baa corp responsibility 2008

8/9/2019 BAA Corp Responsibility 2008

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Corporate Responsibility Report 2008 BAA and Heathrow Airport www.baa.com


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Who does what at our airports

Running an airport is a complex business. While we controlsome aspects directly, other aspects rely on working closelywith stakeholders.

BAA is responsible for planning and undertaking airport developments, operating

the terminals, security, property management, retail facilities, re services and cargo.The responsibilities of other organisations are illustrated below:

1 Airlines

Responsible for checking-in passengersand their luggage, delivering hold luggageto its nal destination, cargo, providingand fuelling aircraft, boarding passengers,passenger safety and on-board catering

2 NATS

The National Air Trafc Services (NATS)

looks after air trafc control andmanagement, ensuring aircraft ying inUK airspace and over the eastern part ofthe North Atlantic are safely separated

3 CivilAviationAuthority(CAA)

Controls all aircraft routes at UK airports,regulates airlines, airports and NATS.The CAA also sets airport charges atthe London airports

4 TheUKBorderAgency

The UK Border Agency is responsible forsecuring the UKs borders and controllingmigration in the UK. They manageborder control for the UK, enforcingimmigration and customs regulations

5 Commercialservices

Individual businesses provide catering,

shopping, car hire, car parking andbanking services

6 Publictransportoperators

Many independently-run bus, coach, taxiand rail companies provide connectionsto and from our airports


3/40BAACorporate Responsibility Report 2008 1

About BAA

Airportexpansion 6Passengerexperience 8

Economyandsociety 10

Sustainablesupplychain 14Sustainableconstruction 15

GlobalenvironmentClimate change 16LocalenvironmentAir quality 20Noise 22Surfaceaccess 26Otherenvironment

Waste 27Water and land quality 28Biodiversity 29

Ourpeople 30Security 32Healthandsafety 33

Performancesummary 34Assurancestatement 36

Whodoeswhatatourairports IFCAboutBAA 1Aresponsiblebusiness 2Ourstakeholders 3ChiefexecutiveQ&As 4

Ourbusinesses

UKairports

We own and run Heathrow, Gatwick,Stansted, Southampton, Glasgow, Edinburghand Aberdeen airports, providing commercialaccommodation for 749 retail outlets and186 restaurants. In 2008, over 145 millionpassengers passed through these airports,with 67 million using Heathrow Airport. Weare in the process of selling Gatwick Airport.

Rail

We own and operate two public rail services Heathrow Express and Heathrow Connect.

Otherinterests

We have a 65% interest in and operateNaples Airport, and manage retail operationsat Baltimore Washington InternationalAirport, Boston Logan Airport and PittsburghInternational Airport.

In 2008 we sold our retail business WorldDuty Free as well as a signicant part of ourproperty portfolio. The planned sale of ourcommercial property arm, Lynton, and ourstake in the Airport Property Partnershipwas discontinued.

Aboutthisreport

This report describes our performance inmanaging our most important corporateresponsibility issues across all BAA airportswith a focus on Heathrow. Information anddata relate to the calendar year 2008.

The report is structured around vecomponents in which we:1 Set out how a responsible approach

is integral to how we do business.

2 Describe our approach to two signicantstrategic issues: airport expansionand improving passenger experience.

3 Examine the economic and social benetsof our business, and how we managethese through our supply chain, ourconstruction methods.

4 Describe the main environmental impactsof BAA and the aviation industry.

5 Review the role of our people, safetyand security.

Issues are described in the same waythroughout the report: Background. Approach. Performance. Plans.

Assurance

Our assurance programme aims to providecondence to senior managers andstakeholders that we are addressing materialissues, delivering against our policies andreporting accurate and comprehensiveperformance information. It includes internalaudits and external certications as wellas independent assurance of selectedinformation within our CorporateResponsibility reports.

Det Norske Veritas (DNV) are assuringselected key performance indicatorsand airport targets for BAA and itsairports, indicated in this report byDNVs logo. These were selected byBAA as part of a rolling programme acrossall Corporate Responsibility issues.

DNVs Assurance Statement is provided onpages 36-37.

Furtherinformation

In addition to this report we publishindividual airport reports, available atwww.baa.com

BAA is owned by Airport Development and InvestmentLimited (ADI), a consortium led by Spanish company Ferrovial,which operates construction, airports, highways and carparking service businesses.


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Become Europeshub of choice by

making everyjourney better

MakeHeathrowthe preferredchoice forpassengers

Improveairportoperationsevery day

Succeed

throughairlinesuccess

Run our

airportresponsibly,safely andsecurely

Focus peopleand teamson serviceand results

Deliver thebusiness plan

Transformthe airport

Win supportfor ourairport vision

2 BAACorporate Responsibility Report 2008

BAAsstrategicframework

While each BAA airport has its own uniquevision, all share a common set of strategicintents. These convey how we run ourbusiness to enable each of our airportsto achieve their vision.

A common strategic framework ensuresthat each action taken by our airports andobjectives for each employee can be linkedto our strategic intents.

Heathrowsvision

Heathrow connects the UK to the rest of theworld. It is the countrys only hub airport,providing frequent, direct links to the worldsmajor cities. Heathrows vision along withthe strategic intents through which this visionwill be delivered are illustrated in Figure 1.

Ourapproachtocorporateresponsibility

We believe that aviation provides a positivecontribution and can grow responsibly whiletackling environmental and social costs. Wedo not believe that the economic benetsgenerated by aviation mean that growthshould be delivered at any cost rather westrive for an aviation industry that grows andoperates in a sustainable manner andrespects environmental limits.

Running Heathrow responsibly is an integralpart of our business strategy and is essentialfor Heathrow to achieve its vision. In 2007,we reviewed our process for identifying andprioritising corporate responsibility issues.These issues are illustrated in Figure 2.

In 2008, we integrated these issues withinthe strategies that underpin Heathrowsstrategic intents and vision. These are subjectto the performance measures and targetsdescribed through this report.

We seek to improve performance where wehave direct control over the management ofissues. Where we do not have direct control,we seek to inuence our stakeholders tobring change.

Our approach is guided by our CorporateResponsibility policy, which can be reviewedat www.baa.com

Governance

BAAs board governs the companys long-term strategy, monitors the achievement ofbusiness objectives, and ensures that wemeet our responsibilities to key stakeholders.

The executive committee recommendsbusiness objectives and strategies to theboard and ensures their delivery.

Heathrows chief operating ofcer and theairport managing directors are responsible forthe delivery of BAA policies and strategies.

BAA has sub-committees of both its boardand its executive committee which reviewhealth, safety, security and environmentperformance. Each airport has its owngovernance group for these issues, reportingto the airport managing director.

A responsible business

Airport expansion

Climate change

Local environment

Noise

Air quality 1

Surface transport

Waste

Water

Other environmental issues

Sustainable construction

Aviation and society

National economic role

Regional and local economic role

Social benets

Passenger experience

Our people

Employee engagement

Equal opportunities and diversity

Developing and retaining people

Managing change

Operating airports safely and securely

Aireld safety

Health and safety

SecurityCommunity investment

Working with our partners

Aviation industry

Retailers

Suppliers

Construction partners

Third parties on-airport

How we run our business

Governance and ethics

Stakeholder engagement

Public policy inuence

Ethical investment

Human rightsManagement systems

Note: priority issues are shown in bold.

1 Identied as priority primarily for Heathrow only.

Figure 1:Heathrowsvisionandstrategicintents

Figure 2:BAAscorporateresponsibilityissues


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Our stakeholders

We seek to engage with our stakeholders through constructivedialogue in order to understand their views. Examples of howwe engage with our stakeholders include:

Localcommunities. At Heathrow,a hotline enables residents to contactus with questions and concerns. Wepublish community newsletters andhold forums where residents, councillorsand other stakeholders talk with airportsenior managers.

