a sensible and balanced framework within which planners can respond to a vital set of national transport infrastructure issues. It makes clear that there are environmental limits, which must be respected, and it sets out the case for emissions trading as the most effective route to deal with aviation’s climate change impacts.

We are committed to meeting the challenge laid down for us in the White Paper so long as everyone else plays their part and the regulatory settlement provides the right incentives.

Climate change isn’t the only concern for your stakeholders. There’s a consultation planned on mixed-mode operations at Heathrow, which is a major issue for those concerned about noise.

Although the amount of noise produced by aircraft has fallen considerably over the last 20 years, aircraft noise continues to be a serious concern for people living close to our airports. The Government reflected this by saying in its White Paper that any new development at Heathrow must not lead to more noise overall than the airport produced in 2002. Heathrow currently operates ‘runway alternation’. This refers to our voluntary systems of alternating the landings between the airport’s two runways. ‘Mixed mode’ would mean using both runways for landings and take-offs.

Although there would be no more noise overall as a result of mixed mode or a third runway at Heathrow, the developments would mean some communities would have more noise than today and some would have less due to this change in runway use.



The most important thing that we can do as an airport operator is continue to work with the industry to develop planes that produce less noise, and incentivise airlines to replace older aircraft with modern quieter planes. The noisiest planes landing at Heathrow already pay three times the normal landing charge, while the quietest planes pay less. We also provide noise insulation and compensation for people who experience high levels of noise and communicate clearly with our communities on all noise-related issues.

Tell us about security and passenger service, which have both been in the news a lot this year

We faced an unprecedented security challenge last August, when the Government raised the official security level from ‘severe’ to ‘critical’ and the security requirements were transformed overnight. After the immediate crisis, we were able to reduce bottlenecks but queuing for security still remains below our target.

Our highest priority remains keeping passengers, staff and aircraft safe from danger, including terrorist attacks. But we have to do that at the same time as delivering the level of service that passengers have the right to expect. We are investing in new equipment and people, including £40 million on 22 new security lanes at our airports, and employing 1,400 new security staff and will continue to invest to the point that queues are reduced to an acceptable level. My aim is to create a higher-quality passenger experience: high security standards, fewer queues, cleaner airports, plentiful trolleys, clear signs and friendly staff.

Our major airports in the south-east are full to capacity and that has made progress on these objectives much slower than I would like, but we are making progress and are determined to deliver for passengers within the constraints that we face.

In the medium term, we are investing billions of pounds in our airports that will result in an end to congestion. A new terminal at Heathrow (Terminal 5), alongside major improvements to the existing facilities, will mean that by 2012 we will have transformed Europe’s busiest airport and created a great gateway for the London Olympics.

There’s clearly been a lot of change over the last year – what are your front-line staff saying about things?

There have been significant demands and pressures on the business, and to respond to those we do need to change. Over the last year, we’ve continued to work through the ‘Delivering Excellence’ change programme that we announced in 2005. This has involved taking out some layers of management in our big airports, bringing decision-making closer to the customer and improving service.

We will need to continue to ensure we have the right people in the right place at the right time to deliver better passenger service and become more commercial. Undoubtedly, going through any kind of change can be unsettling. But I think our people can see that change is going on all around them – not least among our airlines. We can’t be immune from that.

What does the year ahead hold for BAA?

We will reach a major milestone for the company on 30 March 2008 with the opening of Terminal 5. By the end of 2006, Terminal 5 was 90% complete and it continues to set new standards for a major UK construction project, remaining on time and on budget. We’ve focused on minimising the environmental impacts associated with the project, and will publish a separate report on Terminal 5 and the environment which will set out that approach in detail.

We will continue to invest in our airports, mindful that we are a service business which must put passengers first and deliver for airlines. And we shall strive to do all of this in a way which takes a far-sighted and realistic view of the environmental issues faced by our industry.


Stakeholder engagement


Our stakeholders are the people and organisations affected by, or who can affect, our business. The nature of our activities means that this is a wide range of people. These include employees, investors, customers, suppliers, local communities, pressure groups, local, regional and national government and regulators. Investor relations are conducted by Ferrovial.

Figure 1 overleaf illustrates the diversity of our stakeholders. It is important for us to have good relationships with these groups since they can influence the way our business develops. We engage openly to understand their views and to communicate our own.

Feedback from our stakeholders is discussed regularly by our Corporate Responsibility Board and helps us to assess which issues are most material and to shape our priorities (see ‘Material issues’ page 9).

How we engage

We engage with our stakeholders throughout the year, formally through industry initiatives and surveys and informally as part of day-to-day business. Different approaches are appropriate with different groups and these are described in Figure 1.

Local authorities

Our relationships with local authorities are important to us. They help us to understand the concerns of local people and businesses. By sharing our objectives with local authorities at an early stage we give them the chance to influence development plans before we apply for planning permission. Local authorities also help us to identify opportunities for people living around our airports.

Local communities

Having an airport as a neighbour has both positive and negative consequences for local communities. We want our airports to have the trust and support of the surrounding communities. We engage with communities to understand concerns and to guide our response. Sometimes the scale of airport development requires a formal public inquiry.

We engage through independently chaired ‘consultative committees’ with a wide membership including the local community, local government, local authorities, the

aviation industry, and environmental groups. The committees meet at least quarterly with airport directors.

We also conduct regular polls to identify issues for local people and to find out their views on how effective our programmes are at reducing the negative impacts of our operations. Where we have significant community issues, we set ourselves targets to improve community relations.

Our community relations programmes are guided by feedback from local people about how best to improve their quality of life. See page 16 for more information about our commitment to the communities around our airports.

We routinely keep local communities informed of our plans and give them the opportunity to express their views. At Heathrow Terminal 5, for example, we have set up a hotline for residents to give us feedback, and we publish a newsletter to keep local people up to date with construction progress. For more information see ‘Airport expansion’ on page 16.

We undertake extensive consultation when we are considering airport developments (see Stansted case study on page 8).

Customers

Our customers include passengers travelling through our airports, and the organisations operating at our airports such airlines, retailers, suppliers and other tenants.

Third parties at airportsincluding retailers

Localcommunities

Passengers

Suppliers

Airline customers

Regulators

Aircraft manufacturers Employees

Trade associations

Media

Shareholders

Academics Pressure groupsTrade unions

Localauthorities

Regionalgovernment

UKgovernment

EuropeanUnion

UnitedNations

Government

Figure 1: The diversity of our stakeholders



Each year, we interview approximately 70,000 passengers at our UK airports to help us understand customer perceptions and to improve levels of service. For more information see ‘Delivering for passengers’ on page 30.

We work closely with retailers and airlines to make sure that the passenger experience is as efficient and enjoyable as possible and to understand how we can work together better.

Employees

We engage with our employees formally each year through our employee survey as well as through appraisals and meetings.

Our airport employees are represented by four trades unions:• Transport and General Workers

Union (TGWU)• Amicus• Public and Commercial Services

Union (PCS)• Prospect.

We meet formally with these trade unions to negotiate pay and employment policies through the Joint National Forum (JNF). Each airport also has its own consultative arrangements. We have separate arrangements for consulting with ASLEF which represents our Heathrow Express employees. For more information see ‘Our people’ on page 36.

The aviation industry

The aviation industry comprises many diverse activities including airports, airlines, aircraft and engine manufacturers and air navigation service providers, such as National Air Traffic Services in the UK.

We aim to use our influence to lead changes in the aviation industry. Often we need to engage with several stakeholders to resolve an issue. For example, we are tackling noise impacts on local communities by working with airlines and air navigation service providers to implement the quietest operating procedures as planes take off

and land, and with manufacturers to encourage the development of quieter aircraft and engines.

We are working closely with our industry partners to achieve the objectives of ‘Sustainable Aviation’, the cross-sector sustainable development strategy in the UK. Sustainable Aviation has formed industry task groups on Noise Abatement and Climate of which we are members. See www.sustainableaviation.co.uk for the 2006 progress report.

Government and regulators

Government plays an important role in our business and we engage regularly with government officials, regulators and politicians at a national, regional, local and European level. We are regulated by the Civil Aviation Authority (CAA) and the Competition Commission. They review price caps at our three London airports every five years that cover two major aspects of our business:

Third parties at airportsincluding retailers

Localcommunities

Passengers

Suppliers

Airline customers

Regulators

Aircraft manufacturers Employees

Trade associations

Media

Shareholders

Academics Pressure groupsTrade unions

Localauthorities

Regionalgovernment

UKgovernment

EuropeanUnion

UnitedNations

Government

Figure 1: The diversity of our stakeholders


1 Annual increases in revenue from airport charges per passenger

2 Our conduct in relation to customers, business partners and suppliers.

Other regulators important to our business are the Department for Transport, Health and Safety Executive and the Environment Agency.

One of the principal ways we engage is through formal responses to Government and Parliamentary consultations and inquiries. Our responses to these consultations are available in full at www.baa.com.

We engage in the debate about environmental and social challenges, such as climate change, air quality and noise, arguing for economically efficient public policy measures. BAA has lobbied for aviation to be included in the European Union’s emissions trading scheme (ETS) and we are pleased that draft legislation to achieve this has been published.

In March 2007, the Office of Fair Trading (OFT) referred BAA to the Competition Commission on the grounds that “there may be aspects of the market which prevent, restrict or distort competition”. The OFT is particularly concerned about our high market shares in the south- east and in Scotland, and whether the regulatory system works in the public interest. BAA welcomes the prospect of a rigorous review of the airport market and charges. But we believe the fundamental problem for passengers and airlines is lack of capacity, not the ownership of the airports.

We also engage through trade associations. BAA is a member of a number of UK, European and international trade associations. We aim to encourage trade associations to align with our public policy positions and show leadership in environmental and social issues.

The main trade associations we work with are:

Aviation industry associations• The Airport Operators Association • Airports Council International –

Europe (ACI-Europe) • Airports Council International –

World (ACI-World).

Wider business associations• The London Chamber of Commerce

and Industry • The Confederation of British Industry • London First • Central London Partnership. We worked with ACI Europe to lobby to improve airport safety by agreeing common standards for security in Europe following the security crisis of 10 August 2006.

Non-governmental organisations (NGOs)

Several NGOs campaign about the aviation industry, particularly its environmental impacts. These include community groups and national organisations.

After the UK Government identified an urgent need for an additional runway at Stansted, we conducted extensive consultation as part of the planning process for a second runway in 2006.

Over 180,000 local residents, together with MPs, community organisations, business leaders, airlines and councillors are being briefed on the location of the second runway, the position of the extended airport boundary and on the layout of the airport site. This consultation has helped us decide on the location of the runway.

As part of our earlier planning application to grow Stansted around its existing runway in April 2006, we provided the local community with information in a sustainability appraisal, an environmental statement and a health impact assessment.

Case study: Engagement on the expansion of Stansted



NGOs are an important voice in the debate over how best to address the environmental impacts of aviation. We will not always agree but we aim to understand their perspectives and take them into account in our decision-making process. We are working with sustainable development organisation Forum for the Future, to refine our understanding of how to make our business more sustainable.

Suppliers

BAA spends in excess of £1.5 billion per year with external suppliers. We have dedicated buying teams that procure goods and services including:• Construction and engineering• Utilities and fuel• Consultancy services (training and

design services)• Baggage handling systems• Facilities support (catering and cleaning)• Office supplies and services• IT and telecommunications• Marketing and communication services • Travel and transport.

Our major supplier relationships are multi-million pound contracts running for a number of years. The large suppliers we deal with are at the top of a multi-tier supply chain in which the companies are typically smaller further down the chain.

We follow a rigorous sourcing process, evaluating the sustainability of suppliers, including management of their people, resources and processes. We agree performance improvement targets, where relevant.

We assist local companies to market their goods and services through ‘Meet the Buyers’ events at some of our seven airports. These events create opportunities for our large and small suppliers to meet and see if they can do business together.

Stakeholder views

Following our engagement programme

we understand that stakeholders

recognise that airports and the aviation

industry have positive impacts on society

and the economy. This includes job

creation and generating income locally

and nationally, making travel accessible

to people, broadening their horizons and

enabling them to do business overseas.

We are also aware that stakeholders have

concerns about the impacts the industry

has on the environment, particularly

climate change, noise, local air quality

and road congestion around airports.

Some also have different views on the

extent to which people should be able

to fly and the benefits aviation provides.

BAA commissions regular stakeholder

surveys from an independent polling

organisation. The survey assesses

perceptions of BAA, its corporate

responsibility programmes and the issues

which stakeholders feel to be most

important for the company.

The survey results are presented to the

Chief Executive Officer, our Corporate

Responsibility Board and the senior

governance group responsible for

corporate responsibility at each airport.

We use the survey results as part of our

regular review of corporate responsibility

priorities and to develop action plans on

specific issues.

In 2006, this survey covered stakeholders

from nine groups including:

• MPs/MEPs

• Business organisations

• Media

• National editors

• Local communities at the majority

of our UK airports

• Central government

• European Commission

• Government agencies

• General public.

The results have shown that BAA’s

economic contribution and role in job

creation continue to be seen as positives

by most stakeholders. The survey also

highlighted that the environmental impact

of air transport and of airport expansion

is one of the most significant issues

affecting stakeholder perceptions of BAA.

Other issues that were mentioned by

stakeholders as important factors in their

perception of BAA over the last year were

airport security, congestion in our airports

and Ferrovial’s acquisition of BAA.

In response to some of the messages

from the most recent survey, we have

provided further information in this report

on our approach to airport expansion,

climate change and airport security. In

addition, the Chief Executive Officer’s

Q&A session on pages 2–4 discusses what

Ferrovial’s acquisition means to BAA’s

approach to corporate responsibility.


Material issues

We believe that it is possible for the aviation industry to grow sustainably – balancing the benefits of aviation with the social and environmental costs.

We can contribute to this in a number of ways. In part, this means maximising the positive benefits of aviation. But this does not mean that aviation can avoid its negative impacts or that growth should be met at any cost. We strive to minimise negative impacts, improving performance where we have direct control and using our influence to lead changes more widely.

Here, we list the issues that we focus our efforts on – the ones that are most important to our stakeholders and that are important to us as they could have an impact on our business performance. The rest of this report describes how we are managing these issues.

How we identify material issues

We have a thorough process in place to identify material issues. This involves monitoring:• Stakeholder feedback – including the

frequency with which issues are raised• Government policy development –

including consultations and White Papers

• Political and public debate – including Parliamentary inquiries, media coverage, NGO campaigns and opinion surveys

• Relevant laws and regulations• Peer companies – issues they are

addressing• Best practice standards – in particular

the GRI, where our goal is to align ourselves fully with the principles in the new ‘G3’ standard over our next two reporting cycles.

To ensure we focus our efforts appropriately, we review our business processes including:• Our business strategy and the

performance indicators and targets that we use to manage the business

• The risks identified in our corporate risk register (including the potential for issues to affect operational performance in the short term and to affect our licence to grow and take strategic opportunities in the longer term)

• Our company policies and commitments, including our corporate responsibility policy.

Reporting by companies on corporate responsibility is developing and that includes how companies communicate on their material issues. Over the next year, we plan to further develop our reporting in this area, including further information on how we prioritise our efforts across this agenda.

Table 1: Material issues

Local community

• Airport expansion – including stakeholder consultation

• Community investment • Noise• Air quality• Surface transport

Environment

• Climate change – including emissions ‘on the ground’ and ‘in the air’

• Biodiversity• Land and water quality• Sensitive materials• Waste• Water consumption

Passengers

• Passenger service

Our people

• Employee engagement – including constructive engagement with Trade Unions and supporting people through change

• Equal opportunities and diversity• Learning and development• Pay and benefits• Staff turnover • Succession planning/ talent

management

Economy

• Local economic role – including skills development and regeneration

• National and global economic role

Health, safety and security

• For passengers and staff at our airports

Governance and ethics

• Working with customers, other business partners and suppliers to address corporate responsibility issues

• Corporate governance – including audit and assurance

• Management systems – including environmental management systems and third parties

• Public policy influencing• Stakeholder engagement• Whistle-blowing


Climate change

Climate change

Climate change is an important issue for BAA, especially as CO2 emissions from aviation are projected to rise at a time when there are targets to significantly reduce overall CO2 emissions. We are committed to reducing our own climate impact and to helping to reduce the impacts of the aviation industry as a whole.

The issue

Scientists agree that human activity is having a measurable effect on the earth’s climate, with significant impacts on global temperatures and weather patterns. The main cause is the emission of carbon dioxide (CO2) associated with burning of fossil fuels. The latest report (Fourth Assessment) of the Intergovernmental Panel on Climate Change (IPCC) has provided the strongest evidence yet, stating that human activity is ‘very likely’ to be causing climate change.

Political and business awareness of the importance of climate change is growing. The 2006 Stern Review for the UK government highlighted the scale of the economic challenge and the potential costs of not taking action. Stern concluded there is still time to avoid the worst impacts if we act collectively now, and that addressing climate change can be consistent with economic growth.

Climate change is a long-term risk to BAA. Aircraft emissions represent a small but growing contribution to climate change, and this needs to be addressed.

