More Heathrow rail links planned

THE AIRPORTS operator BAA is considering plans to launch direct rail services to Heathrow from Manchester and Birmingham following the opening of a Paddington to Heathrow link next month.

The company is also understood to have been talking to potential operators of Eurostar about bringing a direct link to Heathrow from Paris and Brussels using the Channel tunnel.

Sir Roger Egan, chief executive, said preliminary work indicated "it would be profitable" to link the northern British city centres with London's biggest airport.

But a big increase in rail traffic could be dependent on infrastructure changes at Heathrow which might only be realised with the opening of Terminal 5, proposed for 2005.

The new operator of Eurostar should be known next week when the Government finally makes its decision on who will use the Channel Tunnel link.

BAA will bring in Tony Blair to launch the Heathrow Express on 23 June. The company admits the service, which is costing it pounds 171m in capital expenditure this year, will make a bottom-line profit only in its fourth year.

But it should make an operating profit of pounds 4m in the first year and be followed by a St Pancras Express which will be based at the London station of the same name.

The company shrugged off criticism of the prototype FastTrain service from Paddington to Heathrow. The managing director of the Heathrow Express, Rod Hoare, said it had only been criticised by newspapers who loved to knock anything new.

The company said it was confident of reaching its passenger targets and wanted to grow its railway services as a drive into non-government regulated areas.

BAA yesterday unveiled pre-tax profits for the year to 31 March of pounds 480m, up 17.9 per cent. But the planned 1999 ending of duty free in Europe has triggered a search for more enduing lines of business.

Sir Roger admitted the lobbying to save duty free was "probably over" but he warned it passengers would stand to pay an extra pounds 10 per seat as transport operators sought to protect their margins.

His own company stands to lose pounds 80m a year in profits although this blow will be softened by a significant increase in landing charges on airlines.

BAA said it would increasing its lobbying for the company to be released from its "bizarre" position of being answerable to two regulators, the Civil Aviation Authority and the Mergers and Monopolies Commission.