Customers. Each year, we interview70,000 passengers at our airports tounderstand customer perceptions andimprove levels of service.

Employees. We engage employees ina number of ways, including throughsurveys, appraisals and briengs.

Theaviationindustry.We are membersof Sustainable Aviation, a body representingairlines, airports, aerospace manufacturersand air service providers which drives theindustrys sustainability strategy. We arealso members of Flying Matters, a coalitionpromoting sustainable aviation growth.

Airlines.We work with airlines to ensureeffective deployment of environment,health and safety operating standards andin developing joint sustainability initiatives.

Government. We formally respond toGovernment and Parliamentaryconsultations and inquiries.

Localauthorities. Local authoritiesare represented on airport consultativecommittees, where they receive updatesand engage with our directors.

Regulators. The CAA sets charges atLondon airports and, along with TheEnvironment Agency, will become theindependent regulators for Heathrowon noise and air quality respectively.The Competition Commission hasrecently conducted an inquiry intoairport ownership.

Non-governmentalorganisations.We work with organisations such as Forumfor the Future to help shape our approachto sustainable development.

Suppliers. We create opportunities forsuppliers to meet and do business togetherat our airports.

HeathrowAirtrack,aproposednewraillinktoconnectTerminal5atHeathrowtothenationalrailnetworkatStainestothesouthandwestoftheairport,willprovideservicestoReading,GuildfordandLondonWaterloo.

We understand that there is strong sentiment relating to largeprojects such as Airtrack and that our engagement with communitiesis key to gain their support. In 2008 we ran two public consultationsfor the Airtrack scheme. We will publish the results in 2009 whichwill indicate how the views of our stakeholders have inuenced theproposed scheme and we will provide an update on the next steps

for the project.

We also engaged with affected parties through meetings,newsletters, our web site and public debates.

Case study 1

Maintainingcommunityrelations

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Chief executive Q&As

Youvebeeninyourroleforayear.Whatareyourviewsasyoutakestockofthelast12months?

Last year our business faced signicantchallenges. The global credit crisis meantfewer people passed through our airports.Our ownership structure was reviewed bythe Competition Commission and thechallenge of climate change has put aviationunder an intense environmental spotlight.

We also had a number of successes. We

reorganised the business to focus on front-line operations at our airports and deliveredimprovements in passenger service. Weput the nance in place to support futureinvestment and continued to deliver oursignicant capital development programme.

Going forward, we have a clear vision forHeathrow to become Europes hub ofchoice by making every journey better. Overthe next year, I will be focusing on threepriorities to help deliver that vision: Continuously improving our passengers

experience at Heathrow. Efciently delivering our signicant capital

expenditure programme. Clearly setting out our views on the

strategic issues for UK aviation, includinghow airports are regulated, and how wecan grow within strict environmental limits.

WhyiscorporateresponsibilityimportanttoBAA?

Managing the impacts of our businessresponsibly is fundamental to our success:our licence to operate and to grow dependson it. Those impacts are wide-ranging, fromnoise, air quality and climate change,through to ensuring that local people benetfrom employment generated by our airports.We strive to balance the interests of ourmany stakeholders, to enhance the positivebenets that our airports can bring and to

minimise the negative impacts.

I dont believe that aviation expansion is azero sum game and that we need to choosebetween growth and sustainability. I thinkthat we can grow within environmentallimits. Given that, its right and in ourcompanys long-term interests that corporateresponsibility is treated not as a separateadd-on activity, but is integral to everythingwe do, from day-to-day operations toplanning for a third runway at Heathrow.

AttheT5publicinquiry,BAAcalledontheinspectortoruleoutathirdrunway.Nowyouvechangedyourview,canyoubetrusted?

I get asked this question a lot. I dont thinkits right that we should make commitments

BAA has faced signicant challenges over the last year. Howdoes corporate responsibility compete with other businesspriorities? It doesnt, says Colin Matthews, chief executive,who argues that a responsible approach to business is integral

to the companys success.

Colin Matthews,

chief executive

Underlyingrevenue

2,590m2007: 2,226m

Numberofpassengers

145m2007: 150m

Underlyingoperatingprot

582m2007: 713m

Numberofemployees

13,2132007: 11,729



that are not within our remit. Ultimately thedecision on the development of vital nationalinfrastructure like Heathrow Airport needs tobe taken by the Government. We now havea clear government policy supporting thedevelopment of a third runway, which didnot exist in 1999.

In the past decade, globalisation hasaccelerated bringing associated increasesin air travel. Over half of Heathrows trafcis long-haul, yet Heathrow is falling behindcompetitors because of a shortage of runway

capacity. Thats why in todays world, weneed a third runway, built within strictenvironmental limits.

I accept that the decision to expand is adifcult one, particularly for those mostclosely affected in Sipson and Harmondsworthand surrounding villages. We will work hardto build strong links with our neighbours,listening carefully to their views. I will ensurethat we work with the highest professionalstandards and integrity as we develop ourexpansion plans.

Howcanyoujustifyaviationsgrowingcarbonemissionsinanincreasinglycarbonconstrainedworld?

Aviations emissions are relatively low,especially at a global level, though they arerising at a time when governments aroundthe world are setting ambitious targets toreduce emissions. But we believe thatthrough a combination of technologicaladvances and participation in European andeventually global emissions trading, aviationcan play its role in meeting the UKs overallreduction target of 80%.

A recent report by Sustainable Aviationshows that the UK aviation industry candeliver technological improvements to bringcarbon emissions back to todays levels by2050, while passenger numbers continue togrow. Over the last year weve seen the rstA380 services starting at Heathrow a greatexample of the introduction of plane that isquieter and less polluting than the planes itwill replace.

Im also pleased that aviation will be includedin the EU Emissions Trading Scheme from2012. Alongside that, were foundermembers of the Aviation Global Deal group,

pushing for an international solution in thisyears Copenhagen negotiations. Putting aprice on carbon through emissions tradingwill provide a strong incentive for thedevelopment and use of new technologies.It will also provide a clear cap, so even if

technology doesnt deliver as fast or as muchas we anticipate, net emissions from aviationwill not grow.

Weknowthatplanesarequieterandcleaner,buttheyarestillanannoyanceforpeoplewholiveclosetoanairport.Howdoyourespondtothisinthelightofexpansion?

We understand that noise from aircraft isan issue for those living close to the airport.Minimising the impact of noise is one of our

priorities. We encourage governments andmanufacturers to develop quieter aircraftand reward airlines that use quieter aircraftthrough differential landing charges. We alsone airlines that breach noise limits and usethe money for community projects.

People living in the noisiest areas qualify forrelocation assistance, and others living inhigh noise areas can apply for free doubleglazing and loft insulation. We offer noiseinsulation for community buildings such asschools and hospitals.

The Government has made clear that a thirdrunway will not go ahead unless there is nomore overall noise than in 2002 and hasasked the Civil Aviation Authority to act asan independent regulator on this issue inrelation to expansion.

AsEUairqualitylimitscomingintoforcein2010willnotbemetaroundHeathrowuntil2015,howcanyou

justifyexpansionplans?

Lets be clear. Unless air quality limitsare met, the Government will not allowadditional ights at the airport. TheEnvironment Agency will act as anindependent regulator on air quality.

We are determined to play our part to ensureair quality limits are met by inuencingairlines to use cleaner aircraft and reducingemissions from our ground vehicles. We arealso investing heavily to improve publictransport around the airport.

Giventhecurrenteconomicconditions,areyoucontinuingwithyourplansforsignicantcapitalinvestmentatHeathrow?

Yes, we are fully committed to ourinvestment plans for Heathrow. We aimto rebuild and refurbish airport facilities,providing London with an internationalgateway to be proud of, and deliver the bestpossible service for passengers and airlines.