Globally the proportion of greenhouse gas emissions from aviation is currently relatively small. The Stern Report1 uses a figure of around 1.6% of global CO2 emissions for aviation.

We recognise that aviation’s impact on climate change is not just from CO2 emissions. Other emissions such as NOX (nitrogen oxides) and effects such as jet engine ‘contrails’ (condensation trails) also have an impact. Contrails may also lead to the formation of cirrus cloud. There is uncertainty over the scale of these impacts and more research is being conducted to quantify this. The most recent research estimates aviation’s total impact is approximately 1.9 times the impact of CO2 alone (excluding the impact of cirrus cloud).

Taking into account non- CO2 impacts, the IPCC estimates that aviation accounts for around 3.5% of the total human contribution to climate change. By 2050, the IPCC estimate that aviation will account for around 5% of human contribution to climate change, although its figures range from 3.5% to 15%.

Current CO2 emissions from aviation are 6% of the UK total (around ten million tonnes of carbon). The UK proportion of emissions from aviation is higher than the global figure because the UK is an international aviation hub. The projected growth in air travel means emissions from aviation will rise at a time when the UK has set targets to significantly reduce CO2 emissions. The UK Government’s predictions are that aviation could account for around 21% of the UK’s total carbon emissions by 2050.

A report by the Tyndall Centre for Climate Change Research made much higher projections for air passenger growth and consequent carbon emissions in the UK, predicting that aviation could account for all of the UK’s permitted CO2 emissions by 2050. Their forecasts are based on very high predictions of passenger numbers – 75% more than the Department for Transport’s (DfT’s) high capacity case – which would require many more runways than current policy anticipates.

Our airports are also significant energy users in buildings and for ground transport and that is why three of our airports (Heathrow, Gatwick and Stansted) are registered under the EU Emissions Trading Scheme (EU ETS). Part of the energy use at airports is managed directly by BAA and part by other organisations conducting their operations at our sites.

1 World Resources Institute (2005) in The Stem

Review on the Economics of Climate Change, 2006.


Our approach

Under the Kyoto Agreement, the UK is committed to reducing its emissions of greenhouse gases to 12.5% below 1990 levels. This is to be achieved between 2008 and 2012. If passed into law, the Climate Change Bill will establish a binding reduction in CO2 emissions of 60% by 2050. We welcome the Government’s commitment to a reduction of this order.

We are committed to playing our part in the achievement of these goals for the industry as a whole and within BAA’s operations. We aim to lead the airport industry in managing the carbon emissions over which we have direct control, such as those from energy use in our facilities. Where we do not have direct control over emissions, like those from flights, we will use our influence to lead changes.

Aviation climate impact

We have been actively engaged in the debate over aviation’s climate impacts since 2000. Our objective is to develop and promote measures to minimise emissions from aircraft.

Our strategy has two main elements: • To provide practical support to

policymakers to incorporate aviation in the EU Emissions Trading Scheme (EU ETS)

• To work with the aviation industry to improve energy efficiency through technological and operational improvements.

Emissions tradingAn open emissions trading scheme represents the most economically efficient and environmentally effective way for aviation to address the impacts of its emissions.

We are working closely with key stakeholders in Europe – including government, industry and NGOs – to build support for incorporating aviation into the EU ETS as soon as possible. There has been good progress in this area with the European Commission publishing draft legislation to achieve this at the end of 2006. This is currently under discussion by the European Parliament and Council.

The current Commission proposal is to incorporate aviation by 2011. The timescale reflects the approval process requiring legislation at the EU and subsequently in each member state.

We believe that with sufficient political will, aviation could be included in the EU ETS before 2011, and we will continue to build support for this with our industry partners and other stakeholders.

You can read our latest thinking on this issue in responses to Government and parliamentary inquiries. We will also shortly be publishing an updated policy statement on our website. BAA has worked through the European trade association (ACI-Europe) to secure clear support from Europe’s airports for aviation’s inclusion in the EU ETS. BAA also has ongoing dialogue with the European Commission.

We view action at a European level as an interim step towards a global climate policy framework and we are also working through our global trade association (ACI-World) to discuss the principles and practicalities of emissions trading

6%the percentage of CO2 emissions that are attributable to aviation from the UK’s total


Climate change

for aviation at an international level. As part of that work, we have represented ACI-World on the ICAO Taskforce which was set up to advise on emissions trading.

When emissions trading is achieved in Europe, part of the climate impact from aviation will be offset by reductions in other industries, but paid for by the aviation industry, ultimately through the price of tickets. The Stern Review recommends emissions trading as a strategy for efficient reduction of CO2 emissions.

We are a member of the Sustainable Aviation Group, which has set out a long-term strategy to ensure that the UK aviation industry meets its environmental responsibilities. The strategy has many common elements with our own strategy towards climate change, such as support for the EU ETS and for research into understanding the non-CO2 impacts on aviation. The Group has set up a dedicated ‘Climate Working Group’ of which we are active members.

Technology and operational improvements

Aircraft manufacturers have delivered continual improvements in fuel efficiency over the past 30 years, and expect to make further improvements with each new generation of aircraft and engine design. European manufacturers have set a target for new aircraft in 2020 to be 50% more efficient than new aircraft from 2000. The Sustainable Aviation Group, of which we are members, is actively supporting this target.

There are significant opportunities to cut emissions by making air traffic control more efficient. Currently there are 35 different air traffic control organisations operating in Europe, compared with just one in the USA. The ‘Single European Sky’ is a project to integrate European air traffic control systems. The International Air Transport Association has predicted that 12% of global aviation CO2 emissions could be saved if air traffic control systems were made more efficient.

However, aviation is growing at a faster rate than technology can reduce emissions and at the moment there is no significant alternative to burning kerosene. This means that cost-effective policies need to be developed to manage aviation’s climate impact. We believe that emissions trading is the most effective solution.

Airport climate impact

The main sources of CO2 linked to airport operations are:• Energy use in buildings and

infrastructure (gas and electricity)• Transport to and from airports• Airside vehicles• Aircraft movements on the ground• Auxiliary power units (or ‘APUs’) which

planes use to provide air conditioning and lighting when they are on the ground

• Refrigerants• Embodied energy in our supply chain.

Case study: Glasgow Airport

This year we engaged staff at Glasgow Airport to cut energy and meet their target to reduce CO2 by 2% against business-as-usual projections.

We held a ‘Service Improvement Programme’ event involving BAA staff members from all operational departments to raise awareness of the CO2 emissions associated with the airport and assess how consumption of gas and electricity could be reduced.

Following the event, a ‘S**** Off!’ campaign was launched. This targeted staff and business partners at the airport.

The BAA team members involved in this campaign nominated themselves as ‘energy fairies’ for their own departments to highlight the opportunities to switch off lighting, equipment, and change heating and cooling settings within their departments.

Investments were made to modify the building management systems for the terminal building, including movement sensors for areas with low occupancy and making the pumps for chilled water more efficient. Energy targets were set for each department, dividing energy costs by building or department. Using these measures,

the airport beat its target, achieving a 10% reduction on forecast consumption and cutting CO2 emissions by 634 tonnes from the previous year, while traffic at the airport increased.

The challenge of reducing Glasgow’s CO2 emissions continues. The major extension of the terminal building in 2007/08 will provide more opportunities to invest in energy-efficient equipment and management systems that help the airport meet its CO2 targets.

Figure 2: Buildings CO2 emissions from fixed sources (tonnes) Passenger numbers Carbon dioxide from fixed assets tonnes 2010 target tonnes 2020 target tonnes

95 96 97 98 99 00 01 02 03 04 05 06 0791 92 93 94

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We aim to reduce the emissions as far as possible from sources in our own operations, over which we have direct control. We seek to have a positive influence on the energy efficiency of other organisations operating at our sites. We are working to quantify the different sources at our airports, in line with international best practice guidelines, and will publish the results on our website once available. Around 436,320 tonnes of CO2 are emitted as a result of the energy consumption at our seven airports. Our strategy for managing the climate impact of our airports has the following components:

Within our buildings • Ensuring energy efficiency is built

into the design of new facilities• Investment in energy-efficient technology• Information and tools to improve

data on energy use

• Achieving behavioural change to achieve more efficient use of energy

• Renewables – sourcing more renewable energy and fitting low or zero carbon on-site generation of power where economically viable.

On the airport• Supplying power and air conditioning

from terminals so that aircraft can turn off their engines

• Redesigning taxiways so that aircraft can travel more directly to stands

• Trialling towing aircraft to the runway so that their engines are running for less time

• Reducing emissions from vehicles at our airports.

Beyond the airport boundary• Making major investments in public

transport infrastructure servicing our airports

• Offsetting the impact of our own business flights.

Electricity consumed 750 GWhCombined heat and power gas 340 GWhGas consumed 245 GWhGas oil consumed 9 GWh

Total 1,344 GWh

Table 2: BAA energy sources 2006/07

500

700

900

1,100

1,300

1,500

1,700

Figure 3: Buildings energy use from fixed sources (GWh)

0706050403020100999897969594939291

GW

h


Climate change

Our energy strategy is supported by the Carbon Trust, through a Partnership Agreement. The Carbon Trust is a Government-backed body established to provide UK businesses with advice on reducing carbon emissions by using low-carbon technologies and becoming more energy efficient.

Our performance

BAA’s CO2 emissions in 2006/07 were 436,320 tonnes, a reduction of 1.7% over the previous year. We used 1,344 GWh of energy, a reduction of 2.6%. In the same period passenger volume grew around 3%.

Our target is to reduce our absolute CO2 emissions from fixed sources by 15% on 1990 levels by March 2010. We have operated below this target level since 1997, when the reduced carbon intensity of the UK electricity supply led to a reduction in our carbon footprint. Since that date we have improved our energy efficiency to

meet steadily increasing passenger volumes without a corresponding increase in our carbon footprint.

Our longer-term objective is to reduce absolute CO2 emissions from fixed sources by 30% on 1990 levels by March 2020. This is in line with Government targets to reduce carbon emissions by between 26% and 32% by 2020. Growing our business without growing our carbon footprint will drive us to achieve ever more energy-efficient design specifications and to develop innovative renewable energy sources. We have already begun this process through investment in existing equipment and through management of building use by closely monitoring consumption and eliminating waste.

We are investing approximately £5 million in energy efficiency over four years to achieve projected cost savings of £8.6 million. Since 2002/03 we have saved 102,000 tonnes of CO2 annually against our business-as-usual forecasts.

Significant energy efficiency achievements in 2006/07 were:• Construction of a hot water pipeline

between the cargo area combined heat and power plant and Heathrow Terminal 5 energy centre. This will save approximately 11,000 tonnes of carbon dioxide each year by satisfying approximately 85% of the expected heat demand of the new terminal

• Installation of sunpipes at the new international departure lounge at Glasgow making artificial lighting unnecessary

• Using photovoltaics for remote car park lighting at Gatwick and Southampton

• Installation of equipment to improve the efficiency of chillers at Heathrow and a prolonged shut down of the central terminal area boiler house

• Successful implementation of a monitoring and targeting energy management programme at Glasgow

• Full-time energy managers appointed for Heathrow and Gatwick

• Implementation of our clean vehicles programme (see case study on page 25).


Our plans

Aviation climate impact

We will continue to build support for aviation’s inclusion in the EU carbon trading market, in an environmentally credible and economically efficient way.

Airport climate impact

By March 2010: To reduce absolute CO2 emissions from fixed sources by 15% on 1990 levels.

By March 2020: To reduce absolute CO2 emissions from fixed sources by 30% on 1990 levels.

Case study: Heathrow East

Heathrow East is a project to replace Heathrow’s oldest terminals with a modern, environmentally-responsible passenger terminal. The terminal will set a new standard in environmentally-sensitive airport buildings. It will cut carbon dioxide emissions by around 40% compared to the buildings that it will replace.

BAA will achieve this performance by responding to the priorities set out by the Mayor’s Climate Change Action Plan. The building design is energy efficient, incorporates on-site combined cooling, heat and power and renewable energy generation by photovoltaics and energy from waste technology.

The development will be one of the first in London to meet the tough new standards for on-site renewable energy set out in the Mayor’s London Plan.

Heathrow East will also be the first major development in London to use biomass gasification. This technology generates a combustible gas from waste wood and timber from renewable forests that can be used to fuel a combined heat and power plant serving the terminal.

BAA’s use of this technology supports one of the key priorities from the Mayor’s Climate Change Action Plan by seeking to demonstrate the potential for renewable energy from biomass. BAA will share the results of the technology with the Mayor’s environment team and the London Climate Change Agency to assess its potential use in future developments.

As a step towards delivering these goals, over the next year we will build site-wide energy strategies across our airports.

We will also continue our work to reduce the other emissions linked to our airport operations, including:• Working with airline partners to reduce

aircraft emissions linked to our ground operations

• Continuing our work to reduce vehicle emissions on our airport sites.

We have committed to offset our emissions from business flights since 1 December 2006. We are measuring mileage and estimating the consequent emissions as an interim measure while reviewing which type of offset to purchase. We are assessing the best system for recording our business roads mileage with a view to offsetting that impact in future.


Local community impacts


Our airport operations and developments create employment and income for local communities, but also bring negative consequences like noise and traffic congestion. We engage with communities to minimise these negative impacts where possible and we support projects in the community to improve local quality of life.

Airport expansion

The issue

In 2006, 235 million passengers passed through Britain’s airports. That was almost 7 million more passengers than in 2005.

This growth reflects buoyant demand for air travel. Individuals want to expand their horizons by travelling abroad and stay in touch with extended families and friends and business people want to meet clients, suppliers and colleagues abroad. Aviation is also vital for importing and exporting goods.

As airports expand they generate more employment and income for local communities. But busier airports also bring negative consequences like noise, air pollution and traffic congestion.

The UK Government published an Aviation White Paper in 2003, setting out its plans to increase UK airport infrastructure in the coming decades. The White Paper stated that the first priority is to make best use of existing runways. It identified Stansted for

a second, runway by around 2012 and Heathrow for a third, short runway after 2015, if air quality and other environmental matters can be solved. In Scotland, land has been safeguarded at Edinburgh and Glasgow for expansion.

The White Paper makes clear that there are environmental limits, which must be respected and sets out a range of measures to address climate change, noise, air quality and surface transport.

Our approach

We believe the expansion of aviation brings significant social and economic benefits. We also need more airport capacity to avoid the overcrowding and delays which have marred passengers’ experiences, especially in summer 2006.

However, we understand the concerns of those who are worried about the consequences of growth.

We believe expansion in aviation can be compatible with action on climate change and concern for communities, and that it is possible to have sustainable growth which balances the social and economic benefits with the social and environmental costs.

All our UK airports have published master plans detailing expansion to 2030. We are working closely with our airline customers and a range of public bodies to resolve the environmental issues and remain determined to work with those who live near our airports to understand and respond to their concerns.

Our approach to managing the impacts of our expansions is to avoid negative impacts wherever we can, reduce them as much as possible, and to mitigate what can’t be avoided. We also run compensation schemes (see next page).


Consulting communities

We want to expand our airports with the support of the people who live nearby and we listen to their views to minimise the negative impacts of new developments. For example, after the UK Government identified a clear need for an additional runway at Stansted, we consulted with the public to help us decide on the location of this runway.

We are required to carry out public consultations by law but we often go beyond these requirements. For example, we produced a sustainability assessment and a health impact assessment for the expansion plans relating to Stansted’s existing runway and we signed a ‘Contract with the Community’ at Gatwick to allow us to grow with the agreement of the local authority.

These are some of the channels we use to keep local communities informed of our plans and give them the opportunity to express their views:• Local newspapers • Dedicated internet site • Community newsletters • Leaflets and posters • Letters and mailings• Questionnaires • Call centres • Meetings• Public exhibitions.

Compensation

While we try to minimise the negative impacts of the expansion of our airports as much as possible, factors like depreciation of house prices (blight), are sometimes impossible to avoid. Our voluntary Home Owner Support Scheme (HOSS) supports homeowners who live closest to the proposed new runway at Stansted.

300 homesthe amount of households that have taken advantage of our voluntary Home Owner Support Scheme at Stansted alone

Owners within the predicted 66 decibel average noise contour are offered the opportunity to sell their homes and move, without financial loss. 300 home owners have taken advantage of the scheme since it began in 2004.

For more information on how we aim to reduce the impacts of noise, poor air quality and increased traffic congestion turn to pages 20, 24 and 27. To read more about our community investment programmes turn to page 18.

Figure 4: BAA charity donations by type (including BAA Communities Trust contribution)

04 05 06

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8,41

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• Donations in cash• Donations in time• Donations in kind



Community investment

The issue

Having an airport as a neighbour has both positive and negative effects on the local communities. As set out in the previous section, airports bring employment to the surrounding area but also some unwelcome factors like aircraft noise.

Therefore, as far as possible, airports need to operate and, where necessary, expand with the agreement of the people living nearby.

Our approach

We seek to operate and grow with the agreement of local communities. We engage with communities to gain the best possible understanding of their concerns and to frame our activities in response. However, sometimes the scale of airport development makes it necessary to conduct a formal public inquiry, as we anticipate will be the case for the second runway at Stansted.