Our plans over the next ve years includereplacing Terminal 2 with a brand newbuilding, and the continued refurbishmentof Terminals 3 and 4. We will also invest intraining our employees to ensure we are evermore focused on making passenger journeysas smooth and enjoyable as possible.

Yousaypassengerexperienceisapriority,doesnttheT5experienceindicateotherwise?

We are delighted that T5 is working sowell today, however we regret the signicantdisruption caused to passengers around itsopening. We have learnt valuable lessonswhich we will use to avoid the same mistakeswhen opening future facilities. The problemswere quickly resolved and the facility nowprovides one of the best passengerexperiences of any terminal in Europe,according to the independent Airport ServiceQuality ranking. T5 has brought 30% moreterminal capacity at the airport, freeing upthe space needed to start rebuilding andrefurbishing the other terminals to ensurethe entire airport delivers the experiencethat passengers expect. We are committedto maintaining T5s current high level ofperformance and improving the experienceof passengers across our airports.

Above

The new T5 buildingat Heathrow

Below

T5 baggagereclaim hall



Airport expansion

The demand for air travel in the UK has been increasing formore than 30 years and is predicted to continue to grow.We believe that airport expansion can be compatible withmeeting environmental limits.

The2003FutureofAirTransportWhitePaper

In 2003, the UK Government published TheFuture of Air Transport White Paper, settingout its plans to increase UK airportinfrastructure up until 2030 and seekingto balance that growth with addressingaviations environmental impacts.

The White Paper stated that while the prioritywas to make the best use of existing runways,two new runways should be provided in the

south-east in the period to 2030, the rst atStansted and the second at Heathrow, butonly if strict noise and air quality limits couldbe met.

It also safeguarded land for a second runwayat Gatwick, in case a new runway atHeathrow could not meet the environmentallimits. Land has been safeguarded atEdinburgh and Glasgow airports forexpansion, although new runways will not berequired at these airports until after 2020.

ExpansionatStansted

The Government has recently deferred BAAsplanning inquiry for a second runway atStansted pending BAAs decision on howit proposes to respond to the CompetitionCommissions nal report.

ExpansionatHeathrow

There has been signicant growth in passengernumbers at Heathrow over recent decades.The airport currently handles 67 million

passengers and 470,000 ights a year,compared with 48 million passengers and427,000 ights a year in 1996. As a result,Heathrows runways have been operating ataround 95% capacity, compared to around75% at its main European competitors. Thishas led to increased delays, lower resilienceand fewer destinations served.

This White Paper supported a third runwayat Heathrow, but only if the followingconditions could be met: There should be no more aircraft noise

than in summer 2002 (see pages 22-24for more details).

Below

Aerial photograph

of Heathrow, 2009.



Air quality must be within EU limits inforce from 2010.

Public transport improvements mustbe made to help manage roadtrafc congestion.

Following further study, and an extensiveconsultation during 2008, the Governmentannounced in January 2009 that thoseconditions could be met and that itsupported expansion to a three-runway, six-terminal airport. Specic outcomes included: Support for a third runway and sixth

terminal, but no mixed mode onexisting runways.

Initial capacity will be limited to 605,000ights each year. Any expansion beyondthis to the full capacity of 702,000 ightswill be subject to a review to establishcompliance with environmental conditionson noise, air quality and climate change.

A new target (to be reviewed by theCommittee on Climate Change inDecember 2009) was set for UK aviationto reduce CO2 emissions by 2050 to below2005 levels.

The CAA and The Environment Agencyhave been appointed as the independentregulators on noise and air qualityrespectively.

Additional slots for the third runway willonly be used by the most fuel-efcientand low-emissions aircraft.

The Cranford Agreement will end, whichwill allow aircraft to take off on the northernrunway towards the east of London.

Westerly preference and runwayalternation will be maintained.

Surfaceaccessmeasures

Heathrows expansion will be accompaniedby a package of measures to improvetransport links to the airport. This will includeincreasing the Piccadilly line capacity andintroducing Crossrail from 2017.

The Government welcomed BAAs lead onAirtrack, providing direct rail access to theairport from the south and west, andrecommended schemes for connectingHeathrow to the Great Western mainlinebe reviewed.

The Government also announced the HighSpeed 2 (HS2) proposal, a high-speed rail linelinking Heathrow and the north-west of

England, including a Heathrow InternationalInterchange linking HS2 to the GreatWestern mainline and Crossrail. We believethat high-speed rail will complement ratherthan replace air travel. A new high-speed raillink would not remove the need for

additional runway capacity at Heathrow,because a third runway would serve differentmarkets to a new rail link.

Chaired by Sir David Rowlands, the formerPermanent Secretary to the Department forTransport (DfT), HS2 will report ndings bythe end of 2009.

Managingexpansionresponsibly

Airport expansion will deliver signicanteconomic and social benets (see pages 10-12). We also believe the expansion of aviationcan be compatible with respectingenvironmental limits.

Environmentalimpacts

By incorporating aviation within the EUEmissions Trading Scheme (ETS), the climateimpact of aviation will be addressed in thesame way as with other polluting industries.Airlines will be given an emissions allowanceand will have to buy permits if they exceedtheir quota (see page 19). This will incentivisethe uptake of new technology and limitnet emissions.

Noise limits can be addressed throughmanufacturers designing quieter aircraft.Air quality limits can be met throughimprovements in road vehicle emissions andaircraft engines. Improvements to publictransport will help to reduce road congestion(see page 22).

Consultingcommunities

We want to expand our airports withthe support of our stakeholders and welisten to their views to inform the way weplan developments.

We are required by law to carry out publicconsultations on proposals for airportexpansion. We seek to consult for longerthan the required period and continue toengage with local communities throughmeetings, newsletters and discussion forums.

Read more about our efforts to engage withlocal communities on page 3.

Compensation

With expansion, factors such as house pricedepreciation (blight) can occur. Wherenegative impacts occur, compensationschemes are being made available foraffected communities.

The Property Market Support Bond schemehelps to protect local property values insidethe expanded boundary of a three-runwayHeathrow. It provides a bond tohomeowners that guarantees the value oftheir property, so that they can sell propertiesin the area knowing that the property valuewill not be affected.

The Home Owner Support Scheme protectsproperty values in the Heathrow areaforecast to fall within the 66dB LAeq noisecontour of the new runway. The schemeallows property owners who wish to moveand have been unable to sell their propertyfor a price within 15% of the market value tosell their property to BAA at an unblightedprice (once we have announced our decisionto apply for planning permission).

Homeowners able to sell within 15% of themarket value can receive a contribution tosale costs of up to 5% of their sale price.

As work progresses, BAA expect to periodicallyreview these schemes to make sure theyremain appropriate.

Left

Consultationon proposeddevelopment

Below

Piccadilly lineat Heathrow


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Worst Best

Q4 2008

ASQS

core

Heathrow Comparable airports worldwide

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Q4 08

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3.75

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QSMScore

Queuing time at Security (departing passengers only)

Overall airport experience departing passengers only

Overall airport experience arriving passengers only


Passenger experience

BAA is focused on improving the experience of the 145 milliontravellers who pass through our airports each year.

Background

Congested airports, with limited capacity,mean that the experience of travellingthrough our London airports is not alwaysas good as we would like it to be. We areworking hard to refurbish our airports andbuild new terminals to improve ourpassengers experience.

Ourapproach

Our aim is to continually improve our

passengers experience by providing modern,clean, efcient terminals and great customerservice. The Governments approval forexpansion at Heathrow sets the foundationto deliver an airport the UK can be proud of.

We are increasing the use of real-timemonitoring at Heathrow to assess howsmoothly passengers pass through ourairport, enabling us to plan and allocate

our resources more efciently. This hasalready resulted in a signicant improvementin our security queuing performance: 95% ofthe time, passengers wait for no longer thanve minutes in security queues.Workingwithpartners

Of the passenger processes in the airportterminal, BAA are only solely responsible forsecurity. This means that the overall passengerexperience depends on the performance ofairlines, handling companies and Government

agencies working in partnership with BAA toimprove the end-to-end passenger experience.In 2008, we negotiated service levelagreements with the UK Borders Agencyat Heathrow which aim to deliver fasterimmigration clearance.

Queues at airline check-in counters can alsocause passenger frustration, so we work withairlines and their ground handling agents to

support the use of off-site check-in and self-service check-in machines. For example, atHeathrow, we have implemented mobilephone boarding cards with bmi andLufthansa, allowing passengers to check inonline with an electronic boarding card sentto their mobile device.

Ourperformance

BAA

We regularly participate in the international

Airport Service Quality (ASQ) survey. During2008, we used the results to drive serviceimprovements for customers.

Figure 3 shows the improvement inHeathrows performance relative tocomparable airports over the past year.

We frequently ask passengers their viewsabout service and quality at BAA airports.We research customer perceptions throughour Quality of Service Monitor (QSM) survey,which involves around 70,000 passengers ayear. Passengers are asked to rate around 40aspects of their departure experience and 20aspects of their arrival experience. We settargets for our airports to improve scores inthe QSM survey each year. Key QSMindicators include crowding, comfort,cleanliness, queuing, security, retail andrestaurants.

The average score for overall airportexperience across BAA airports improvedfrom 3.95 in 2007 to 4.06 in 2008. Theaverage score for queuing time improvedfrom 3.77 in 2007 to 4.12 in 2008. Figure 4shows our performance in overall airportexperience and security queuing time forHeathrow since 2004.

We believe that the better airport experiencereects the improvements to customerservice brought about by the opening of T5,which eased capacity at other terminals, aswell as general improvements in areas suchas cleaning and security times.

In August 2008, 99% of passengers waitedless than ve minutes in the central searchareas, compared with 75% in August 2007and 45% in August 2006. We have achievedthis by implementing new technology,standardising the security process, recruiting

around 600 more security staff and addingsecurity lanes.

Figure 3:Heathrowsimprovementinrelationtocomparableairports

Figure 4:OverallairportexperienceandsecurityqueuingtimeHeathrow


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Ourplans

BAA

In 2009 we will: Continuously improve the passenger

experience, reected in improved QSMscores, aiming to make every journeybetter for passengers.

Maintain and improve on performanceagainst the regulated Service QualityRegime measures.

Conduct a review of the QSM survey to

focus more attention on aspects that aremost important to passengers.

BAA opened Terminal 5 in March 2008. The rst week of operationsuffered disruption to service resulting from some problems that werethe responsibility of both BAA and British Airways. We have learntvaluable lessons which we will use to avoid the same mistakes whenopening future facilities. The problems were quickly resolved and thefacility now provides one of the best passenger experiences of anyterminal in Europe, according to the independent Airport ServiceQuality ranking. T5 has brought 30% more terminal capacity atthe airport, freeing up the space needed to start rebuilding andrefurbishing the other terminals, to ensure the entire airport deliversthe experience that passengers expect.

Case study 2

Terminal5opening

Heathrow

Between 2008 and 2012 Heathrow is investing4.1 billion to refurbish and renew facilities.This will transform passengers experience ofthe airport and will provide London with acontinuously improving international gateway.

A new terminal will replace Terminal 2.Terminals 3 and 4 are being refurbished,including forecourt redevelopments, check-inrefurbishment and extension, refresheddepartures lounges, new air bridges ready

for the new A380 super-jumbo, baggageupgrades and many other improvements.

Our approach to sustainable construction isoutlined on page 15.

Read more about our approach toimproving the passenger experiencein our individual airport corporateresponsibility reports available atwww.baa.com

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Frankfurt

Heathrow

Paris CDG

Amsterdam

1990

Heathrow ranked second in Europe

0 50 100 150 200 250

Destinations

Frankfurt

Amsterdam

Paris CDG

Heathrow

2004

Heathrow ranked fourth in Europe

0 50 100 150 200 250

Destinations

Frankfurt

Paris CDG

Amsterdam

Munich

Rome

Madrid

Heathrow

2010

Heathrow ranked seventh in Europe

0 50 100 150 200 250 300

Destinations


Economy and society:National economic contribution

As well as directly providing over 180,000 UK jobs,aviation benets the UK economy by facilitating tradeand attracting investment.

Nationaleconomiccontribution

The air transport industry makes a criticaleconomic contribution as an enabler ofbusiness. It inuences decisions on wherebusinesses locate, helps improve productivitythroughout industry and promotes foreigninvestment and international trade. TheUKs investment in aviation has helped thecountry become one of Europes leadingdestinations for foreign investment andcorporate headquarters.

A 2008 study by York Aviation, an aviationpolicy consultancy, for the City of Londonconrmed that aviation services are a criticaland expanding requirement for the City andfor London as a whole.

In 2006, Oxford Economic Forecasting,an economic forecasting and policyorganisation, updated its 1999 report, TheContribution of the Aviation Industry to theUK Economy. This found that the aviationindustry contributes 11.4 billion to the UKeconomy, supporting more than 520,000direct and indirect jobs over a quarter ofwhich are within airport boundaries.

Although BAA does not currently paycorporation tax because of interest paymentsarising from debt, we remain a signicant UKtax payer.

Thecontributiontotourism

The UK is the worlds sixth largestinternational tourism destination, in terms ofthe number of visitors. In 2007, over three-quarters of the 33 million overseas visitorsto the UK arrived by air, accounting for 86%of the UKs tourism revenue of 16 billion.Tourism accounts for around 3.5% of UK GDP.

Air fares and convenience at airportsinuence decisions about where to visit. Itis important to maintain sufcient airport

capacity, both to support continued airlinecompetition and affordable fares forpassengers, and to ensure that passengershave positive experiences as they travel.

Regionaleconomicrole

Air travel helps the economies of Scotland,Wales, Northern Ireland and the Englishregions. Airports, as employers, providers ofservices and investors in infrastructure, areimportant economic generators in their ownright and facilitate and attract other businessactivities. Good connections to internationalmarkets ensure these regions benet frominward investment and help businesses in theregions compete.

MaintainingtheUKsposition

This economic and social contribution isat risk. As illustrated in Figure 5, by 2010,Heathrow will have slipped to seventh in theinternational airport ranking by number ofdestinations served, from second in 1990.Heathrows two runways are 95% full,whereas our main competitors have 25%spare capacity. This will affect the UKs abilityto respond to international business demand.

The potential damage to the UKs economy

if we are unable to meet the demands oftrading with emerging economies shouldbe clearly evaluated. If the UK constrainsaviation growth while our Europeancompetitors encourage it, the countrywill be disadvantaged.

Figure 5:Numberofdestinationsserved



Economy and society:Heathrows contribution

As the UKs largest airport, Heathrow has signicantimpacts at a regional and local level. We work tooptimise these benets.

Understanding Airport Employmenttraining days, helping local teachers andcareer advisers nd out about Heathrowjobs and skills.An intern programme where sevenstudents from Thames Valley UniversitysAirline Relations and Airport Managementcourse spent six weeks on paid BAAwork placements.

Jobsforlocalresidents

As illustrated in Figure 6, the airport providesjobs for a high proportion of people livingnear Heathrow. We support Routes toWork a scheme largely funded by theLondon Development Agency and managedby Heathrow City Partnership helpingresidents to nd construction and retail jobsat Heathrow. In 2008, the project helped134 residents access jobs.

ApprenticeandNVQprogrammes

As illustrated in Figure 7, BAA is committedto providing local people with access totraining opportunities

BAAs engineering advancedapprenticeship has been running for over30 years. In 2008, 20 apprenticescompleted the programme at Heathrowand were given permanent jobs.We manage apprenticeships and NVQson behalf of other Heathrow companiesas part of our Retail Academy.Programmes are funded by the Learningand Skills Council and delivered in

partnership with VT Training. In 2008,58 employees of companies operatingat Heathrow gained apprenticeships and131 people received NVQs as a result ofRetail Academy programmes.