Our community relations strategy focuses on initiatives that improve the quality of life of the people living around our airports. Our aim is to address issues of prime local concern, notably the disturbance caused to local residents by noise or heavy traffic. We support and run a range of programmes in the local community, from education and skills initiatives to environmental projects, and encourage our employees to volunteer their time to support local communities through key projects. All our programmes are carefully chosen to meet the requirements of our airport communities and are developed in partnership with local people.

To read about our community efforts on aircraft noise and air quality turn to pages 20 and 24.

Grant making

BAA has its own charity, the BAA Communities Trust (The Trust). This receives 0.15% of our pre-tax profits each year and has donated over £4 million worth of grants in its first ten years. The Trust focuses giving in three main areas:• Supporting local community activity

around our airports such as grants to help local schools or to fund skills development programmes

• Initiatives proposed by BAA staff such as fundraising and volunteering activities

• Schemes that create opportunities for young people from the UK to develop their potential through overseas community and volunteering projects, in partnership with the charities VSO Global Xchange and the Fulcrum Challenge.

Employee volunteering

We encourage our employees to volunteer and fundraise in the local community. This provides a personal touch, which is highly valued by communities, and helps employees to learn new skills and develop their careers. Employees can take up to six days’ paid leave for volunteering activities per year, subject to operational requirements. We support all employees who volunteer, even if the project is outside the local airport community.

Employees who volunteer or fundraise can enter our awards scheme, I-Volunteer, and win funding from The Trust for the cause they support. I-Volunteer, now in its fourth year, helps to embed a culture of volunteering at BAA. See Table 3 for performance information about the awards.

We have made it easy for our employees to volunteer by giving them access to a database, run by the charity YouthNet, listing volunteering opportunities in the UK.

Table 3: I-Volunteer awards 2004–2006

Inputs – BAA contribution

• 1,333 individual and team applications from employees

• 51,208 hours volunteered• £300,000 donated by the Trust• £100,000 spent on management costs

Outputs – community benefits

• 461 charities helped, benefiting 77,135 people directly.

Our performance

In 2005/06, BAA gave £6.4 million to charitable causes compared to £8.4 million in 2004/05. This equates to almost 1% of pre-tax profits and includes our contribution from the BAA Communities Trust. We were included in Business in the Community’s ‘PerCent Club’ for the fourth year in a row.

The amount we donated this year is less than 2004/05 when we were subject to one-off Section 106 obligations. These require developers to invest in local communities to reduce any negative impacts. 2006/07 figures will be available later in the year.


These are some of our community relations activities from 2006/07:• We launched Take Off and Learn,

an education website for teachers and students. This provides learning resources, including literacy games and an interactive resource for GCSE IT students. The site also informs young people about the training and skills programmes available at our airports. Visit www.baa.com/learn for more details.

• We continued to work with the Gatwick Greenspace Partnership which supports the biodiversity of 68 hectares of land on the Gatwick estate. The Partnership also runs the Gatwick Environment Centre, an environmental education facility. Since the Centre opened in November 2005, over 3,000 people from companies, schools, and community and environmental groups have got involved in environmental activities.

• We continued the London Stansted Partnership – Airport Skills Training Programme, which helps get unemployed people back to work. The programme is accredited by the NCFE (the UK’s national awarding body for further education) and is part of a wider partnership with Harlow College and 30 airport companies. Everyone who completes the course is guaranteed a job interview or assessment at Stansted Airport with an employer who has signed up to the scheme. 822 people have completed the training course since it began in 2003, of which 263 people have found jobs at the airport in areas including retail, baggage handling, customer service and security. The programme has now expanded to cover other regeneration areas in North and East London including Haringey, Enfield, Waltham Forest and Newham.

• We continued our strategic partnership with Bitterne Park School at Southampton Airport, a nearby secondary school. Employees from the airport share their expertise and resources through work experience placements, enterprise days and school governorships. The airport has now formed a second partnership with Quilley School of Engineering in Eastleigh.

• Using funding from the BAA Communities Trust, we launched the BAA Scotland Outreach Programme in 2006 in partnership with the Prince’s Trust and the National Trust for Scotland. This will deliver nine projects at Aberdeen, Edinburgh and Glasgow airports for socially excluded young people. Almost 100 people have participated in practical conservation work at National Trust properties, helping to raise self-esteem, promote team work and build character. The National Trust for Scotland has gained over 400 hours of volunteering time which they would otherwise have had to pay for. Over 30 BAA employees

gave their time and expertise to promote citizenship and work opportunities with the young people.

• The BAA Communities Trust continued to support the international development charity VSO’s Global Xchange Programme. This promotes youth volunteering abroad and in the communities around our airports.

• The Trust set up a three-year partnership with a new youth volunteering charity called ‘v’. It has committed £450,000 over three years to support national initiatives to inspire one million young people to get involved in volunteering and community action. Through ‘v’ the UK Government is matching our donation to VSO GlobalXchange pound for pound.

Our plans

We will continue to focus on supporting the initiatives that make a positive difference to local communities.

Case study: Fulcrum Challenge – investing in leaders of the future

Students from schools around Heathrow and Gatwick airports have helped rebuild lives in India, while gaining new confidence and skills.

The Fulcrum Challenge, a personal leadership and development programme funded by The Trust, began in 2005 when 30 young people from schools around Heathrow Airport went to Gujarat in India to rebuild a school flattened by an earthquake. Since then, 46 young people from schools local to Heathrow and Gatwick have built an orphanage in the same area.

The students were accompanied by BAA mentors, who also benefited enormously from the project.



Noise

The issue

Communities around our airports are affected by aircraft noise and we consider this issue a priority. Noise is created by aircraft approaching or taking off from airports and by taxiing aircraft and engine testing within the airport perimeter.

There has been considerable progress in reducing noise from individual aircraft in the last 30 years and today’s planes are significantly quieter. However, increases in the number of flights have to some extent offset noise reductions.

In the UK, aircraft noise is measured by calculating the average noise level in decibels (dB) over 16 hours, to give a single, daily figure. The Government calls this average decibel measurement ‘LAeq’. It means ‘equivalent continuous noise level’ and is the most common international measure of aircraft noise.

The UK Government says that communities start being significantly annoyed by aircraft noise above 57dB LAeq averaged over 16 hours. They use this as the starting point when setting policy on aircraft noise.

Our approach

Government policy influences how BAA tackles aircraft noise. The December 2003 Aviation White Paper outlined several ways to control, mitigate and compensate for noise. The Department for Transport (DfT) has direct control over noise at Heathrow, Gatwick and Stansted, and local planning authorities contribute to setting noise controls at our other UK airports. We work with airlines, air traffic controllers and local authorities to meet our noise objectives.

Encouraging the manufacture of quieter aircraft

We engage with governments and aircraft manufacturers to encourage the adoption of more stringent noise emission standards. Through the UK Government and the trade association ACI, we engage with the International Civil Aviation Organisation Committee on Aviation Environmental Protection, the UN body that regulates aircraft noise standards. We communicate directly with aircraft manufacturers and airlines regarding noise emission standards and participate in research projects, for instance the Silent Aircraft Initiative at Cambridge University.

Encouraging the use of quieter aircraft and operating practices

BAA has put in place a variety of measures to reduce noise, in partnership with airlines. These are monitored and enforced by our airport flight evaluation units using a noise and track-keeping system. The system matches noise data to radar data on aircraft flight paths to

monitor aircraft compliance with various noise control measures. The measures cover noise levels from departing aircraft, how closely individual aircraft adhere to their departure routes, and the use of continuous descent approaches for arriving aircraft. We provide airlines with regular feedback on their track-keeping and noise infringements. This information is also publicly available, to create a further incentive for good performance.

We reward airlines that use quieter aircraft through reduced landing charges, and penalise those that breach noise limits at our airports to improve compliance with quieter operating practices. During 2007, we will be reviewing these noise-related landing charges and fines and will identify opportunities to make them more effective.

We use a range of controls to reduce ground noise. For example, we provide engine test pens and support restrictions on aircraft reverse thrust at night. During 2006 we initiated studies to look at possible changes to aircraft operations on the ground and worked with airlines and ground handlers to reduce the use of


aircraft auxiliary power units (APUs), to reduce noise levels as well as CO2 and other fuel emissions.

Take-off noise

At Heathrow, Gatwick and Stansted airports, an aircraft must reach a minimum height of 1,000 feet by 6.5 kilometres from the start of their take-off roll and must not exceed specified noise limits. This is measured by permanent monitors situated near the ends of the runways. BAA fines airlines that breach these noise limits and the money is used to fund projects in the local community. We extended departure noise limits and fines to Glasgow and Aberdeen airports in 2005, and Edinburgh in 2006.

Our airports also monitor how well aircraft keep to agreed noise-preferential routes (NPRs) after take-off. These are designed by Government to avoid aircraft flying over populated areas as much as possible. There are sanctions against aircraft which do not keep to NPRs and we work closely with airlines and National Air Traffic Services (NATS), the air traffic services provider, to improve performance. This approach undoubtedly reduces noise for those who do not live under NPRs.

Landing noise

In the UK, there are no noise limits or preferential routes for arriving aircraft. To reduce arrivals noise, BAA, airlines, NATS and the Civil Aviation Authority cooperated in the development and implementation of an Arrivals Code of Practice which advocates the use of continuous descent approaches (CDAs).Using a CDA, an aircraft descends smoothly from around 6,000 feet rather than through a series of steeper descents. This minimises noisy changes in engine tone, and can reduce average noise on the ground by up to 5dB(A).

The airspace to the south of Stansted Airport incorporates flights from Stansted, Heathrow and Luton. This reduces the scope for CDA approaches. BAA is working with NATS who manages the airspace to improve the situation.

Night noise

There is a legal limit on the number of aircraft movements between 11.30pm and 6.00am at Heathrow, Gatwick and Stansted airports. In June 2006, the Government announced its decision not to allow any increase in night flights at Heathrow, Gatwick and Stansted in the regime that runs to 2012. At the same time, noise levels from night flights at all three airports must be further reduced. The new restrictions came into effect in October 2006. BAA did not seek any increase in night flights at Heathrow in recognition of noise impacts on local communities and we were pleased to see this reflected in the Government’s decision.

There are also restrictions on the type of aircraft that can be used at night and a quota limit on the total noise allowed at night over a whole season (summer or winter). Aircraft used at night are scored according to how noisy they are, which counts towards the noise quota limit. This is a powerful incentive for airlines to use planes with the lowest score for the size and type of aircraft.

Noise mitigation and compensation schemes

While aircraft will continue to get quieter in future, some communities are likely to be significantly affected by new take-off flight paths or landing routes to cater for growth in the number of flights. In such cases, we will:• Offer to purchase dwellings subjected

to high levels of noise

• Offer acoustic insulation for dwellings subjected to medium and high levels of noise.

In summer 2005, we published our voluntary aircraft noise compensation and mitigation schemes, following consultation with local communities. We will provide:• Acoustic insulation for schools,

hospitals and community buildings near the airport

• Financial assistance toward the cost of moving to people living in the most affected areas

• Acoustic insulation for dwellings in the vicinity of Heathrow, Gatwick and Stansted.

For more information on the Community Buildings Noise Insulation Scheme and the Home Relocation Assistance Scheme please visit www.baa.com/noise

Keeping our local communities better informed

We aim to assure our stakeholders that we use the best practicable means to minimise aircraft noise impacts and will continue to do so in the future, within the framework established by the Government’s White Paper.

In 2006, we produced three publications called ‘Bothered by Aircraft Noise: We’re Listening’; one each for Heathrow, Gatwick and Stansted. These help make this complex issue as accessible as possible.

We also launched a new dedicated 24-hour free-phone service in Edinburgh and Glasgow airports for members of the public to contact the airports about noise.

Figure 5: People and area affected by noise(within 57 dBA daytime contour by calendar year)

Heathrow Gatwick Stansted Population (000s) Population (000s) Population (000s)

01 02 03 04 01 02 03 04 01 02 03 04

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Our performance

Figure 5 shows the area and population exposed to 57dB LAeq at Heathrow, Gatwick and Stansted. This is called the LAeq contour. Planning proposals at our airports are often linked to this contour. Figure 5 shows Government data; the 2006 data is not yet available from the DfT.

Contours are affected by several factors, including numbers of aircraft movements, changes in types of aircraft in the fleet, prevailing wind directions, population statistics and terrain.

We define a noise complaint as: “A report or request for information from a member of the community regarding a noise incident or operating procedure, excluding general property enquiries and instances where they state they do not want it recorded as a complaint”. Where multiple complaints are made by one person, this is recorded as one complainant. Where the number of individuals making complaints is unknown each is assumed to come from a separate person. The numbers of complaints and complainants are highly

variable between airports and do not necessarily reflect contour area or population. In many cases, complaints are made from locations outside the 57dB LAeq contour. The figures for Stansted and Southampton airports are particularly high relative to their size, which may reflect the growth rate of these airports rather than actual noise impact.

We are currently reviewing the accuracy of our monitoring systems to enable us to manage this impact even more effectively.

Quieter aircraft

There are different certifications for aircraft noise standards called ‘Noise Chapters’. The quietest Chapter currently available is Chapter 4, which was introduced in 2006, superseding Chapter 3. Even within these Chapters, some aircraft are noisier than others.

In 2006, we improved our performance to 0.23% against our 1% target. We introduced the quieter Chapter 4 category aircraft into our charging structure from April 2007.


We developed a new website for people who want to know about aircraft noise (launched in May 2007). Users can make a noise complaint or enquiry online, find information about the likely effects of aircraft noise in their communities and understand the complex causes of aircraft noise.

Perhaps the most exciting part of the site is ‘WebTrak’, where users can look at actual flight tracks of aircraft arriving and departing at Heathrow, Gatwick and Stansted and see how high planes fly in relation to where they live or work. The airport sites are available through www.baa.com/noise

Heathrow, Gatwick and Stansted each held noise seminars during the last 18 months. Representatives from local communities, environmental groups, central and local government, airlines and aircraft/engine manufacturers attended. The seminars aimed to raise awareness of noise impacts and of the perspectives of the regulator, industry, manufacturers and communities. Stakeholders had the opportunity to feed back to BAA.

In 2007 we will complete a benchmarking study of communication on noise by international airports and use the findings to update our noise communication plan. We will also consult local communities on our noise action plans, evaluate their responses and publish final versions by April 2008.

In 2007, the Government is expected to publish some new research into attitudes to aircraft noise in England. We await the findings with interest.

Figure 6: Aircraft exceeding Department for Transport take-off noise limits (London airports per calendar year)

Heathrow Gatwick Stansted

02 03 04 05 06 02 03 04 05 06 02 03 04 05 06

190

81

122

98

108

20

167

39

167

39

2/5

3/5 14

/12 12

/35

2/9 14

/13

7/8 7/14 24

/11

21/9

• Night • Day


The main factors that increase noise infringements are poor visibility, delays to flights and higher numbers of full planes at peak travel times, which require increased thrust and create more noise. As Figure 6 shows, the number of infringements decreased at Gatwick, while at Heathrow and Stansted they remained fairly consistent with 2005.

BAA increased levels of monitoring for noise infringements in 1997, and the Government introduced more stringent departure noise limits from February 2001. We are currently reviewing the accuracy of our monitoring systems to enable us to manage this impact even more effectively.

Our plans

By 2020: To be within the top 20% of companies for best practise in international airport noise management on comparable sites.

Our airports each have their own noise targets, and these are published in their individual corporate responsibility reports.

Table 4: Noise complaints – Total number of noise complaints and average complainants per quarter from all UK airports

Complaints andcomplainants

2005

Complaints andcomplainants

2006

Complaints andcomplainants 2007

(quarter 1)

Heathrow 4,505 428 5,734 530 927 266

Gatwick 6,189 225 3,165 183 782 93

Stansted 20,466 574 14,662 596 1,157 261

Glasgow 28 7 33 8 105 17

Edinburgh 77 19 261 48 19 15

Aberdeen 70 11 82 12 21 14

Southampton 1,475 185 1,778 166 32 58

We have five key aspirations for our future work. We will:• Demonstrate that we are reducing noise

impacts wherever practicable• Engage with communities affected by

noise impacts to better understand their concerns and priorities, and to reflect them as far as possible in airport noise strategies and communication plans

• Organise ourselves to manage noise efficiently and effectively

• Fully understand aircraft noise• Ensure planning policy controls the

development of noise-sensitive buildings in aircraft noise-exposed areas.

We recognise that indicators such as the area within the 57dB LAeq contour provide some basis for action to reduce noise climate, but that this does not entirely reflect community concern. We aim to establish new noise targets for the business, informed by the community engagement and research activities discussed in this section. We will also measure the effectiveness of our own actions to address community concerns.

Figure 7: Air quality monitoring – Heathrow area(NO2 in microgrammes per cubic metre) Harlington London Hillingdon Hounslow Cranford Slough Colnbrook Terminal 5 Oaks Road Terminal 5 main road Terminal 5 green gates Hillingdon 3 – Oxford Avenue

Dec 03 Dec 04 Dec 05 Dec 06Dec 01 Dec 02

Runn

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ean

NO

2/µg

m-3

Note: 2006 data are provisional.