Ourapproach

We invest in economic and communitydevelopment activities that benet peopleliving around Heathrow, involving othercompanies operating at the airport tomaximise the opportunities available tolocal communities.

We focus our support on:Education and employment programmesthat increase local skills.Training programmes that help airport staff.

Programmes that create business linksbetween local companies and Heathrow.Projects to improve the environment.Programmes run by charities, localschools and community groups thatbenet the environment and encouragecommunity development.

We encourage our employees to volunteerand fundraise in their local communities.Six days paid annual leave is offered toemployees for volunteering activities.

Involvementinregionalandlocalpartnerships

We participate in and nancially supporta number of partnerships and agencies tosupport Heathrows local economy. Weprovided funding support of over 150,000in 2008.

We are represented at senior level on:Think London.West London Business.The Thames Valley Economic Partnership.

We chair:The Hillingdon Sustainable EconomyTaskforce.Heathrow City Partnership.The Feltham Area RegenerationSteering Group.

We are board members of:West London Working.Slough Business Community Partnership.CBI London Council.The Staines Town Partnership.The Hayes Town Partnership.The Hillingdon Local Strategic Partnership.

Totalnumber ofpeople in

employment

Numberof peopleemployed

at Heathrow

Percentageof people in

employment whowork at Heathrow

Proportionwho work at

Heathrow

2007 2008 2007 2008 2007 2008 2007 2008

Ealing 153,400 153,200 5,338 5,300 3.5% 3.5% 1 in 29 1 in 29

Hillingdon 120,000 116,000 8,295 8,300 6.9% 7.2% 1 in 14 1 in 14

Hounslow 105,000 111,000 10,748 10,700 10.2% 9.6% 1 in 10 1 in 10

Slough 60,000 58,200 3,029 3,000 5% 5.2% 1 in 20 1 in 10

Spelthorne 41,900 44,800 5,265 5,100 12.6% 11.4% 1 in 8 1 in 9

Ourperformance

Heathrow

Compensationandcommunity

investmentacrossourairports

Our 2008 total contributions

to mitigation schemes, skills

programmes and community projects,

including donations from the BAA

Communities Trust, amounted to

nearly 8 million. This total gure

includes 6 million spent on mitigation

schemes at our airports.

The BAA Communities Trust has made grantsof over 4 million since 1996. In 2008, theTrust invested 220,000 in education, skills,environment and charitable support schemesaround Heathrow.

Youthtrainingandcareers

In 2008 we supported a range of programmesto help local pupils and teachers nd outabout Heathrow jobs and the skills requiredby airport employers, including:

The updated Heathrow Careers andEconomy teacher resource pack, availableat www.baa.com/educationThe primary schools Build a Terminalchallenge, involving 2,095 pupils from38 schools learning basic constructionprinciples and teamwork.

The Surrey retail merchandising challenge, where 446 pupils created a visualmerchandising display for a Heathrowretail outlet.

Figure 6:ImportanceofHeathrowtolocaljobs



2006 2007 2008

Number of suppliers attending Heathrow Meet the Buyers 303 332 260

Estimated value of business generated by

Heathrow Meet the Buyers (m)2.6 5.1

not yet

published

Number of people accessing airport jobs as a result of

BAA training programmes156 154 134

Number of people completing apprenticeships managed

or supported by BAA83 108 127

Number of people completing NVQs managed by BAA 0 122 131

We provided nancial support to the WestLondon Construction Training Centre,established by Carillion ConstructionTraining during the construction of T5,which helped 49 young people tocomplete apprenticeships in 2008.Our Retail Academy won Business inthe Communitys National Exampleof Excellence for Total Talent throughour approach to developingskills in the communityand the workplace.

Supportinglocalbusiness

We lead Heathrow Meet the Buyers, an annualevent helping local businesses to promotetheir goods and services directly to majorcompanies and public sector agenciesbased in and around the airport. As illustratedin Figure 7, 260 suppliers attended the2008 event.

A survey of Heathrows 2007 Meet theBuyers estimated that 5.1 million of newbusiness was generated.

Supportingcommunityprogrammes

FulcrumChallenge

The BAA Communities Trust funded theFulcrum Challenge, a youth developmentcharity, for a third year. Through this, 22schoolchildren aged between 16 and 18from around Heathrow spent two weeksrebuilding a Himalayan primary school inthe remote Spiti Valley, Nepal. The schemecontributed towards an ASDAN personaldevelopment qualication.

Sustainabilityinschools

In partnership with Green Corridor, anenvironmental charity, we launched aneducation programme to get local studentsthinking about the environment. 150students from ve secondary schools spenttwo days at Heathrow learning about theairports environmental features. Back atschool, they explored the environmentalimpact of their school building anddeveloped action plans to reduce energy use.The programme was supported by 20,000from the BAA Communities Trust.

BAAHeathrowCommunityand

EnvironmentAwards

We launched the BAA Heathrow Communityand Environment Awards, in conjunctionwith the charity Groundwork Thames Valley.Local schools, community groups and

voluntary organisations can apply for grantsof up to 2,500 to support local projects.The awards are funded with donations fromBAA, the BAA Communities Trust andpassenger foreign coin collections. Around60 organisations across the boroughs aroundHeathrow received awards worth 115,000.

YoungFireghters

The Heathrow Fire Service launched YoungFireghters, which brought 12 studentsaged 11 to 17 to the airport to learn aboutreghting. The scheme emphasises there services principles of communication,teamwork, motivation and leadership. Allstudents received a personal achievementcerticate. The participants were selectedfor the scheme through Connexions, anorganisation supporting young people at riskfrom social exclusion and unemployment.

Otherkeycharitiessupportedin2008

Our employees selected Marie CurieCancer Care as the rst Heathrow charityof the year. We raised 240,000 throughevents and passenger donations. This willhelp Marie Curie provide 12,000 nursehours. Employees have chosen AgeConcern and Help the Aged as the 2009charity of the year.We provide 1 million each year to theHillingdon Community Trust, a charityfunding community projects in the southof Hillingdon.We provide ofce accommodation andcore funding for Green Corridor.

Supportingvolunteering

The I-Volunteer awards give BAA volunteersand fundraisers the chance to win between2,000 and 5,000 for their chosen charity.A total of 93 Heathrow employees entered

the awards, up a third from 2007, winninga total of 34,000 from the BAACommunities Trust.

Ourplans

Heathrow

In 2009, we will:Align our community investment andeconomic development programmes toensure they are maximising local value.Work with local authorities and otherpartners to secure public funding to sustainprogrammes supporting unemployed localresidents into Heathrow jobs.Increase the number of airport staff (BAAand non-BAA) beneting from recognisedtraining programmes by at least 10%.Deliver programmes that help at least4,000 school pupils to understand moreabout airport skills and careers.Raise over 200,000 for our charity ofthe year, Age Concern and Help the Aged.Launch a grants scheme to fund localprojects from money collected fromaircraft noise infringements.

Read more about our efforts tosupport local communities inour individual airport corporateresponsibility reports, availableat www.baa.com

Economy and societycontinued

Figure 7:Economy


15/40

The rst ever Heathrow Apprenticeship Fair was held in February2008. The Fair helps young people from schools around Heathrowto nd out about employment and training opportunities offeredby companies based at the airport or within BAAs supply chain.

The Fair was attended by over 600 young people, parents andteachers from 32 schools and colleges within the boroughs of Ealing,Hillingdon, Hounslow, Slough and Spelthorne. Twenty companiesoffering over 200 apprenticeships attended the event.