20

25

30

35

40

45

50

55

60

2010 EU limit value



Air quality

The issue

Aircraft and road vehicles at and around airports produce a number of pollutants that affect human health and the environment, particularly nitrogen dioxide (NO2), fine particles (PM10) and carbon monoxide (CO).

The EU Air Quality Framework Directive requires member states, including the UK, to stay within set limits for pollutants. The UK Government has implemented a National Air Quality Strategy, which contains objectives to reduce health impacts and meet the requirements of the EU Directive.

Airports are not the only contributors to local air pollution. At Heathrow, for example, air quality is also affected by the nearby M4 and M25 motorways. There are nevertheless many practical measures that we can and do take to manage air quality at our airports.

Our approach

We work to tackle our own emissions, and to help airlines and other companies that use our airports to address the emissions they create. Our strategy has three core elements:• To improve air quality assessment

at airports• To influence airlines to cut emissions

from aircraft• To reduce emissions from

ground vehicles.

This is an important issue for BAA as national air quality objective levels for NO2 have been breached at some sites around Heathrow and there is a risk

that the current PM10 and 2010 NO2 EU limits may be breached in future years. The Government’s Aviation White Paper, The Future of Air Transport, states that permission to build Heathrow’s third runway depends on demonstrating that the runway will not compromise compliance with the EU air quality standards applying from 2010, among other environmental measures. The Government is leading the Project for the Sustainable Development of Heathrow, to prepare for a public consultation on this issue.

We work to reduce air pollutants from our airports by for example, using our landing charges to reward airlines that operate lower-emissions aircraft; promoting clean vehicles to third-party operators, contractors and suppliers, and buying vehicles that run on alternative fuels for our own fleet. We focus on our airports where potential air quality impacts are greatest and on emission sources over which we have most control. Heathrow and Gatwick, where concentrations of pollutants are closest to EU limits, receive the most attention.

Improving the accuracy of airport air quality assessments

We monitor air quality at a number of fixed sites in and around Heathrow and Gatwick. This helps us to work towards national air quality objectives and to play our part in helping the region comply with EU limits. NO2, PM10, CO and other pollutants are measured, with the main focus on NO2.

The DfT published recommendations for assessing air quality around Heathrow in 2006, and is expected to publish findings in 2007. This work will inform our future air quality strategies and assessment at all of our airports.

We are finalising an updated air quality action plan for Heathrow, which will include targets to reduce pollution concentrations at key monitoring sites and actions to tackle PM10 levels.


Influencing aircraft emissions through dialogue with the industry

Aircraft engines are designed to meet the emissions standards set by the International Civil Aviation Organisation’s Committee on Aviation Environmental Protection (CAEP). The current standard for new engines is called CAEP/4. However, engines vary significantly in the emissions they produce. Some engines made before the introduction of CAEP/4 produce more nitrogen oxides (NOX) than the standard, but some produce much less.

We charge airlines for the emissions they cause and therefore encourage airlines to use lower-emission engines. Our charges are based on the amount of NOX created during take-off and landing and are calculated for each individual aircraft.

This allows us to highlight differences in emissions performance and encourage airlines to improve their emissions technology. In 2007, we will review these emissions-related landing charges to identify opportunities to make them more effective.

Tackling ground-based emissions

At all airports, we continue to work on operational initiatives to tackle emissions at ground level. During 2006 we have been working with airlines and ground handlers to reduce aircraft APU use and initiated studies to look at possible changes to aircraft operations on the ground to benefit emissions, noise and CO2.

See case study above for our work to reduce emissions of vehicle fleets.

Understanding external developments and developing best practice for air quality management

We continue to keep up to date with external scientific and policy developments in air quality management, and contribute information to improve knowledge of the area. We reviewed and responded to a number of consultations in 2006: • The Department for Environment,

Food and Rural Affairs (Defra) consulted on its review of the air quality strategy for England, Scotland, Wales and Northern Ireland

• The Air Quality Expert Group, an independent advisory group to Government, published a draft report, Trends in Primary Nitrogen Dioxide in the UK

• Transport for London consulted with us during the development of the proposed London Low Emission Zone.

Our performance

This section details our activities to tackle air emissions in 2006/07 and the air quality monitoring results.

Figure 7 shows NO2 trends from December 2001 to December 2006 at monitoring sites around Heathrow. Data from Hounslow Cranford has been corrected since the previous report. An additional site, Hillingdon 3 – Oxford Avenue, has also been added.

It demonstrates recent compliance with the 2010 EU limit value at most sites. This site is just above, but within the acceptable range defined by the EU.

Case study: Tackling ground-based emissions

In 2006, we launched a new clean vehicle programme incentive scheme at Heathrow with a total fund value of £100,000. This programme is aimed at companies operating vehicle fleets in and around the airport, and encourages them to use lower- emission vehicles and to increase fuel efficiency.

The grants help companies to convert or replace inefficient vehicles, for example by replacing old diesel vehicles with electric alternatives. The programme has more than 45 current members, and continues to expand. We received five

applications for grants from companies operating within Heathrow. The projects will be implemented in 2007 and the grants will help these companies reduce NOX, PM10 and CO2 emissions.

BAA Heathrow is a member of the clean vehicles programme itself – 22% of the vehicles in our own fleet are hybrids run on LPG (liquid petroleum gas). BAA Gatwick is also a member.

Figure 8: Percentage of air traffic movements with NOX emissions at least 20% better than CAEP/4 standard • Heathrow • Gatwick

05 06 07

23.9

%

27.0

%

22.7

%

31.0

%

21.1

%

31.6

%

0

5

10

15

20

25

30

35

40

Figure 9: Air quality monitoring – Gatwick area (NO2 in microgrammes per cubic metre) RG1, Horley RG2, Horley

RG3, Poles Lane CA2, Schlumbeger House

Runn

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NO

2/µg

m-3

Note: Some 2006 data are provisional.

Dec 03 Dec 04 Dec 05 Dec 06Dec 01 Dec 02

2010 EU limit value



The London Hillingdon site, which is just north of the M4, is above the EU acceptable range for the first time. Road traffic emissions predominate at this site.

The air quality around Heathrow is reported primarily through the Heathrow Airwatch, www.heathrowairwatch.org.uk, which is sponsored by the London Boroughs of Hillingdon and Hounslow, Slough and Spelthorne Borough Councils, BAA Heathrow and British Airways. Some data from 2006 is still provisional and may change when ratified.

Local authorities run a number of monitoring sites near Gatwick – see Figure 9. Data from these sites is available from the London Air Quality Network, www.londonair.org, UK and the Sussex Air Quality Partnership, www.sussex-air.net. We are reporting on more sites than last year, as there is now enough data to allow trends to be plotted. As at Heathrow, some data from 2006 are still provisional and may change when ratified. During 2006, NO2 measurements remained below EU limits.

Gatwick is preparing an air quality action plan, which aims to reduce airport-related emissions for both nitrogen oxides and PM10.

Influencing aircraft emissions

Under the CAEP/4 standard, new aircraft engines must meet specified levels of NOX emissions, depending on their power output. Some engines have NOX emissions substantially below the CAEP/4 standard, and our emissions charges aim to encourage airlines to use lower emission engines. We track the percentage of aircraft movements with NOX emissions at least 20% below the CAEP/4 standard (CAEP/4 –20%), as this reflects even better performance than the standard.

The percentage of air traffic movements meeting or exceeding CAEP/4 – 20% decreased at Heathrow and increased at Gatwick in 2006. In the longer term, a greater proportion of aircraft are expected to meet or exceed the standard as fleets are replaced.

Our plans

Our long-term goal is to drive full compliance with future EU air quality limit values in residential locations where our airports make a significant contribution.

As our airports are not the only contributor to air pollution levels around our airports, and because we do not directly control many airport emissions sources, air quality around our airports is not within BAA’s direct control. We will continue to reduce the emissions we are directly responsible for and influence other emissions sources where we can.

In 2007, we will focus on implementing air quality strategies or action plans at Heathrow, Gatwick, Southampton and our Scottish airports.


Surface transport

The issue

Heavy traffic can build up around airports because of the large number of passengers, employees and suppliers accessing them every day by road. In combination with non-airport traffic, local road transport networks can become overloaded.

Congestion around airports affects businesses and local communities. It also creates emissions that can harm human health and the environment. Reducing congestion around airports and improving access via public transport was one of the key goals in the Government’s 2003 Aviation White Paper.

Our approach

Our objectives are to increase employee and passenger access to public transport and minimise the impact of our airports on the road network. We focus our efforts on increasing the number of public transport trips made by employees and passengers and increasing the efficiency of business traffic. We also engage with planning processes for future public transport to ensure our airports are easily accessible.

Each of our airports has a surface access strategy, local targets for public transport use and employee travel plans. These are developed in line with Government White Papers. We consult extensively with our stakeholders as we develop these strategies, including all levels of government, local transport providers, airlines and the Civil Aviation Authority.

We work with stakeholders near each airport through airport transport forums, discussing local projects to increase the number of public transport journeys.Improving public transport has wide-reaching benefits. Reducing car journeys helps to reduce related CO2 emissions and other pollutants. This is good for the climate and for local air quality. The reduction in congestion, air pollution and noise from road traffic helps to reduce our impact on the local community.

Our performance

The proportion of passengers travelling to and from our airports by public transport has increased by 3 percentage points on average across all our airports over the last five years, with a 4 percentage points increase at our London airports. Stansted continues to have the highest public transport use in the UK as well as the second highest in Europe.

The growth in public transport use at Gatwick and Stansted over the last year reflects an increase in the number of coach services from these airports. Nine new or improved bus services began operating from Stansted in 2006, including a demand-responsive service and express services to Nottingham and Leicester. The small reduction in public transport use at Heathrow since 2005 is linked to the temporary closure of the London Underground Piccadilly Line service during part of the year for the construction of Terminal 5.



Accessibility of our airports

These are some examples of our efforts to improve public transport, cycling and walking facilities options for employees and passengers:

StanstedWe have developed a new public transport interchange at Stansted, which will offer significant improvements to bus and coach access from summer 2007. We have been working in partnership with local councils around Stansted to develop a substantial new cycle and walking network and to provide over 80 new cycle and motorbike parking spaces. Some of the routes were constructed using recycled materials from our airport operations runways.

GatwickAt Gatwick we are working in partnership with Network Rail to create a public transport interchange and a new entrance to the south terminal.

EdinburghA number of new bus services to Edinburgh have been introduced over the past year including a night service, a direct service to Fife and an Edinburgh shuttle service. The shuttle service offers a door-to-door connection to destinations in the city centre for groups travelling together.

AberdeenA second taxi concession has been appointed at Aberdeen Airport to meet growing demand. While taxis are not the most sustainable travel option they are a necessity in rural areas. We are working to make taxi journeys as efficient as possible by reducing empty returns and encouraging shared journeys.

Employee transport plans and promotions

All of our airports offer a dedicated website with the latest travel planning advice for journeys to work. We also offer reduced fare travel cards and car share schemes. Electric cars and bikes are supplied for trips around the airport campus and travel planning is an integral part of the induction process for many of our new staff.

Over the last year, there was an 20% increase in membership of Stansted’s car share scheme and airport travel card sales increased by 22%. Both exceeded their target growth of 10%.

Our airport travel plans extend to all employees at the airport, not just those that work for BAA. Over 90 airport companies signed up to the Stansted travel plan in 2006.

Case study: Cutting emissions and improving freight efficiency

Our retail consolidation centre, opened in 2006, is cutting congestion and reducing the environmental impacts of deliveries to Heathrow. The new centre has reduced annual deliveries to the airport from 49,000 to just 8,300, cutting annual mileage by 500,000 kilometres and saving 368 tonnes of CO2. The centre has also been designed to make loading as efficient as possible.

The centre is used for freight, cargo, courier and mail services and is managed for the mutual benefit of all suppliers.

Figure 10: Public transport use to and from our London airports (% passengers by calendar year)

02 03 04 05 06

33.0 35

.5

36.1

36.3

36.7

Data provided by the CAA. Most recent year is provisional

Figure 11: Public transport use to and from our UK airports (% passengers by calendar year)

2002

34.4

30.4 34

.3

8.3

16.6

3.3

2005

36.9

32.3 39

.6

9.9

19.5

4.7 11

.5

2003

35.5

32.5 38

.79.

2

19.4

3.9

2006

35.2

34.8 40

.2

9.6

22.6

5.4 11

.135

.8

31.7

40.6

9.1

2004

20.4

3.5 11

.3

• Heathrow• Gatwick• Stansted• Glasgow• Edinburgh• Aberdeeen• Southampton (reported from 2004)


Transport initiatives within the airport

We introduced a clean vehicles programme at Heathrow and Gatwick encouraging companies operating vehicle fleets in and around the airports to use lower-emission vehicles and to increase fuel efficiency (see case study on page 25).

Protecting future access to airports

We are working to ensure that there will be good public transport access to all our airports in the future. For example, we are planning a major new initiative, the Airtrack rail project, to link Heathrow to new destinations including Reading, Guildford and stations in south west London by 2013.

The Gatwick Express is a popular way of reaching the airport, but was under threat following a Government review which looked to ease commuter

congestion. We recently used our links with local stakeholders to provide a detailed response to the DfT’s consultation on the future of the service. We continue to work closely with the DfT and rail operators to achieve the best possible rail service for air passengers. On 4 April 2007, the DfT announced the retention of a dedicated rail service between Gatwick Airport and London Victoria.

We continue to work with the Scottish Executive on the delivery of rail links to both Edinburgh and Glasgow airports, scheduled to open in 2012 at the earliest. We have also used our influence to secure improved bus services to Gatwick and Southampton airports, including the popular Fastway service to Crawley. We also helped to secure more and earlier UniLink buses to the centre of Southampton.

Our plans

We will continue to keep our airport surface access strategies up to date and work towards achieving our public transport and access targets. As well as ongoing initiatives, we will focus on potential growth areas and new innovations. For example, we will promote Heathrow Connect, a new train service to London Paddington. We will also find ways to maximise coach use.


Delivering for passengers


Our highest priority remains keeping passengers, staff and aircraft safe and secure at our airports. We also have to deliver the service our passengers have a right to demand. We are working to make our processes as effective and efficient as possible, and to reduce queuing times without compromising security.

Safety and security

The issue

September 11 2001 and other acts of international terrorism have highlighted the risk of terrorist attack to aviation. The International Civil Aviation Organisation (ICAO) and the European Union (EU) have introduced additional security measures to combat the risk. The UK also experienced a serious security alert at its airports in August 2006.

In the UK it is the Government’s responsibility to impose requirements on airports in response to security threats. Since August 2006, increased demands for screening passengers, aircrew and employees have been placed on airports in the UK. The challenge for airports is to implement these rules and protect their customers while minimising disruption to travellers.

Airports have an important role in keeping people safe from other causes of injury and criminal activity (ranging from theft of high value cargo to petty theft from passengers). They must also protect their employees and assets.

Our approach

Our highest priority is the safety and security of passengers, our employees and our partners. We provide a crucial public service and there is intense public scrutiny of our performance. It is also critical to the success of our business and nearly half of our employees work in security, in the following areas:• Searching passengers and hand luggage • Securing airport perimeters• Searching airport employees (not just

those working for BAA) • Providing the infrastructure for hold

baggage to be screened• Managing access to secure areas.

Pre-boarding screening is the public face of security at our airports, but there are many more layers behind the scenes. We coordinate closely on security with Government agencies and industry organisations nationally and at airport level. We also consult with the Department for Transport (DfT) and other agencies before any major airport development. The recent security alert in August 2006 reinforced the need for the whole airport community to be vigilant at all times and to continue to update processes to manage evolving threats.

We expect the threat level to remain at a high level for the foreseeable future and we are developing new processes to avoid disruption to passengers caused by increased security requirements and recruiting 1,400 new security employees. This is especially important at Heathrow Airport where we are operating at 98.5% capacity.

Whilst in other areas we can be transparent about our systems and plans, clearly this not possible here for security reasons. We continue, however, to evolve and improve our response to the threats we face.

Identifying risks

We identify any potential risks systematically with a risk management process. This helps us develop plans to deal with the consequences of any of those risks materialising and then to return to business as usual as quickly as possible.

We provide two channels for agencies to share information on security threats and criminal activity at our airports: The Airport Security Committee and the MATRA Group (Multi-Agency Threat and Risk Assessment). These ensure that all organisations involved in airport security, including the police, border agencies, airlines and cargo handling companies, are working to an integrated airport security plan.


Technology and security teams

We use a combination of technology and manpower to maintain security at our airports, as well as a range of screening technologies including archway metal detectors, explosives trace detection equipment, and x-ray screening equipment in conjunction with body and cabin baggage searches conducted by hand.

We are always looking to enhance the technical capabilities of our security systems. We work closely with the DfT and technology manufacturers to make sure we have the right technology to meet the changing security threat and minimise disruptions to journeys.

Cutting journey times through the airport is also a priority (see case study above). There is no single technology that can tackle all security threats. A highly trained and engaged security team is vital.

Before anyone can work in restricted areas at our airports they are vetted thoroughly in line with DfT guidelines. A criminal record check is conducted and employers take a full five-year reference history which is vetted by BAA. People that complete this process successfully are given electronically-coded photo ID cards which limit access to areas of the airport.

Training and awareness

We train our security teams to ensure that they operate beyond standards mandated by Government. Almost half of BAA employees work in security and they receive theoretical and practical training, exceeding the minimum amount recommended by the DfT. In 2006/07, we delivered over 34,000 hours of training to our security staff. We also have programmes at our airports to ensure that non-security personnel recognise potential risks. Our airports

take different approaches including providing special DVDs, training sessions and security awareness leaflets.

Crisis management

Our company-wide strategy for continuity planning and crisis management is tested every year with each airport carrying out exercises to test different scenarios. Our Head of Business Continuity Planning co-ordinates activity across BAA, working with specially appointed managers at each of our airports.

We also work with the UK Government to respond to risks on a national basis. We do this through the London Regional Resilience Forum, the Scottish Emergencies Co-ordinating Committee as well as other Government resilience teams.

This year we trialled ‘miSense’ at Heathrow Terminal 3, a system that uses biometric technology to allow automated immigration control. It simplifies a passenger’s journey through the airport and helps to strengthen security.

Passengers were invited to register their biometric details (ten fingerprints, irises and one facial image) and they could then use self-service border clearance.

Around 1,100 people registered with miSense during the trial and we carried out a survey to test their perceptions of the scheme – 345 people

replied to the survey and it showed that the trial was a success. 72% of people said that ‘faster journey times’ was the most important benefit of miSense, 61% said they would definitely recommend the scheme to a friend and 28% said they would probably do so.

We are now assessing the success of the trial to determine whether this technology can be used further.

5 minutes or lessour aim for queuing for 95% of the time at the majority of our airports

Case study: Improving security and cutting queues



Protecting our information infrastructure

We operate and maintain ICT infrastructure that is of national significance. In 2007 we completed Shield, a four-year programme of work for ensuring the integrity of our critical information systems.

Measuring effectiveness and efficiencyWe continually measure the effectiveness of our security processes. We use an independent organisation to audit and test our security arrangements.

We also assess perceptions of our security systems by interviewing passengers and monitoring complaints. In a process, called quality service monitoring (QSM) people are asked to rate security in four areas:• Staff vigilance• Staff helpfulness• Waiting time• Thoroughness of check.

We monitor efficiency of our security processes by measuring flow rates and queuing times.

Other security issues

Our airports also face threats from criminal activity ranging from theft of high value cargo to petty theft from passengers. We use CCTV cameras at our airports to deter and detect criminals and we are changing some of the forecourt and layouts to our terminal buildings to make them more secure. We also raise awareness among travellers and employees of the need to be vigilant by displaying posters around our terminals and through public address announcements.

We continue to work closely with Government departments to prepare for the possibility of a global flu pandemic. Our security teams also continue to be alert to threats of smuggling.

Advocating effective security

We lobby national and European government to ensure that security legislation is efficient and effective and works in practice at airports. For example, in 2006/07, in conjunction with other industry members, we lobbied for the introduction of common security arrangements in Europe which resulted in a consistent approach to hand luggage restrictions.

Airport safety

Although the vast majority of our passengers use our facilities without incident, some accidents do occur. The main causes of accidents to passengers involve escalators, trolleys and slips and trips. Our health and safety management systems aim to make our airports as safe as possible and our target is for there to be no serious injuries to the people in our care.

For more information on ‘Health and safety’ see page 52.

Former Deputy Prime Minister John Prescott personally thanked frontline security staff at Edinburgh Airport for their “dedication and professionalism” during the security alert in August 2006.

The heightened security restrictions caused widespread disruption across the UK air network, but less than 8% of flights departing from Edinburgh Airport were cancelled during the first week of the clampdown and the airport soon returned to a full schedule.

Mr Prescott met with the airport’s security team on a visit to the airport and praised their hard

work and commitment to maintain security and minimise disruption for travellers.

He said: “I would like to thank all the staff at BAA Edinburgh Airport for their hard work in response to the new security measures. They have worked with dedication and their professionalism has shone through, with staff giving up their own holidays to ensure that people in Scotland can travel securely and with the minimum of delay. BAA Edinburgh’s staff have been working under huge pressure over the last two weeks and it is a real tribute to their hard work that passenger service levels are returning to normal. Your effort is truly appreciated.”

Case study: Former Deputy PM flies-by to thank Edinburgh Airport staff


Our performance

In August 2006 we were faced with increased security requirements. This led to frustration among passengers and airlines, particularly at Heathrow where there were severe disruptions. The speed with which these requirements were implemented meant that delays to journeys were inevitable.

We are spending an additional £40 million to recruit 1,400 extra security guards and open 22 new security lanes across our seven UK airports. After the security alert we held workshops with our airline partners to discuss the new security restrictions and to develop action plans to respond to future security alerts.

We also used signs and leaflets at our airports and published information on our website to inform passengers about hand luggage restrictions to prevent delays to individual journeys.

Passenger health and safety

Please see ‘Health and safety’ on page 52 for our performance in this area.

Our plans

By the end of 2007: We will have enhanced screening equipment at our security check points.

We aim to reduce queues to five minutes or less for 95% of the time, for majority of our airports.

Improving the effectiveness and efficiency of our security systems will continue to be a key focus area for BAA in 2007. We aim to: • Meet or exceed the DfT’s standards

while minimising inconvenience to passengers

• Continue enhancements to our access control and CCTV systems

• Continue to explore the use of biometrics (see case study on page 31)

• Enhance the security arrangements for our information and IT systems.

We have set ourselves the aim of reducing passenger queuing times to five minutes or less at security for 95% of the time, at the majority of our airports. We aim to achieve this by investing in new security facilities, installing additional x-ray machines, and recruiting additional security officers.



Passenger experience

The issue

Airport congestion and increased security requirements mean that the experience of passing through our airports is not always as we would wish for our customers.

Queuing, the availability of retail and food services and distances travelled in the airport are all factors.

Our approach

Passengers are one of our most important stakeholders and ensuring a good experience for the people who visit our airports is vital to the long-term success of our business.

Achieving the highest standards of security without unnecessarily inconveniencing our customers is an important component of this and we are working to make our processes as effective and efficient as possible. We have set ourselves challenging targets to reduce queuing times without compromising security.

Accessibility of information for passengers is also key, and we aim to display information at our airports as clearly as possible using signs and leaflets. We also use our website to keep passengers informed.

We research customer perceptions through our QSM survey, which involves interviews with around 70,000 passengers. We set targets for our airports to improve scores in the QSM survey each year.

The feedback we receive is used to prioritise investment in our facilities and in the discussions we have with our many businesses that contribute to the passenger experience.

Our performance

Figure 12 (opposite) shows the trend of passenger responses to the question ‘How would you rate your overall experience in this terminal/airport today’. The results represent moving annual average scores, plotted at quarterly intervals, between January 2004 and March 2007.

The figure shows that the results for individual airports throughout the period ranged around the value of 4 on a scale of 1 to 5 where 1 = ‘extremely poor’ and 5 = ‘excellent’.

Overall, Figure 12 shows gradually improving scores over 2004 and 2005, followed by a decline during 2006 and early 2007. The exceptions to this trend were Southampton, which started to record lower scores during a period of growth in 2005, and Edinburgh, where improvements to its security processes in 2006 helped it to record better overall ratings.

For the remaining airports the major factor behind the declining trend in 2006 is believed to have been the extended queuing times caused by sudden changes to the rules governing the screening of laptops, size of carry-on baggage and carriage of liquids. Industrial action by airline staff and serious fog disruption also contributed to some periods of below-par conditions within our airports during the year.

Case study: Satisfied customers

In January 2007, Heathrow Express achieved an overall satisfaction rate of 96% in the independent National Passenger Survey, the highest ever score in the survey’s eight year history. The survey, conducted by the independent national rail consumer watchdog Passenger Focus, was based on interviews with 25,000 rail passengers.

In November 2006, we launched a new customer initiative which placed customer service station managers at Paddington Station and Heathrow Airport. This commitment to customer service has not gone unnoticed – the Heathrow Express was judged to be Team of the Year at the UK’s prestigious National Customer Service Awards.

3.7

3.8

3.9

4.0

4.1

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Figure 12: Passenger quality service monitor – overall score Glasgow Edinburgh Southampton Stansted Gatwick Heathrow Aberdeen

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Limiting queuing time and improving security

We are recruiting over 1,400 new security employees in line with our aim of reducing queuing times to five minutes or less for 95% of the time at the majority of our airports. We are also opening 22 new security lanes across our seven airports.

We shall monitor closely the effectiveness of this investment and continue to develop our capacity until we achieve an acceptable and consistent standard of service for passengers.

We use signs and leaflets at our airports and publish information on our website, to inform passengers about hand luggage restrictions to prevent delays to individual journeys.

For more information see ‘Safety and security’ on page 30.

Working with retailers

Retailers have an important role to play in enhancing passenger experience at our airports. We ensure that all retailers at our sites operate according to our corporate responsibility policies and to high health and safety standards.

Our plans

We aim to reduce security queuing times to five minutes or less for 95% of the time, for the majority of our airports.

We set targets for each of our airports to improve scores in the QSM survey.


Our people

Our people

Our employees are a crucial resource. We aim to treat our people fairly, to foster their development and to create a safe and engaging working environment, free from discrimination.

The issue

Companies succeed by attracting and retaining the best employees. To do this, they must offer attractive pay and benefits packages, opportunities for training and development and provide a safe workplace, free from harassment. Companies that encourage equal opportunities and diversity will also benefit from a broader resource of innovation and creativity.

Our approach

BAA employs around 13,000 people in the UK. Our major employment areas are security, retail, planning, the fire service and engineering. We aim to attract and retain the best people by creating a high-performing organisation where: • People are rewarded for the work

they do• People are encouraged to increase their

skills through learning and development • Team working is fostered • Equality of opportunity is a reality and

employees can work in an environment free from bullying and harassment.

Diversity

A diverse workforce helps us reflect the diversity of the population and understand the needs of our customers. We launched a new diversity policy in 2006 which commits us to treating employees and potential recruits equally whatever their race, colour, nationality, ethnic or national origin, sex, marital status, sexual orientation, religious belief, disability, age or community background. We also have a comprehensive bullying and harassment policy, which we publicise to all employees.

Read both policies in full at www.baa.com/corporateresponsibility

We have updated our employment policies and procedures to comply with the UK’s new age discrimination laws.

Pay and benefits

We aim to offer pay and financial benefits that help us recruit, retain and motivate employees to meet the needs of the business. Last year we negotiated a three-year pay deal with our employees.

All staff are eligible for an annual bonus based on company performance. Managers’ bonuses are based on a combination of the company’s performance and achievement of personal objectives.

Following the change in ownership, we introduced new long-term incentive plans for all staff: • Bonus Saver Plan for all employees –

where savings are enhanced by an end-of-saving-period bonus dependent on company performance

• Executive Share Option Plan (ESOP) for senior management.

These schemes were introduced in 2006/07 to replace those in place before the Ferrovial consortium acquisition.

We recognise the experience our long-serving employees bring and each of our airports runs schemes to reward employees after 10 years and 25 years’ service.

We run courses to assist individuals with the transition from employment to retirement, which are open to staff whatever their age. Our pension scheme has around 7,000 pensioners and 9,574 members still employed at BAA.

Learning and development

We aim to offer the training and development opportunities that our employees need to increase their skills and to adapt to new roles. BAA’s virtual university, called Uni, provides information on development opportunities including traditional classroom sessions, e-learning, coaching and mentoring.


We consider training and development as key to achieving our business objectives. In the future we will look for ways BAA employees can benefit from learning and development and job moves within the larger Ferrovial Group.

Health, safety and well-being

We want our employees to be able to balance work and home life. We offer flexible working options including:• Part-time working• Job sharing• Home working • Reduced hours• Special leave for domestic emergencies

and for volunteering • Maternity, paternity, adoption and

carer leave. Employee engagement We aim to keep employees informed about the business and to understand their views. We engage with our employees informally through team meetings and formally through our annual survey, ‘Make Your Mark’. Read the results of this below. Here are some of the other ways that we engage with employees:• Airwaves, our monthly internal magazine • ‘CEO Chatback’, a recorded telephone

service where employees can leave a question which is then answered in Airwaves (see case study on page 39)

• ConnectLive, our internal electronic news service on screens in employee areas.

Whistle-blowing

Employees’ concerns can usually be dealt with by their managers. In November 2006, we launched a confidential, independently managed phone line

which employees can use to raise any problems they feel unable to raise with their managers. This makes it easier for employees to speak out without fear of repercussions. We investigate all calls made to the phone line.

Managing change

This year we continued to restructure our operations to put decision-making as close as possible to the front line, bringing clear benefits to the customer. This follows our announcement of a change programme in 2005/06. This will mean the loss of jobs for around 700 managers and office workers by the end of 2007/08.

We aim to manage people through change carefully and fairly by communicating clearly with all those involved using a consistent approach. We have published a ‘change toolkit’ on our intranet which contains guidelines on how to achieve this.

Through our redeployment process, New Connections, we help people find alternative roles in BAA where possible, or outside the company if no suitable internal roles are available.

Trade unions

We are committed to working cooperatively with the unions that represent our employees. Our airport employees are represented by four trades unions:• Transport and General Workers

Union (TGWU)• Amicus• Public and Commercial Services

Union (PCS)• Prospect.

We meet formally with these trade unions to negotiate pay and employment policies through the Joint National Forum (JNF), and other national bodies. Each airport also has its own specific consultative arrangements. We have separate arrangements for consulting with ASLEF which represents our Heathrow Express employees.

New recruits

In 2006/07 we welcomed 2,206 new recruits. We will have recruited over 1,400 new security staff by 30 June 2007 to help us meet new requirements brought in after 10 August 2006.

1,900 coursesthe number of training courses that our staff took part in during 2006/07

Figure 15: Ethnic diversity of employees in UK (%) (including Heathrow Express and World Duty Free)

• Unknown• White• Other

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Our people

Performance

Diversity

GenderThe gender diversity of our workforce remained fairly consistent this year compared to 2005/06 – See Figure 13.

AgeOur employee age data shows a good spread of ages working at BAA – see Figure 14. While the number of people in the upper age group is small, but increasing partially due to our flexible retirement policy we introduced last year ahead of legislative requirements.

EthnicEthnic diversity data also remained consistent with the year before – see Figure 15. Due to Ferrovial’s acquisition, we delayed a diversity survey planned for last year but this has now been sent out to all employees. This will update our diversity data and will inform our future work in this area. In 2006/07 we reviewed our diversity policy, and also

rolled out diversity training across the business, including courses on the new age discrimination legislation.

Employee survey results

This year 58% of our staff responded to ‘Make Your Mark’, our employee survey, down from 70% in 2005/06. This fall in completion rates is due to the challenging year we have had including the Ferrovial acquisition and heightened security levels.

The survey showed a drop in the number of employees who said they were proud to work for BAA from 72% to 62%. We believe that this partly reflects our own employees’ view of the level of service we were able to provide in the difficult days following the heightened security levels at our airports on 10 August 2006.Following last year’s survey the Executive Committee identified three focus areas for improvements:• Strengthen our management teams –

by completing the change programme in operational areas, with most of our managers going through competency-based re-selection processes

• Focus on the management of each individual’s performance by improving performance feedback and measurement

• Improve the working environment.

This year 49% of employees agreed with the statement, “I think my physical working conditions are good”, a five point increase from 2005/06. This reflects the improvements we made to facilities and safety at our airports during that year.

We still have room to improve in the other two focus areas and they will remain priorities for this year. For example, we introduced a new performance management system in March 2007.

The Executive Committee has identified a further two priorities: improving communications and additional improvements in making our airports clean, efficient and friendly for our passengers and our people.


Employee engagement and communications

Communication with employees is vital, particularly during times of uncertainty like the takeover. During 2006/07 we:• Began to redevelop our HR intranet,

to include tools that help employees to do their job

• Launched a text message trial which allows employees to sign up to breaking news affecting BAA and media alerts

• Launched Airwaves Direct – an email news bulletin

• Held three conferences for senior managers.

Whistle-blowing

Since we launched our confidential employee whistle-blowing line in November 2006, 17 reports were made to the phone line. Each report was fully investigated.

Our employee turnover rate for 2006/07 was 12.3%, compared to the UK average of 16% for our industry.

Learning and development

In 2006/07 over 16,700 delegates took around 1,900 training courses in leadership, business and technical skills and almost 3,500 visits to Uni, our training intranet site. This represents a drop from 2005/06 when 25,485 delegates received training. This is due to the fact that individuals have already received a high volume of training as part of the airport change programmes. Trade unions

We agreed a three-year pay deal with the trade unions representing our employees which will provide pay stability for BAA and its employees up to and beyond the opening of Terminal 5 at Heathrow Airport. A number of national policies were agreed by all the Trade Unions, including a new approach to attendance management and policies to accommodate changes in UK legislation, such as the employment equality age regulations.