Case study 3

HeathrowApprenticeshipFair

13


16/40

Sustainable supply chain


Background

Suppliers can play an important role inhelping companies meet their corporateresponsibility objectives. For example, wastemanagement suppliers can help companiesto achieve recycling goals and constructionsuppliers enable energy efciencyimprovements in new facilities.

Good corporate responsibility managementpractice also indicates quality in supplychains. Association with poor performing

suppliers can damage a companys reputation.

Ourapproach

BAA spends more than 1.5 billion eachyear with suppliers, approximately 70%with construction suppliers. Our supplierrelationships involve multimillion pound

contracts running over several years. Thisprovides an opportunity to work withsuppliers to deliver our corporateresponsibility objectives.

We recognise the need to promote highsustainability standards to our suppliersand are working to translate our experiencein construction to other parts of our supplychain. While we have not yet set sustainabilitytargets for non-construction suppliers, weassess potential new suppliers on theirsustainability performance as part of the

tender process.

We want our business to benet the peopleand economies around our airports. Werecognise the benets of buying from localsuppliers where possible and our Meet theBuyer events provide opportunities for localbusinesses to meet BAAs partner companies

to discuss business opportunities (read moreon page 12).

Ourperformance

BAA2008target

Re-launchtheSupplierEvaluationProcess,linkingsupplierperformancetoawardingfuturecapitalprojects

Performance

We monitor the sustainability performanceof our construction suppliers through aSupplier Evaluation Process. This requiressuppliers to implement sustainabilitymanagement systems and demonstratecontinual improvements in health and safety,waste, energy use and environmentallysensitive materials. The average sustainabilityscore of the 19 suppliers that were assessedin 2008 was 82.4%.

We conducted a sustainability workshop for19 senior representatives from our top-tierconstruction suppliers.

2008target

ImplementournewResponsibleSupplierPolicy

PerformanceWe made some progress towards meetingthis target through developing an auditprocedure to measure and understandsupplier activity and by subscribing to aservice providing information on whetherour suppliers have used child labour orundertaken poor environmental practice.We intend to build on this initial work tofully deploy our new policy in 2009.

Ourplans

We plan to refocus our approach to ethicalsupply chain management. This will involveredesigning our procedures to managesustainability risks and extend good practiceswith construction suppliers throughoutour supply chain. In 2009, we will linksustainability performance directly toawarding new contracts.


17/40

Sustainable construction

BAACorporate Responsibility Report 2008 15

Background

Airport expansion, building refurbishmentsand infrastructure upgrades involvesignicant construction. It is important tominimise impacts on the environment fromenergy and resource use and the productionof waste, and to ensure building materialsare from more sustainable sources. Stepsmust be taken to protect communities fromlocal impacts such as noise and dust and toensure that building design enables greaterenergy and resource efciency.

Ourapproach

The BAA Capital Projects SustainabilityManagement Process ensures that weconsider sustainability at every stage of aproject. It is aligned with environmentalmanagement standard ISO 14001.

The process focuses on:Designing more energy-efcientbuildings and promoting renewableenergy technologies.Reducing waste and increasing recycling.Improving the sustainability credentialsof construction materials.Efcient water use.

Our construction projects include stepsto minimise ground and water pollution,disruption to local communities, and dustand noise. We inspect sites for archaeologicalimportance and conduct excavations. Weuse ecological surveys to minimisebiodiversity impacts.

Ourperformance

2008target

90%ofprojectmanagerstrainedinsustainabilitymanagementprocess

BAA performanceWe conducted sustainability training for86% of project leaders (113 people)and piloted sustainability training for19 development managers.

2008target

80%ofprojectstohavesustainablemanagementprocessesinplace

BAA performanceWe developed key performance indicators(KPIs) for BAA project teams to conrm theircommitment to sustainability. The KPIscovered adoption of BAA sustainabilitymanagement systems, consideration of

energy efciency, waste management,and awareness of BAA policy to reduceenvironmentally sensitive constructionmaterials. We monitored awareness of theKPIs across 24 of our most complex, high-value Group-wide projects. By December2008, 21 (87.5%) projects had signed upto follow the principles.

2008target

80%ofprojectstomeetenergyandmaterialstargets

BAA performanceProcesses to measure energy and materialsperformance (other than timber) were notdeveloped during 2008. We intend todevelop methods to report against thistarget in 2009.

Heathrow performanceDuring 2008, free heat recovered fromthe T5 energy centres combined heat andpower facility for use in the terminal saved6,820 tonnes of CO2 compared with aconventional gas boiler.

Read more about energy and climatechange in the climate change sectionon pages 16-19.

2008target

Recycleorcompost85%ofconstructionwaste

We required preparation of Site WasteManagement Plans (SWMP) on BAA projectsbefore legislation was introduced in April2008. The SWMP predicts waste types andquantities likely to arise from projects andprovides the template from assessingmeasures to reduce and recycle.

Heathrow performanceWe recycled 65% of Heathrows constructionwaste, falling short of our 85% target assome projects with limited waste storagespace arranged night-time waste collectionswhen Materials Recovery Facilities (MRFs)were closed. We have corrected this bymaking arrangements to store waste at alicensed off-airport waste logistics centre fordaytime delivery to designated MRFs.

2008target

80%procurementofForestStewardshipCouncil(FSC)constructiontimber(temporaryandpermanentworks)

BAAperformance

In 2008 we continued our membership ofthe World Wide Fund for Nature, Forestand Trade Network, which independentlyassesses our approach and performancerelating to responsible procurement oftimber products.

We increased the number of suppliersrequired to contribute to our timberevaluation process to 18 from 5 in 2007. Thereview of 2008 certied timber procurement

(completion date April 2009), which willenable us to report progress against ourtimber procurement targets.

2008target

80%eliminationofformaldehydeinboundboardsandproducts,internalstructuresandt-outandnishings

BAA performanceWe are unable to report progress against thisgoal as the data collection process was notcreated and we will review carrying thisforward in 2009.

Ourplans

Heathrow

Extend tracking of basic sustainability KPIsacross Heathrow projects, with enhancedsustainability assurance on selected projects.Heathrow East Terminal development tobe designed to exceed the 2006 BuildingRegulations minimum energy performanceby 20% based on energy efciencymeasures, with a further 20% carbonreduction from on-site renewableenergy generation.Develop quantiable measuresof sustainable construction.

BAA2010Targets

100% procurement of FSC constructionand FSC virgin timber products.100% elimination of HFC and HCFCsin BAA-owned equipment.100% of solvent-based products toachieve Blue Angel Eco Label or EUEcolabel Class II accreditation, or bereplaced with water-based solvent.Recycle/compost at least 85%

of construction waste.80% of projects to meet ourmaterials targets


18/40

0 300 600 900 1200 1500

08

07

06

05

Gas oil Gas Electricity


Global environment

Climatechange

Background

There is consensus that climate change iscaused by human activity, primarily burningfossil fuels which generates greenhousegases. Carbon dioxide (CO2) is a primarygreenhouse gas, but other emissions, such asnitrogen oxides (NOx), also have an impact.

The Intergovernmental Panel on ClimateChange (IPCC) estimates aviations total

impact to be around 3.5% of the totalhuman contribution to climate change.By 2050, the IPCC estimates that aviationcould account for 5%, although scenariosrange from 3.5% to 15%.

The DfT estimates that UK aviationcomprised 6.4% of the UKs total CO2emissions in 2006 (37.5 million tonnes ofCO2). In January 2009, the DfT forecastedthat UK aviation emissions could rise toaround 60 million tonnes of CO2 by 2050.As the UK reduces its emissions to meetits 80% reduction target by 2050, aviationwill represent a greater proportion of theUKs total emissions. Inclusion of aviationin the EU ETS, however, will cap aviationsnet emissions at 97% of the 2004-2006average level.

Ourapproach

We believe that our industrys contribution toclimate change should be addressed and wework with stakeholders to pursue the bestmeasures to achieve this. Where we havedirect control over emissions we aim to leadthe airport industry in managing them.Where we do not have direct control, suchas over emissions from ights, we use ourinuence to encourage the airline industryand policy makers to tackle climate change.