Our plans

The focus areas for 2007 will be:• Strengthening our management teams

to meet the new challenges• Managing individual performance • Improving internal communications • Making our airports clean working

and friendly for our people and for our passengers

• Continuing to deliver diversity• Continuing to build constructive

relationships with the trade unions• Supporting people through change

programmes.

We will also complete a diversity survey to update our diversity data and to inform our future work in this area.

Case study: A direct line to the CEO

When Stephen Nelson took the job as BAA’s new Chief Executive Officer he said that “my role is not always to be right, but always to be useful.” BAA’s new telephone service, CEO Chatback, is making this easier to achieve by giving him direct access to the ideas and feedback of employees on the ground.

Employees can dial a freephone number and listen to Stephen talk about a key issue on his mind, before having the chance to record their own question. Each month Stephen tries to respond to as many of the suggestions and comments he receives using his message on Chatback, or in BAA’s monthly internal magazine, Airwaves.

The response to CEO Chatback has been extremely positive, receiving 2,000 calls since it opened in December 2006. A further 2,000 people have downloaded Stephen Nelson’s monthly messages from the intranet.


Economic benefits

Economic benefits

BAA’s airports make a significant contribution to the UK economy. Aviation supports international trade and encourages businesses to locate in the UK. As well as the taxes we pay, hundreds of thousands of people are employed in and around our airports.

National economic benefits

Some 15% of the world’s international air passengers use BAA’s UK airports each year, signifying Britain’s importance as a leading aviation hub. Air travel is important for the UK economy and contributes significantly to the country’s prosperity, supporting regional infrastructure, logistics and travel.

The UK Government’s 2007 Budget Report identified globalisation and the integration of the world economy as key forces in Britain’s economic future. The report refers to the Eddington Transport Study of 2006 which stressed that a healthy economy needs excellent transport systems and that investment is required to provide the global transport connections necessary for economic growth.

As globalisation increases, aviation will continue to have a crucial part to play in maintaining the UK’s strength in import and export trade and service industries.

In 2006, Oxford Economic Forecasting (OEF), an economic forecasting and policy organisation, updated its 1999 report on the Contribution of the Aviation Industry to the UK Economy. This found that the aviation industry makes an £11.4 billion value-added contribution to the UK economy and supports more than 700,000 direct and indirect jobs – over a quarter of which are within airport boundaries. It is estimated that in 2004/05 the industry contributed at least £3.6 billion to the Exchequer.

Some of the value BAA creates as a company contributes to central and local government through taxes. Our approach to our fiscal obligations is agreed by our executive committee and is based on long-term decision-making. Our policy is to manage our tax affairs in an efficient manner and to fulfil our obligations in an open and transparent way, creating and maintaining mutual trust with HM Revenue & Customs (HMRC). Table 5 shows BAA’s tax payments for 2006/07.

Table 5: Tax payments 2006/07

Direct tax contribution (including business rates and national insurance)

£130 million

Indirect tax contribution (employees)

£80 million

Indirect tax contribution (excise duties)

£10 million

VAT

£500 million

VAT recovery (exempt aeronautical supplies)

-£156 million

In addition to the tax contribution generated by the group’s normal activities, the acquisition of the BAA group by Airport Development and Investment Limited in 2006 gave rise to exceptional contributions: £53 million in stamp duty on the transfer of shares, and £40 million paid by BAA and the group’s employees following the closure of BAA plc’s employee share schemes.

At present the group does not pay corporation tax in the UK, but it will become a major taxpayer again when the impact of financing costs falls away.

A facilitator of UK plc

The air transport industry makes a critical economic contribution through its influence on other industries and its facilitation of economic activity. It can influence decisions on where to locate businesses, improve productivity in other industries and promote foreign direct investment, international trade and international tourism.

Figure 16: Heathrow is falling further down the European rankings for destinations served

1990 – Heathrow 2004 – Heathrow 2010 – Heathrow Ranked second Ranked fifth Ranked seventh in Europe in Europe in Europe

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Aviation supports high-value, high-tech industries, sectors – such as ICT, research and development, biotechnology and financial services – which are increasingly important in advanced economies like the UK. The UK’s comparative advantage in aviation has helped the country become Europe’s leading destination for foreign direct investment and for corporate headquarters. UK Trade and Investment, a Government organisation, reported that in 2005/06 1,220 projects were undertaken in the UK providing around 34,000 jobs. Of these projects 12% were in software activities, 11% in ICT and 8% in pharmaceuticals and biotechnology.

This contribution is now at risk. Since 1990 Heathrow Airport has slipped from second to seventh in the ranking of number of destinations served (see Figure 16). At a critical time when Chinese airlines are seeking to expand routes to Europe, Heathrow’s two runways are

98.5% full whereas our main competitors have 25% spare capacity. If the UK does not accommodate the demands of doing business with China, we risk losing out to our European competitors. In the financial sector for example, competition between the leading commercial centres is intense, and Heathrow’s lack of capacity for growth is a potential threat to the continued pre-eminence of London as Europe’s financial centre.

In an increasingly global economy, UK plc benefits from the wide travel choices available from our airports. Britain’s strongest industries, such as pharmaceuticals, finance and communications are internationally mobile and depend on our services. Analysis suggests that the banking, finance and insurance sectors depend heavily on air transport services requiring, on average, six times more air travel than other sectors.

The UK is the sixth largest international tourist destination in the world in terms of the number of visitors. Aviation is critical to the tourism industry accounting for 3.5% of UK GDP. In 2004 almost three-quarters of the 28 million overseas visitors to the UK arrived by air, accounting for nearly 85% of the UK’s tourism revenue of £13 billion.

We believe the responsible growth of aviation is crucial to the UK economy remaining competitive and achieving high and stable levels of economic growth at national, regional and local levels. In 2006/07 we invested over £1.5 billion in our airports as part of a ten-year capital investment plan to ensure we provide the capacity and standard of service needed to support the UK economy.

£11.4 billionthe amount of value-added contribution the aviation industry makes to the UK economy


Economic benefits

Regional and local economic benefits

We work to maximise the contribution our airports make, including helping the communities around them to benefit. The growth in traffic at regional airports has also been an important factor in generating local economic growth and greater competitiveness.

Local access to flights is essential for the economies of Scotland, Wales, Northern Ireland and the English regions. Good connections to global markets ensure these regions of the UK get their share of inward investment and logistics activity and businesses based in the regions can compete on more level terms with those in the south east of England.

Our airports play an important role (directly and indirectly) in regional and local economies. They are significant businesses in their own right, providing direct economic benefits through employment of airport staff and indirectly through employment by companies fulfilling our investment and purchasing contracts. At Heathrow for example, 1 in 15 of the people in employment in neighbouring boroughs works at the airport (see Table 6). The Government’s Regional Spatial Strategy for the east of England notes that studies have shown that airports provide a wide range of employment opportunities with a significant proportion of jobs that do not rely on high skill and education levels.

We provide an important interface between the many companies based at our airports and local communities. We use our role to support programmes that maximise the local economic contribution of our airports. Our training and job

creation programmes benefit not only our own employees but also those of other companies operating at our airports and job seekers in the local community.The main ways we achieve this are by:• Creating opportunities for local

businesses to supply our airports• Developing the skills of airport staff

(BAA and non-BAA)• Providing employment and training

opportunities for local residents• Supporting inward investment and

regeneration activity in the regions around our airports.

Regional and local projects

Creating business opportunities for local suppliersBAA supports annual ‘Meet the Buyers’ events that give businesses the chance to sell their products and services directly to airport companies, local authorities and other major buyers, including contractors on construction programmes such as Heathrow’s Terminal 5. Since the first ‘Meet the Buyers’ was held at Heathrow in 1997, events linked to our airports have generated business worth an estimated £113 million for local small and medium-sized companies.

In 2006/07, we supported ‘Meet the Buyers’ events at Gatwick, Heathrow and Stansted airports. Last year, we reported that we wanted to develop ‘Meet the Buyers’ at each airport from a one-off event into a programme of support for local companies. This was achieved with the introduction of ‘Understanding airport procurement’ seminars, supported by Business Link and local authority partners. The seminars gave local companies an insight into the business opportunities within airport supply chains.

Across the whole programme, we engaged 1,154 local businesses in 2006/07, with 583 attending the ‘Meet the Buyers’ events. We estimate that the events have helped local companies win £10.5 million of new business.

Developing employment skills in the communityEmployment forums at Stansted, Gatwick and Heathrow bring together BAA, our suppliers, other airport companies and public agencies on a range of employment and training projects.

The Gatwick Skills Centre – now in its second year – has provided a full range of learning opportunities to airport employees (from BAA and its partners),

Table 6: Importance of Heathrow for local jobs

Local authority

Total number of people in employment

Number of people

employed at Heathrow

Percentage of people in

employment who work at Heathrow

Proportion who work at

Heathrow

Ealing 142,700 5,312 3.7% 1 in 27

Hillingdon 120,400 8,254 7.7% 1 in 15

Hounslow 107,200 10,695 10.0% 1 in 10

Slough 59,700 3,015 5.0% 1 in 20

Spelthorne 45,700 5,240 11.5% 1 in 9

Total 475,00 32,516 6.8% 1 in 15


including languages, pre-employment training programme (working with Jobcentre Plus), sign language and a Gatwick induction programme with a strong focus on customer service skills. Over 170 people have benefited from the Centre over the past year. A strategic plan is being prepared to make the centre self-funding by March 2008. We also continued support for the Crawley Foyer project.

At Heathrow, we significantly increased the number of airport staff taking part in nationally-recognised training programmes. In retail, 87 young people started the retail apprenticeship that we introduced in 2005. We secured a ‘Train to Gain’ contract in September 2006 to deliver National Vocational Qualifications across the airport, with 164 learners signed up by March 2007. Our status as a Centre of Vocational Excellence – a quality mark awarded by the Learning and Skills Council to highly-rated training provider – was confirmed in January 2007.

The Heathrow Retail Academy helps people get retail jobs at the airport, and gain qualifications once they are employed. BAA Heathrow manages the programme.

The Academy works with Jobcentre Plus and local training organisations to reach out into local communities and find unemployed people suitable for retail work at the airport. Every six weeks, the Academy’s Red Bus tours local estates and Job Centres in areas of high unemployment in Ealing, Hillingdon and Hounslow. Staff on the bus give advice on job vacancies, work benefits, childcare provision and public transport routes. Suitable candidates are matched to retail job vacancies, while others are offered support by our partner organisations, or referred to the ‘Routes to Work’ training programme (a 30-hour

pre-employment course, managed by Heathrow City Partnership).

Retail Academy staff interview people when they have completed the training, and try to match them to vacancies. Since the Routes to Work programme was launched in July 2005, it has helped 411 people into employment, with 199 of those gaining jobs at Heathrow.

We continued the London Stansted Partnership – Stansted Airport Skills Programme – which helps get unemployed people back to work. The programme is accredited by the NCFE (the UK’s national awarding body for further education) and is part of a wider partnership with Harlow College and 30 airport companies (see community investment section for more information).

Supporting inward investment and regenerationThe Gatwick Diamond (a West Sussex Economic Partnership), launched its strategy in 2007 focusing on transport, inward investment, smart growth and skills. Gatwick Airport is a significant element of the Diamond’s strategy with its comprehensive transport links, employment and skills development and its direct and indirect business links and opportunities. We play a key role in the success of this internationally recognised economic region, working together with public and private sector partners to ensure sustainable and balanced economic growth.

BAA is supporting local regeneration and is represented at senior level on strategic bodies including West Sussex Economic Partnership, Sussex Enterprise, regional CBI, The Essex Partnership, Thames Valley Economic Partnership and West London Business. We also provide financial support and business expertise for

regeneration programmes that target disadvantaged areas. Stansted, for example, supports the Thames Gateway, North London Partnerships and Harlow 2020. East of England International, part of UK Trade and Investment, encourages air route development to support inward investment.

In its business plan for 2007/08 it notes that international business is essential to the prosperity of the East of England region which already has around 2,000 subsidiaries of foreign companies accounting for 30,000 jobs. At Heathrow, BAA is business champion for the Heathrow City Growth Strategy, which brings resources from the London Development Agency and other partners to a range of regeneration projects near the airport in Hayes, Heston, Feltham and Southall that are managed by the Heathrow City Partnership. In 2006/07, the Partnership supported the ‘Rates to Work’ and ‘Meet the Buyers’ programmes at Heathrow, as well as a range of business advice and support services for local residents and young entrepreneurs.

Our plans

We are continuing with our strategy to help communities get the benefits that the aviation industry and our airports bring in generating economic activity, employment opportunity and prosperity.

We will share good practice across our airports so that we can replicate successful programmes and initiatives and develop common performance indicators. We will continue ongoing programmes.


Other environmental impacts


We aim to minimise all our impacts on the environment. We manage waste disposal, water consumption, environmentally sensitive materials, biodiversity and water and land quality at our airports.

Biodiversity

The issue

Noise and air pollution resulting from the everyday running of an airport impacts on local biodiversity. Airport construction can also cause loss of habitat for local plant and animal species.

To avoid the risk to planes from bird-strike it is necessary to disperse birds and to deter them by controlling biodiversity, including wild flowers, grass and soil-dwelling invertebrates.

Protected ecosystems near airports must be preserved in compliance with the relevant laws. Protecting wildlife and natural areas is also an important part of maintaining good relations with local communities.

Our approach

We aim to use land as efficiently as possible to minimise impacts on local wildlife habitats and follow the Government’s recommendations on land efficiency outlined in its 2003 White Paper on Aviation.

The landscape and wildlife habitats around our airports vary so we take an individual approach to site management and focus our efforts on vulnerable species and habitats.

We tailor our biodiversity action plans to meet local needs and measure performance against these plans. Our approach to site management at all our airports follows a number of broad steps:• Assessing local habitats and wildlife and

using independent ecological impact assessments to identify our impacts

• Consulting with the local wildlife trust, planning authorities and other stakeholders to understand local concerns

• Creating biodiversity action plans to reduce our impacts, and to compensate for any unavoidable loss of biodiversity

• Setting aside land for wildlife-sensitive management.

We aim to operate and expand our business in accordance with the good practice principles for business and biodiversity published by the UK Roundtable for Sustainable Development in 1997.

Our performance

We own, lease or actively manage the following areas for biodiversity around our airports as detailed in Table 7 (opposite).

In the UK, all our airports are on target to meet their biodiversity objectives. These are some examples of our efforts to manage our impacts on biodiversity during 2006/07:• At Heathrow Airport we survey nine sites

periodically to make sure the biodiversity management activities are appropriate. We share data from our surveys with our local biodiversity partners, such as local authorities and the London Wildlife Trust. During 2006/07 an independent audit measured our activities at Heathrow against the requirements of the Wildlife Trust’s Biodiversity Benchmark award scheme. We are implementing the recommendations of the audit including publishing a biodiversity policy statement and improving our management actions and monitoring plans to protect key species and habitats. During 2007 we will prepare our application for the award scheme at Heathrow and Stansted airports.

• We funded ecological surveys of sensitive wildlife habitats around Edinburgh Airport, that support species such as otters, bats, water voles and kingfishers. The surveys confirmed the presence of notable native species and identified a problem with invasive non-native plant species such as Japanese knotweed. The results will inform a new biodiversity action plan to protect these habitats and will help shape our development plans.


• We are part of the Gogar Burn Partnership Group (GBPG) to protect an ecologically rich waterway running beneath the runway at Edinburgh Airport. During 2006/07, the GBPG undertook a feasibility study to consider options for protecting the waterway which examined flood control, water quality and flow, public access and sensitive biodiversity.

Our plans

In 2007: To progress our application for the Wildlife Trust’s Biodiversity Benchmark award at Heathrow and Stansted.

In 2007: To continue to assess our impacts and manage biodiversity using our action plans.

70%our goal for waste recycling by 2020

Table 7: Biodiversity around our airports

Airport

Area of land owned, leased or

managed (hectares)

Area of land managed for

biodiversity (hectares)Number of

management plans

Heathrow 1,574 52.5 8 site plans

Gatwick 764 83 1 site plan with 4 habitat plans

Stansted 1,106 72 2 site plans

Southampton 1,132 3

Scottish airports(Glasgow, Edinburgh, Aberdeen)

929 1 2 site plans

Total 5,505 221.5 13 sites plans, 4 habitat plans



Environmentally sensitive materials

The issue

Some of the materials commonly used in our construction projects can have negative impacts on the environment, society or human health. For example, substances such as formaldehyde can cause skin and lung irritations and timber that is not sourced from sustainable forests can contribute to deforestation and climate change. To minimise these negative impacts it is important to source alternatives that are less harmful to human health and minimise impacts on the environment.

Our approach

We have developed a strategy to reduce the risks of environmentally sensitive materials to our business. This focuses on reducing the impacts of hazardous chemicals, HFCs and HCFCs, formaldehyde, PVC, timber and concrete.

We work closely with our construction suppliers to limit the use of sensitive materials wherever possible. We review their use every quarter and set performance improvement targets. Key commitments in our strategy include:• Concrete – to increase the levels of

recycled concrete aggregate and cement replacements in concrete mixes. This reduces the amount of virgin materials needed and diverts waste from landfill

• HFCs and HCFCs – we are evaluating more sustainable alternatives to HFC refrigerants and phasing out the use of HCFC refrigerants

• Polyvinyl chloride (PVC) – we aim to reduce PVC use by promoting alternatives where possible

• Formaldehyde – we aim to eliminate formaldehyde from internal wall boarding products, where it is most common

• Hazardous chemicals – we plan to phase out our use of hazardous chemicals in accordance with the legislative requirements of the OSPAR and Stockholm Conventions.

Our performance

We have made good progress in limiting the use of environmentally sensitive materials throughout our business. Performance highlights over the last year include:• Timber – 100% of our targeted

suppliers offered timber from certified sources with around 40% of this coming from FSC-certified sources

• Concrete – At Heathrow, Gatwick and Stansted airports we recycled over 79,000 tonnes of concrete, used over 2,500 tonnes of recycled concrete aggregate (just over 2% of all aggregate used), and used over 5,900 tonnes of pulverised fuel ash in place of cement

• Refrigerants – Two of our key suppliers began using non-HFC sealant foams in their work programmes

• PVC – we installed 4,400 metres of PVC-free electrical cabling. In the recent refurbishment of Terminal 3 we used a PVC-free canopy roofing membrane

• Formaldehyde – our suppliers installed over 860m2 of zero formaldehyde plywood, over 50% of the total installed during the year

• Hazardous chemicals – no supplier reported the use of any chemical currently listed in the OSPAR and Stockholm Conventions.

Our plans

In last year’s report we published a 2008 target to procure 100% of permanent construction timber from forests that have been certified to the standards of Forest Stewardship Council (FSC). However, having reviewed our key construction impacts, which are heavily focused toward temporary timber as well as permanent structures, and analysed our potential source base for sustainable timber, we no longer feel this target is appropriate or achievable, so have chosen to withdraw it. Our key action over the coming year will be to seek guidance from key external stakeholders, including WWF, to define a target for sustainable timber use that will set a progressive, as well as realistic, level of performance for the future.

We have now established a baseline for our sensitive materials use which we seek continuous improvement against. We will continue to work with our supply chain team to ensure targeted suppliers report sensitive material use in line with our strategy.

Figure 19: Waste disposal sources (000 tonnes) •% Incinerate •% Landfill •% Recycle/compost

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0.44

0.39 0.

41 0.42

0.40

4

0.41

6Previous year’s figures have beenupdated to reflect more accurate monitoring results

Figure 17: Sources of waste across UK airports • Retail waste 40% • Aircraft cabin 40% • BAA waste 10%* • Other sources of waste 10%

Other includes: Property tenants,flytipping, miscellaneous activities* Excluding construction waste


Waste

The issue

We are responsible for managing around 60,000 tonnes of waste at our airports, most of which is generated by companies involved in retail and aircraft cleaning. Our operations account for about 10% of total waste at our airports (excluding construction waste). We also generate waste from our construction and refurbishing projects. Waste management is a significant expense for BAA – costing approximately £5.5 million each year. Reducing waste and recycling more is not just good for the environment, it also saves us money.

Our approach

We aim to achieve more with less, to reduce inefficient use of resources and

to mitigate the increasing costs of waste management to the business. We will achieve these goals by recycling and minimising our own waste stream and influencing airport users to manage their waste production and disposal.

This approach reflects local and national waste objectives, including those set out in the UK Government’s 2005 Sustainable Development Strategy.

We are focusing our waste management efforts in four areas: • Effective measurement and

prioritisation of waste streams and use of technologies to improve waste management

• Encouraging customers and contractors to take responsibility for waste generation and disposal using both financial and non-financial incentives

• Reducing waste in our procurement• Understanding and acting on national

and local sustainability objectives for waste management.

Influencing our business partners

We want our customers and contractors to minimise waste and to manage it efficiently within their individual businesses. At the moment they are charged a set amount for waste disposal, rather than for the actual volume they produce. We are reviewing the way we charge for waste disposal, to link costs more directly to the volumes produced. This will provide a financial incentive for our partners and contractors to reduce and recycle more of their waste.

We are looking at a number of methods including a three-tiered charging levy for retailers and a system that will link individual users (via a swipe card) to their actual waste volume and then charge them accordingly.



Reducing construction waste We aim to minimise the amount of waste produced by the construction and refurbishment projects at our airports by:• Using a ‘consolidation centre’ to increase

efficiency during delivery, storage and handling of construction materials

• Using a logistics supplier to bring materials to the site at the most suitable time which reduces the potential to damage materials during storage and handling

• Standardise building components which can help to avoid materials waste

• Choosing demolition suppliers with strong sustainability practices, including recycling

• Using waste compactors (at Heathrow Terminal 5).

Our performance

General waste

This year recycling rates decreased to 23.6% compared to 24.6% for 2005/06. We missed our target to recycle 26% of waste. This was partly due to the difficulties of collecting and sorting large volumes of waste in the restricted and pressured environment after the revised security requirements in August. We also awarded the waste contract for Heathrow, Gatwick, Stansted and Southampton airports to a new supplier in late 2006/07. This was later than planned and led to a drop in performance at the end of this year.

Total waste production increased to 61,354 tonnes from 58,176 tonnes in 2005/06. Waste per passenger increased to 0.416kg compared to 0.404kg. The revised security requirements in August 2006 caused a large increase in waste production. There was also an increase in the number of caterers at our airports that produce more waste than non-food retailers.

Construction waste

Data for construction waste is not available this year due to the change in our waste management supplier. We will return to reporting this data in our next Corporate Responsibility Report.

Our plans

Target for 2007:• Recycle 30% of waste by 2007 • Recycle at least 80% of

construction waste.

Target for 2010: • Recycle 40% of waste • Recycle at least 80% of

construction waste.

Target for 2020:• Zero waste to landfill and recycle

70% of waste• Recycle 85% of construction waste.

Ongoing target:• Achieve 100% compliance with waste

duty of care.

We are reviewing our waste strategy (published in 2003) and will publish a new strategy in 2007. This will incorporate our improved understanding of our own waste streams, the recent changes in the waste industry and new technologies that have arisen in the last four years.

In 2006 we agreed a ten-year contract with a new waste management supplier at Heathrow, Gatwick, Stansted and Southampton. This will help us meet our targets by:• Using local material recovery facilities

to increase recycling• Using an energy-from-waste plant that

is currently being constructed and will be commissioned in 2008

• Introducing pollutants, oils and lubricants bins to help airlines manage hazardous waste generated during aircraft maintenance.

We are looking at the possibility of constructing a waste bulking facility at Stansted to reduce road haulage impacts when transporting waste to the energy from waste plant at Colnbrook. We will also look at adopting ‘mixed dry recycling’ to increase recycling rates. This allows waste producers to put all recyclable waste into one container, making collection of recyclable materials easier.

Energy from waste at Heathrow

We have commissioned a report into the opportunities of generating energy-from-waste at Heathrow using new technologies such as anaerobic digestion, gasification, pyrolysis and mechanical biological treatment. The results of this study will be published in 2007.


Water and land quality

The issue

Water running off airport surfaces is collected in drainage systems and eventually discharged to watercourses (rivers and streams) or sewers (which flow to sewage treatment works). If the quality of this water is not managed effectively, airports have the potential to cause water pollution by applying substances such as de-icers to runways, taxiways and aircraft. Water quality can be managed using flow diversion, water quality monitors, water treatment systems, oil separators and balancing ponds or lagoons.

Airport construction projects can also result in elevated levels of substances in soil – like hydrocarbons – that can damage the environment.

UK and EU legislation limits the amount of harmful materials permitted in water that is discharged from airport sites and it is vital that these standards are achieved.

Our approach

Our objective is to manage water and land quality to protect the environment at all times and to ensure compliance with regulations now and in the future.

We manage water quality through our environmental management systems and a water quality strategy which sets out the specific actions needed to achieve our commitments. These include:• Maintain clear procedures for incident

management, reporting and follow-up• Use robust risk identification and

evaluation processes• Use effective monitoring and control

of water systems to achieve compliance

• Fully understand and adequately monitor and control impacts caused by airport operations

• Understand wider stakeholder concerns and have a strategy to address these

• Have clear accountability for, and management of, water assets and ensure employees are adequately trained and supported

• Fully assess the impact of airport development strategies on water infrastructure.

Our performance

We achieved our key priority to meet all statutory environmental limits and we received no enforcement notices or legal actions in 2006/07.

We measure our performance through water and land quality initiatives at our individual airports. Here are some examples of successful initiatives in 2006/07:At Aberdeen, Edinburgh, Heathrow and Stansted airports we continued to use global positioning navigation systems on

de-icing vehicles. These use satellite signals to indicate where de-icer should be applied, avoiding over-application. Initial trials of the system at Aberdeen showed a reduction in pollution load of 26%. We installed automation and control equipment at balancing ponds at Stansted, significantly improving surface water drainage systems. This work reduced water quality risks by improving the control and speed of flow diversion equipment.

We continued to supplement chemical sampling with biological monitoring at our airports to more effectively measure the environmental impact of surface water discharges.

We treated contaminated land at the old fuel farm at Heathrow Terminal 5 using a system of ‘biopiles’. This promotes the natural bacterial activity in the soil to break down the hydrocarbon contamination into harmless products. Analysis of the soil has shown that the quality of the soil is good enough to be used on the construction site as backfill.

Figure 20: Total water consumption (m3) and use per passenger (litres)

0602 03 04 05 07

4,84

4,28

1m3

4,03

5,40

4m3

3,98

4,32

3m3

4,19

6,74

8m3

4,52

4,90

0m3

4,79

2,57

1m3

34L

32L

30L

28L



Our plans

In 2007: To continue to secure protection of the environment and regulatory compliance in all aspects of water and land quality management

In 2007: To develop performance standards for the continuous improvement of water system performance

In 2007: To evaluate opportunities to improve the efficiency of drinking water distribution systems to help reduce our environmental burden.

Water consumption

The issue

Clean water is essential to all life and to the health of ecosystems. It is a scarce resource in many regions and must be used sparingly. Some regions of the UK are already under water stress due to the effects of climate change and increasing population.

Airport operations and development use significant amounts of water which can contribute to the stress on water resources available to other users.

Our approach

We aim to use water as sparingly as possible by identifying how much, and in what areas of our operations we use it, and then implementing saving schemes.

Key elements of our approach to managing water consumption include:• Forecasting the future water demand

at each of our airports as passenger numbers increase and ensuring that consumption remains within the expected volumes

• Regular monitoring and investigation of exceptional usage

• Annual leak detection surveys• Incorporating low water technologies

into new building design, for example, we have a technical standard for new toilet facilities

• Water conservation initiatives within existing buildings where practical and financially viable.

Terminal 5 has been designed with water savings in mind. It will use two separate water systems, one for drinkable (‘potable’) water and one for activities such as toilet flushing and irrigation. The non-potable water is sourced from Terminal 5’s own rainwater harvesting system, which captures 85% of the rain that falls on the terminal, and groundwater boreholes drilled into the chalk aquifer, 150 metres below the site. These will reduce the demand from the public water supply by 70%.

The boreholes were commissioned early on in the terminal’s construction and have been used to supply water for construction activities.

Additional water-saving devices at the new terminal include dual-flush on all toilets and water-saving devices such as automatic on and off sensors and aerated flow in taps and showers. The British Airways CIP lounge has vacuum-flush toilets which use just 1.2 litres of water per flush. We predict that the water systems will be so efficient that we will beat our target of 25 litres per passenger.

Case study: Water saving at Terminal 5, Heathrow


Our performance

Figure 20 shows total water consumption and volume per passenger.

Overall water consumption in 2006/07 increased by 1.1% compared to the previous year. Water consumption at our airports increases as the number of passengers we handle continues to increase. More passengers using our terminals results in more retail, catering and sanitary uses of water. More flights means more plane washing and other activities that require water.

Water consumption per passenger remained at the same level as last year, with an increase of two litres per passenger, approximately 5%, over the past five years.

Our plans

In 2007: We will continue to focus on investigating and repairing pipe leakages.

We will also further develop our pilot water reuse project at Gatwick which involves rain-water harvesting, where water is pumped from a pond for reuse in irrigation and aircraft stand cleaning. We are currently investigating ways to make this water available for wider use on airside locations.


Health and safety

Health and safety

The safety of everyone in our care is of critical importance to us in running an effective and reputable public service. We continually seek opportunities to improve our health and safety performance and processes.

The issue

There are many potential hazards within airports. From slips and falls in public areas to complex procedures involved in moving aircraft, fuel and heavy equipment. Construction work during airport developments also involves significant hazards.

Ensuring the health and safety of everyone who comes into contact with their operations is crucial to the success of airport businesses. At BAA, this includes the 146 million customers who use our airports each year, our 13,000 employees as well as contractors and business partners.

Our approach

The health and safety of all our partners, staff and passengers, is a top-level priority. Our objective is to achieve zero serious injuries.

We aim to achieve this by:• Operating rigorous health and safety

management systems and measuring performance

• Evaluating risks to prioritise our health and safety efforts

• Continually emphasising the importance of health and safety to our employees

• Investing in training and encouraging an open culture where failures are investigated and lessons shared widely.

All health and safety incidents are investigated and we use safety campaigns and issue directives to all employees to prevent re-occurrence.

Health and safety governance

BAA’s Board and Executive Committee have ultimate responsibility for health and safety, assessing the thoroughness of safety systems and setting annual targets. In 2006, we commissioned an independent review of our health and

safety governance arrangements. This highlighted the strength of existing governance arrangements and identified possible improvements which we will implement in 2007.

Each of our airports has a dedicated health and safety department that work with line managers to ensure all activities carried out at the airport are undertaken safely.

In 2006 we began a process to combine management systems for health, safety and environment into one system called ‘Managing Responsibly’. The new system is designed to be more effective and efficient and is aligned with the international standards ISO 14001 and ISO 18001. We will complete the transition to the new system in 2007.

See our ‘Safety and security’ section on page 30 for further details of our approach to passenger safety.

9%the improvement in the number of lost time injuries to our employees in 2006/07

Figure 21: Passenger category three accidents (per 1,000,000 passengers)

05 06 07 Target

3.52

2.53

2.28

2.20

Figure 22: Employees reportable accident frequency rate (per 100,000 full-time employees)

883

567

650 72

5

566

Previous year’s figures have beenupdated to reflect more accurate monitoring results

03 04 05 06 07


Our performance

Our targets for 2006/07 were:• 2005/06 target: 2.20 category three

accidents per million passengers• 2005/06 target: 0.79 lost time injuries

per 100,000 hours worked• Ongoing target: to achieve zero

serious injuries.

Passengers

This data has changed from what we have previously reported. In March 2006, we revised the way we report passenger incidents to capture both the number of incidents and their severity. Incidents are now graded depending on the level of injury sustained by the passenger.

Over the last year, the passenger accident rate improved by 10% and by 35% over the last two years. We did not meet this year’s target of 2.2 accidents per million passengers.

Table 8: Reportable injuries per 100,000 employees by SIC Group

2005/06

Air transport 900

Supporting and auxiliary transport activities

832

BAA 737

Employees

We use two measures to monitor safety of our employees – reportable injury rate and the lost time injury rate, as defined by the UK Health and Safety Executive (HSE).

This year the number of reportable injuries reduced by 22% to 566 injuries per 100,000 staff. This is below the industry average (see Figure 22).

There were 149 lost time injuries (requiring days off work) to our employees in 2006/07 – an improvement of 9%. The main causes of lost time injuries are muscular-skeletal injuries and stress. We missed our target of 0.79 injuries per 100,000 hours worked. Our lost time injury target for 2007 is 0.75.

Figure 24:Construction – reportable accident frequency rate (per 100,000 hours) • Actual • Target

03

0.33

0.2

04

0.4

0.1

050.

42

0.2

06

0.28

0.2

07

0.19 0.2

Figure 23:Lost time injury rate (Per 100,000 hours worked)

05 06 07 Target

0.91

0.89

0.81

0.79


Health and safety

There were regrettably eight major injuries to BAA staff over the last year, an increase from five in 2005/06. This is substantially lower than comparable industry groups. Though it is hard to compare directly as there is no industry-wide definition of lost injury time. Six of the eight injuries were caused by a slip or trip resulting in a broken limb. An engineer caught a finger in a door losing the tip of his finger and a lead fire fighter was injured in a hose backlash incident. Each accident has been fully investigated and the lessons learned have been communicated across the business.There were no fatalities resulting from our operations this year.

Construction health and safety – employees and contractors

There were 39 reportable injuries to employees and contractors working on construction projects in 2006/07. The reportable injury rate dropped by 33%. Reportable injuries are a standard category of serious injuries defined by the UK HSE.

Key health and safety activities 2006/07

Fire safety Our forum of fire safety professionals works with the Local Fire Authority and Airport Fire Service to maintain a good fire safety culture.