Turn to page 7 to read how expansion plansrelate to the UKs climate change targets.

Measuringtheclimateimpactofairports

In last years Corporate Responsibility Reportwe committed to producing a carbonfootprint for our airports. The footprint for2008 for Heathrow is shown in the box onpage 18.

During 2009 we will use the carbon footprintto establish an updated climate changestrategy for Heathrow.

Ourperformance

Climateimpactofairports

The emissions over which Heathrow hasdirect control are shown in the carbonfootprint on page 18 and total 340,480tonnes of CO2. The most signicantcontributor to these emissions is from energyused in buildings and infrastructure (xedsources), accounting for over 98% ofHeathrows direct emissions.

BAA

BAAhassettargetstoreduceourabsoluteCO2emissionsfromxedsourcesby: 15%on1990levelsbyMarch2010. 30%on1990levelsbyMarch2020.

For 2008 we have amended our greenhousegas (GHG) reporting methodology to alignwith the Department for Environment, Foodand Rural Affairs (DEFRA) GHG Guidelines2008. This recommends that companies usea rolling average carbon conversion factor of0.537. This compares to the long-termcarbon factor of 0.43 that was applied in2007. The effects of this is to increase CO2associated with BAAs electricityconsumption by 25%.

In 2008, CO2 emissions from xed sourceswere 529,646 tonnes. This compares to436,229 tonnes reported in our 2007Corporate Responsibility Report. This increaserelates to the change in the carbonconversion factor and is not representativeof BAAs overall level of energy consumption,as shown in Figure 8. This shows that BAAsactual use of energy has remained relativelyat over the past four years.

In making the change to calculating CO2emissions from our xed sources we havealso considered the effect on meeting ourtwo long-term targets. Although it is nowlikely that we will not be able to meet our2010 target we remain condent in meetingour 2020 target through:

focused energy reduction strategies acrossall BAA airports;continued improvement of energyefciency across all BAA airports;UK Government commitments to de-carbonise the UK energy mix as part of

the Climate Change Bill.

We will shortly be publishing an energystrategy for Heathrow outlining how we willmeet our 2020 CO2 target at the airport.

Heathrow

2008target

ReduceCO2emissionsby3%againstbusiness-as-usualforecastthroughimprovementsinenergyefciency.

The target was achieved, with performance atHeathrow for 2008 amounting to 8.6% belowthe business-as-usual forecast, which representsa scenario when CO2 is not actively managed.

Key activities contributing towards thisperformance are grouped under threeelements in Heathrows energy strategy: Energy demand management. New building design. Energy supply and generation.

Energydemandmanagement

Energy demand management describespractical initiatives to reduce our use ofenergy through switching equipment offwhen not needed and using equipmentmore effectively. At Heathrow this has helpedus achieve a reduction of over 27 GWh.

Examples of achievements at Heathrow include: 1.8 GWh savings by turning baggage belts

off earlier. 2.8 GWh savings by installing low-energy

lighting in Terminal 1 and World BusinessCentre 1.

1.45 GWh savings at Terminal 4 throughauditing.

0.4 GWh savings through improvingcar park lighting.

2.75 GWh savings by using waste heatfrom our combined heat and powerstation to heat T5.

We regained accreditation to the CarbonTrust Standard, a leading emissions reductionaward scheme, and together developed anenergy-saving video for employees.

Figure 8:Buildingsenergyusefrom

xedsources

(GWz)



Below

T5 Energy Centre

Newbuildingdesign

New building design describes our work toimprove the energy efciency and fabric ofnew buildings and refurbishments.

TheHeathrowEastTerminal

The proposed Heathrow East Terminal will bebuilt on the existing site of Terminal 2, FlightConnections Centre and Queens Buildingand will accommodate 30 million passengersper year.

The new building is being designed to meettwo targets: A 40.5% CO2 reduction compared to

2006 building regulations, with on siterenewable energy contributing a 20%CO2 reduction.

The building will meet these targets by: Reducing heat loss during winter and solar

gains in summer. Using energy-efcient heating, lighting,

cooling and electrical systems aboveenergy regulation requirements.

Terminal5

The main terminal building is glazed on allfacades, giving the building a light and airyatmosphere, and reducing the need forarticial lighting. To prevent solar gain,louvres shade all but the north facade. Theseare angled to prevent the summer sunpenetrating the building, but allow in thewinter sun, which is lower in the sky. Thebuilding has energy-efcient light ttingsthroughout. Individual sets of lights can beset according to the need at a particular time

of day or for certain weather conditions.

The terminal is cooled by water suppliedby efcient ammonia chillers. This removesthe need for multiple air-conditioning unitsand refrigerators.

Waste heat from the combined heat andpower station delivered to T5 by a newunderground pipeline supplies 85% of T5sheat demand.

Energysupplyandgeneration

A new energy centre is required at Heathrowto meet rising energy demand and to replaceold equipment. In 2008, we identiedoptions for meeting energy demand whilereducing CO2 emissions. This identiedcombined heat and power (CHP) as aneconomically and energy efcient wayof reducing CO2 emissions at Heathrow.

Climateimpactofights

We do not have direct control over climateemissions from ights but believe thataviation should meet its external costs andcontribute to the goal of avoiding dangerousclimate change. We welcome the completionof the Climate Change Bill in November2008, which established a binding reductionin UK CO2 emissions of 80% by 2050 as wellas the recommendation of Adair Turner,chairman of the Committee on ClimateChange, that aviation should play a role inmeeting this target.

We believe that this reduction can be achievedthrough improved efciencies, and theindustrys participation in emission trading.


20/40

Facilities Natural Gas93,483 tonnes27%

Facilities Other Fuel2,171 tonnes

Facilities Refrigerants1,295 tonnes

Airside Fuel Use1,376 tonnes

Business Travel22 tonnes

Facilities Electricity242,134 tonnes72%

Other1%

Carbonfootprint

Departing429,389 tonnes

Approaching285,668 tonnes

Ground635,044 tonnes

0 200100 400300 600500 700

Direct emissions

Heathrow direct emissions

Other emissions

Passenger transport

Staff transport

Airside fuel third party

Waste and water

Business travel

Aircraft in LTO1,350,100 tonnes

340,480 tonnes

248,856 tonnes

132,960 tonnes

40,219 tonnes

25,805 tonnes

299 tonnes


Figure 9:Directcarbonemissions

Figure 10:Othercarbonemissions

HeathrowAirportcarbonfootprint

BAA commissioned Entec to develop

a methodology for calculating the

carbon footprint of its airports.

Heathrows Limiteds footprint

is described below.

Entec has drawn on best practice

guidelines such as the Greenhouse Gas

Protocol on Corporate Accounting and

Reporting. These dene emissionsover which an organisation has direct

control as well as other emissions that

can be reported voluntarily.

Heathrowsdirectcarbonemissions

These emission sources cover fuels

and energy used in airport operations,

including electricity and natural gas,

airport vehicle fuel, company cars and

emissions from refrigeration systems.

Electricity used in running Heathrow

Express buildings and ofces is

included. Electricity used for running

trains has been included under other

emissions, as Heathrow has less control

over these emissions.

Heathrows 2008 direct emissions are

calculated as 340,480 tonnes of CO2.

Figure 9 shows that emissions from

electricity generation dominate,

followed by emissions from use of

natural gas on-site. These activities

account for over 98% of Heathrows

direct emissions.

Otheremissions

In addition to the activities included

in Heathrows direct carbon footprint,

the activities of staff, business partners,

customers and passengers also result

in carbon emissions. We recognise the

need to understand these impacts and

play a role in inuencing behaviour.

The following carbon emission sources

have been included:

aircraft movements on the groundand close to the airport (arrivals

and departures up to 3,000 ft).