We have introduced newly defined performance standards for fire safety in

response to recent legislative changes. These are available to all employees responsible for fire safety and include guidance documents and a modified fire risk-assessment process.

Health and safety trainingWe ran 23 health and safety training courses. These included training needed for specific jobs such as manual handling as well as training for all staff.

Health and well-beingWe launched a major new project to keep our employees fit and healthy and to help them get back to work as quickly as possible after injury or illness. Employees now have improved access to a physiotherapy service at our airports as well as to mental health specialists who typically support employees through minor stress-related illnesses.


Our plans

In 2007: 2.1 category three accidents per 100,000 passengers.

In 2007: 0.75 lost time injuries per 100,000 hours worked.

Ongoing target: To achieve zero serious injuries.

Since Ferrovial’s acquisition in June 2006, our management systems have undergone some changes. We will ensure clear accountability for health and safety during this business change, over the coming year.

Case study: Airfield safety

We are responsible for maintaining safety on the airfield. This requires a rigorous inspection regime. We regularly inspect runways, taxiways and aircraft stands, to keep them free from debris, as well as signs, markings and lights essential to the safety of aircraft and vehicles. We also check runway surfaces.

We have inspection teams to ensure that airside drivers and support organisations drive and park vehicles in a safe manner and all equipment is maintained in good condition. And each of our airports have specialist teams and equipment to keep airports as free from snow and ice as possible, as well as plans for dealing with fog, high winds and thunder storms.

Our operational and safety employees are also trained to work with local emergency services. They regularly take part in emergency exercises with police, fire and ambulance services and local authority and voluntary groups.

Our fire service has a fleet of over 50 fire appliances, including 20 vehicles, eight command and control vehicles and two boats. The service is equipped to deal with any incident from a minor vehicle collision to a major aircraft fire.

We conduct exercises involving all the emergency services, police, airline and BAA employees. At Heathrow, Gatwick and Stansted airports, this happens at least once a year.


Managing corporate responsibility

Managing corporate responsibility

Our approach to managing our business impacts responsibly is guided by our corporate responsibility policy and embedded in our business processes. Our recent change of ownership has led to some changes in the governance structures we use to manage corporate responsibility. The new structures are outlined below.

Governance

Our Board and Executive Committee are fundamental to how we manage and communicate on corporate responsibility. The role of the Board is to determine the company’s long-term strategy, monitor the achievement of business objectives and ensure that we meet our responsibilities to key stakeholders.

The Executive Committee develops and recommends to the Board, business objectives and strategies and ensures their delivery. Its recommendations, based on a risk and opportunity management framework, are used to identify social, environmental, economic and ethical issues.

The Board and Executive Committee sign off key policies and strategies for implementation throughout the business. The managing directors of BAA’s businesses are responsible for their delivery. The Board and Executive Committee are supported by several sub-committees including a Corporate Responsibility Board.

Each airport has its own senior management governance structure to oversee delivery of corporate responsibility.

Team responsibilities

Our corporate responsibility and environment strategy team is responsible for overall co-ordination of our programme, including policy and strategy development, performance monitoring and assurance, and internal and external reporting. The team works closely with a number of other parts of the business who are responsible for their local business agenda or who specialise in a particular aspect of corporate responsibility.

We have set up management groups – such as environment management, human resources – at corporate level and within airports to deal with specific issues and to share best practice across the organisation.

Management systems

Our programme is supported by management systems centrally and at our airports. We collect and store data at group level to ensure accuracy and consistency and to identify opportunities for continuous improvement. Key performance measures and performance against our long-term objectives and annual targets are reported to senior level committees.

Our airports each set annual targets on corporate responsibility and environment issues. As part of their assurance scope, ERM assessed progress against a selection of environment targets. Targets were defined as ‘target bettered’, ‘target achieved’, ‘some progress made’ or ‘no progress made’. Of the 50 targets assessed by ERM for the year 2006/07, 12 were assessed as ‘target bettered’, 10 were ‘target achieved’, 20 were ‘ some progress made’ and eight were ‘no progress made’. Our individual airport reports contain more information on the targets assessed and the progress against them.

Our airports operate individual environmental management systems. We encourage these to be developed in line with the international standard ISO 14001 but do not require formal certification to the standard (Stansted Airport and Heathrow Express are certified).

Our ‘managing responsibly’ system, which includes security, environmental and health and safety management, is outlined in Figure 25. This is supported by the development and implementation of environmental performance standards. Internal audit

BAA’s internal audit programme supports our management system. In 2006/07, health, safety, security and environment compliance teams carried out more than 80 days’ worth of audits. General risk audits took place across the business, including Gatwick Airport, Heathrow Terminal 5 and Southampton Airport. We also conducted audits across our UK airports based on specific risk areas.

Check

Review

Plan Do

Figure 25: ‘Managing responsibly’ system Key stages in the process

Managing responsibly

system

• Indentify and evaluate risks• Managing the risk of change• Legal and other requirements• Objectives, targets and programmes• Structures and responsibilities

• Training awareness and competence• Consultation and communication • Documentation and record management• Operational controls• Emergency preparedness, response

• Audit• Performance measurement and monitoring• Incident reporting, investigation

• Management reviews


Our internal audits of the environmental management systems follow ISO 14001 guidelines. Our World Duty Free has carried out the first phase of its assessments towards its certification. Our ISO 14001 assessments are carried out by ERM CVS, with a focus on results, requiring us to demonstrate performance improvements not just evidence. Risk management

BAA has a comprehensive risk management policy which covers the management of all aspects of risk to BAA’s business. A number of our risks fall under the broad heading of ‘corporate responsibility’. These include safety and security, environmental, reputational and industrial relations risk.

Our environmental risks, for example, include non-compliance with noise regulations caused by BAA or by a third party, and the risk that stakeholder concerns will restrict our licence to grow.

The actions to address these risks are integrated within BAA’s corporate responsibility programme. For more information on how we identify corporate responsibility risks – see ‘Material issues’ on page 9.

Training and awareness

We aim to equip employees with the knowledge and skills to embed corporate responsibility within our business through a combination of communication and training, offering a range of internal and external courses to help them to gain an overall understanding of the key BAA corporate responsibility issues. These courses vary according to seniority and role within the organisation. Individual training needs are identified between employees and their line managers. In 2007 we will develop a training strategy for environmental issues.

We run internal technical and leadership courses on specific issues such as safety,

security, cultural awareness and disability. In 2007, we are reviewing and refining our training strategy for environmental issues. Our aim is to equip operations staff with the skills they need to do their job and raise awareness and buy-in on corporate responsibility issues across the business. We also offer external courses for our senior executives, including the Forum for the Future Sustainability Masterclass and the Prince of Wales Business and Environment Programme.

Incentive schemes

We use incentives to help embed effective management of corporate responsibility within BAA. Staff with direct functional responsibility for corporate responsibility as well as senior managers and Board members have this reflected in their job descriptions and personal targets. These targets are assessed as part of our annual performance development process and linked to our annual bonus scheme.

ISO 14001the guidelines that BAA’s internal audit follows for environmental managements systems


Performance summary

Performance summary

Performance measure

Performance history

2004/05 2005/06 2006/07

Climate change (page 10–15)

CO2 emissions from energy use (tonnes) 424,407 443,522 436,320

CO2 emissions from energy use per passenger (kg CO2) 3.08 3.08 3.00

Total electricity consumed (GWh) 820 848 851

Total natural gas consumed (GWh) 264 286 245

Local community impacts (page 16–29)

Total donations to charitable causes total (£) 8,416,246 6,403,974 No recent data*

Percent of pre-tax profits donated to charitable causes 1.4 1 No recent data*

Number of employees involved in community activities in company time 1,017 1,035 No recent data*

Number of hours contributed by employees involved in community activities in company time

12,851 36,120No recent data*

Number of I-Volunteer applications per year 414 311 608

Population (000s) and area (km2) affected by noise (ie within 57 Leq contour) at London airports (calendar year)

247.1:195.3km2

258.4:193.9km2

No recent

data**

Percentage of Chapter III high aircraft at London airports 1.56 0.81 0.23

Number of infringements of government day and night take-off noise limits 180 289 226

Number of noise complaints 27,855 31,697 25,421

Average nitrogen dioxide concentrations (NO2) (in microgrammes per cubic metre) at residential monitoring sites around Heathrow and Gatwick compared to 2010 EU limit value

See Figures 7 and 9

See Figures 7 and 9

See Figures 7 and 9

Percentage of aircraft in fleet at Heathrow and Gatwick for CAEP/4 –20% NO2 performance standard

25.6 27.0 26.7

Percentage of passengers using public transport to and from our London airports (calendar year) 36.1 36.3 36.7

Delivering for passengers (page 30–35)

Overall quality service monitoring score for passenger experience (1 = extremely poor; 5 = excellent)

4.04 4.05 4.01

Our people (page 36–39)

Total number of UK employees 11,779 12,168 12,966

Permanent employee turnover 8.8 7.5 12.3

Number of internal promotions New measure 153

Number of external recruits 1,159 1,266 2,591

Number of employees receiving BAA award for 25+ years’ or 10+ years’ service New measure 49:85 26:126

*From London Benchmarking Group **From Department for Transport


Performance measure

Performance history

2004/05 2005/06 2006/07

Percent ethnic origin of employees (excluding Heathrow Express and World Duty Free) (other:white:unknown)

14:84:1 20:76:4 20:75:5

Percentage of employees responding to staff survey 60 70 58

Percentage of employees proud to work for BAA 69 72 62

Active members in pension scheme; pensioners 6,330; 8,958 6,450; 8,950 6,859; 9,574

Number of visits to Uni intranet site 6,563 4,543 3,433

Number of courses (including eLearning) delivered 2,196 2,423 1,888

Number of delegates on courses delivered 18,396 25,485 16,708

Number of dial-ins to CEO Chatback New measure 2,000

Number of whistle-blowing hotline issues raised New measure 17

Economic impacts (page 40–43)

Number of suppliers attending ‘Meet the Buyers’ events New measure 575

Estimated value of business generated (£) New measure £10.5m

Number of people accessing airport jobs as a result of training programmes New measure 202

Number of people completing apprenticeships managed or supported by BAA New measure 86

Number of people completing NVQs managed by BAA New measure 21

Other environmental impacts (page 44–51)

Percentage of owned or leased land managed for biodiversity 4.8% 3.9% 3.9%

Number of biodiversity management plans New measure 13 site plans, four habitat plans

Percentage of waste recycled or composted 21.8 24.6 23.6

Total waste produced (tonnes) 59,192 58,176 61,354

Waste produced per passenger (kgs) 0.42 0.40 0.42

Total volume of water used (m3) 4,524,900 4,792,571 4,844,281

Volume of water used per passenger (litres) 32 33.3 33.3

Health and safety (page 52–57)

Reportable injuries per 100,000 employees 650 725 566

Construction: reportable accident frequency rate per 100,000 hours worked 0.42 0.28 0.19

Number and severity of category three passenger injuries 3.52 2.53 2.28

Employee lost time injuries per 100,000 hours worked 0.91 0.89 0.81


Assurance statement

Assurance statement

BAA appointed Environmental Resources Management Ltd (ERM) to provide independent assurance on selected information presented in its Corporate Responsibility Report 2006/07 (the report).

Scope of our work

We were asked to provide assurance on:A Management’s approach to identifying

BAA’s key corporate responsibility issues and priorities.

B The following environmental key performance indicators (KPIs) for the 2006/07 financial year:• Air quality: Average nitrogen dioxide

(NO2) at residential monitoring sites around Heathrow and Gatwick compared to 2010 EU limit value (microgrammes per cubic metre)

• Noise: Population (000s) and area (km2) affected by noise (ie within 57 Leq contour) at London airports (Heathrow, Gatwick and Stansted)

• Climate change: CO2 emissions from energy use (tonnes)

• Surface transport: Percentage of passengers using public transport to and from our London airports

• Waste: Total waste volume produced (tonnes) and amount of waste landfiled, recycled/composted or incinerated (tonnes, percentage).

C Progress made against selected 2006/07 airport level environmental targets.

We did not undertake assurance work at airports for items A and B above. If the engagement had required us to do so, our conclusions may have been different.

Reporting criteria and assurance standards

BAA applies its own internal approach to managing and reporting the corporate responsibility assurance topics outlined above. These are described in the ‘Material issues’ section on page 9 and the ‘About our report’ section on the inside front cover. We performed our work in accordance with ERM’s assurance methodology which is based on the following international assurance standards: ISAE 3000, AA1000 AS and ISO 19011.

Respective responsibilities and ERM’s independence

BAA’s management is responsible for preparing this report and for the collection and presentation of information within it. ERM’s responsibility is to express our assurance conclusions on the selected scope of work agreed with BAA. During 2006/07, we have worked with BAA on other consulting engagements. However, we operate strict conflict checks to ensure independence of the company and individuals involved in our assurance activities is not compromised.

Our team and assurance activities

A multi-disciplinary team of environmental, noise, air quality, corporate responsibility and assurance specialists performed the engagement.

We conducted the following assurance activities:• Face-to-face interviews with the owners

of the five environmental KPIs at a corporate level, reviewed relevant supporting documentation and assessed the internal control / audit processes in place

• Face-to-face interviews with seven senior managers at corporate level to understand the processes in place for identifying and reporting BAA’s material issues. This was followed-up with relevant documentation review

• Visited all seven BAA UK airports to interview the relevant environmental target owners and review documentary evidence to support their self-assessed progress against each target

• Reported our assurance findings to management as they arose to provide them with the opportunity to correct them prior to finalisation of our work

• Reviewed the presentation of information relevant to the scope of our work in the report to ensure consistency with our findings.

Our conclusions

Based on the work undertaken, and in consideration of the limitations of our assurance engagement presented above, we conclude that, in all material respects:A BAA’s approach to identifying its

material issues is appropriately reported, and that the selected corporate responsibility issues set out on page 9 are an appropriate reflection of the outcome of this process during 2006/07

B The above selected environmental KPIs for the 2006/07 financial year set out on page 58/59 are appropriately reported

C BAA’s progress against selected 2006/07 airport level environmental targets set out on page 56 is appropriately reported.

Our key observations and recommendations

2006/07 has been a significant year for BAA including the change of ownership to ADI, a consortium led by Ferrovial, the introduction of new airport security rules and the Competition Commission inquiry. This context has been a challenging one and has affected progress against some of the targets within the scope of our work, as described at a high level in this report and in more detail in the airport level reports. However, we have observed through our assurance work that BAA has remained committed and focused on managing its corporate responsibility impacts. Based on our assurance activities set out above, and without affecting our assurance conclusions, we provide the following comments and recommendations for improvements.

BAA has made the following improvements in the last year:• Refined corporate responsibility

communications: responded to stakeholder feedback received on corporate responsibility communication and refined its overall approach to external reporting to better address different stakeholders’ information needs

• Target harmonisation and KPI review: started to align the airports’ approaches to setting and wording corporate responsibility targets and conducted an internal review to ensure continued appropriateness of KPIs.

The areas for BAA to consider for future improvement are:• Climate change: increase the scope

of measuring BAA’s climate change impacts from fixed energy sources to its full direct carbon footprint (eg from vehicles, refrigerants etc), and develop energy and carbon emissions efficiency targets at corporate and airport levels

• Target achievement: Ensure that management continues to work towards delivering the 2006/07 airport level targets where no or some progress was made

• Performance targets: further develop performance-based targets (rather than process-based ones) across BAA’s corporate responsibility issues

Environmental Resources Management LimitedLondon, UK28 June 2007

ERM is an independent global provider of environmental, social and corporate responsibility consulting and assurance services. Over the past four years we have worked with over half of the world’s 500 largest companies, in addition to numerous governments, international organisations and NGOs.

BAA response to ERM’s recommendations

BAA thanks ERM for their assessment work and contribution towards our corporate responsibility and environmental management.

The recommendations made by ERM are consistent with the aims that BAA has and we plan to respond positively to these recommendations: • We agree with the recommendation to

further develop performance targets and will continue our work in this area. In some cases, we recognise that new measures may have to be developed, and want to ensure these measures are consistent with external good practice, for example finding and setting performance measures for noise

• We will continue to work towards the 2006/07 airport-level targets where some or no progress was made. For a full discussion of our plans, please see our individual airport reports. In many cases the same targets have been rolled over into this year’s set of targets, for example waste recycling. In other cases, we will remain committed to fulfilling the outstanding target within the next few months and reporting this back in our next report

• In relation to measuring our full direct carbon footprint, our assessment work to date suggests that energy use is the most significant source of carbon emissions for which we are directly responsible, hence our focus on reporting and targeting emissions from energy. We are planning to further develop our carbon management strategy in future and as part of that will review the options for measuring and targeting our other direct carbon emissions.

For further information on BAA, please visit our website www.baa.com. If you would like this document in an alternative format, please call us on 0800 731 4247.

Produced by BAA Limited Design by Addison Corporate Marketing Limited

Registered office BAA Limited, 130 Wilton Road, London SW1V 1LQ © BAA Limted, 2007

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