This represents the limit of airport

inuence over these activities;

all passenger and staff journeys to

Heathrow (door to door), including

Heathrow Express;

water treatment and waste

management;

vehicles used at Heathrow

by third parties; and

Heathrow Airport Limited

employees road, rail and air

business travel.

Figure 10 summarises carbon emissions

from other airport sources and

illustrates the signicant contribution

from aircraft emissions both on the

ground and in the departing and

arrival phase of ights.

Taken together, other airport emissions

amounted to 1.8 million tonnes in 2008.

The carbon footprint does not include

emissions from aircraft in ight. These

are regulated and managed through

national polices, notably the EU ETS.

The DfT calculate CO2 emissions from

ights for the UK as a whole as well

as broken down by airport. Carbon

emissions for ights departing

Heathrow were 17.1 million tonnes in

2005 (the most recent year for which

calculations were published).

It is Entecs view that this work

represents a signicant step forward

for Heathrows carbon management

strategy and Entec recommends that

BAA continue to develop and report

against this methodology.

Full details of Heathrows carbon

footprint are due to be published in a

separate report mid-2009. This will also

contain data for all BAA airports.

Global environmentcontinued



Improvingefciency

In December 2008, industry groupSustainable Aviation issued a CO2 reductionroadmap. This demonstrates that CO2emissions from UK aviation can be reducedto 2000 levels by 2050, through newtechnologies, operational efciencies andlow carbon fuels. View the roadmap atwww.sustainableaviation.co.uk.

Emissionstrading

An open emissions trading scheme (ETS)represents the most efcient and effectiveway for aviation to address its climateimpact. Emissions trading means that partof the industrys climate impact will be offsetby reductions in other industries, but paidfor by the aviation industry.

The European Commission completedlegislation during 2008 that means thatarriving and departing EU ights will bepart of the EU ETS from 2012.

The cap set for aviation from 2012 isstringent, with the industry having topurchase 15% of its permits. We view thislegislation as an interim step towards aglobal aviation climate policy framework.We are a founder of the Aviation Global Deal(AGD) group which is promoting aviationsinclusion in the global climate agreement tobe negotiated in Copenhagen in 2009.

TaxThe 2008 DfT Emissions Cost Assessmentdemonstrates that Air Passenger Duty morethan covers the aviation industrys externalcosts of CO2 emissions. However, we believethat Air Passenger Duty remains a bluntinstrument and does not create incentivesto improve environmental performance.

We continue to press the Government torevise or remove this new tax from 2012, whenaviation will be included within the EU ETS.

Workinginpartnership

We participate in The UK Corporate LeadersGroup on Climate Change. In 2008 we weresignatories to two high-prole initiatives inthe form of an open letter to UK partyleaders as well as to policy makers taking partin the Poznan negotiations.

Read our latest position on climate change inresponses to Government and Parliamentaryinquiries on our website (www.baa.com).

Ourplans

BAAtargets

To reduce our absolute CO2 emissions fromxed sources by: 15% on 1990 levels by March 2010. 30% on 1990 levels by March 2020.

Heathrowtargets

To reduce CO2 emissions from xedsources at Heathrow by 6% against the

2009 business-as-usual forecast.

We plan to publish our carbon footprintalongside our approach to managing othersources of CO2 and will play an active rolein the Aviation Global Deal group.

Read more about our approach toreducing energy use and climateimpacts in our individual airportcorporate responsibility reportsavailable at www.baa.com



Local environment

Airquality

Background

Aircraft, ground vehicles and trafc at andaround airports produce a number ofpollutants, particularly nitrogen dioxide (NO2)and ne particles (PM10), which can affecthuman health and the local environment.Housing and industry also contribute.

The EU Air Quality Framework Directives setlimits for airborne pollutants. NO2 limits must

be met by 2010, although a new EU directiveallows member states to apply for anextension until 2015. The Government isexpected to apply for this extension forareas exceeding the limit in the UK.

The most recent modelling for Heathrowwas carried out by the DfT. This indicated thatthe annual average EU limit for NO2 will not bemet in the immediate surroundings ofHeathrow, where the airport is a key source,until 2015. This is in common with many areasof London as well as other locations acrossthe UK and Europe.

PM10 concentrations around Heathrow meetthe relevant EU limits and permitted levelsof pollutants have not been breached atour other airports in recent years.

Ourapproach

Heathrows licence to expand relieson addressing air quality at and aroundthe airport.

Air quality is measured in and around theairport at monitoring sites operated byBAA, local authorities and Government.In 2008, PM2.5 was added to the list ofpollutants measured at all BAA-funded airquality monitoring sites located outside ofthe airport perimeter. In addition, wecommission emissions inventories anddispersion modelling from time to timeto assess NOx emissions from Heathrowsoperations as well as from roads, rail,buildings and industry around the airport.We use this evidence to focus our efforts onthe most signicant emissions sources. Thisinvolves tackling our own emissions andencouraging airlines and other companiesthat use our airports to do the same. These

data are also used to assess the impactHeathrow has on the local area.

Modelling data in Figure 13 showsconcentrations of NOx along a line runningnorth from Heathrows boundary to the M4.

Concentrations increase signicantly nearthe major roads as they are a major sourceof NOx. The inuence of Heathrow graduallydeclines with distance from the airport.

We support increased use of public transportto and from our airports and reduction inthe use of private vehicles (see page 26).Alongside implementing policy changesand scientic development in air qualitymanagement and better airport air qualityassessment, our Air Quality Action Plan hastwo core elements:

1.Encouragingreductionsinaircraftemissions

Aircraft engines must be manufactured tomeet emissions and noise standards. Theseare set by the International Civil AviationOrganisations Committee on AviationEnvironmental Protection (CAEP). A NOxemission standard, called CAEP/4, appliedto new aircraft types from 1 January 2004and a new standard, CAEP/6 (which is 12%lower than CAEP/4), came into force fromJanuary 2008.

We believe that the aviation industry canoperate within environmental limits if weengage with government, regulatory bodies,airlines and aircraft manufacturers to adoptmore stringent NOx emission standards. Welevy a NOx emissions charge on aircraft thattake off and land at Heathrow, encouragingairlines to use lower-emission engines.

05

06

07

08

23.01

21.29

20.60

18.69

Green Gates

Oaks Road

London Hillingdon

Harlington

CranfordSloughColnbrook

OxfordAvenue

Figure 11:Percentageofairtrafc

movementswithNOxemissionsatleast

20%betterthanCAEP/4standard

Figure 12:AirqualitymonitoringsitesaroundHeathrow

2.Tacklingground-basedemissions

Ground-based emissions result primarily fromvehicles operated by BAA and othercompanies involved in ground operations, aswell as by airlines using auxiliary power units(APUs). APUs are small engines used topower aircraft lighting, air conditioning andcontrols when the main engines are turnedoff. We are working with airlines and groundhandlers to reduce the use of APUs.

Approximately 200 companies operateairside vehicle eets at Heathrow, ranging insize from a few vehicles to many hundreds.BAA Heathrow run the Clean VehiclesProgramme (CVP), a voluntary scheme, toincentivise companies to reduce emissionsfrom their eets.

Vehicles that operate at Heathrow musthave a Vehicle Apron Pass from BAA. Weare updating the criteria used to awardpasses to ensure only vehicles with thelowest emissions are allowed to operate.

Reproduced from Ordnance Survey 1:1250 landline, 1:10k and 1:50k Raster by permission of Ordnance Survey on behalf ofThe Controller of Her Majestys Stationery Ofce, Crown Copyright. All rights reserved. BAA Ltd, O.S. Licence NumberAL100020071.

DEFRA (National Network)BAALocal Authority



Ourperformance

Heathrowairquality

BAA, the Government and localauthorities monitor air quality at anumber of xed sites in and aroundHeathrow. Figure 14 shows the NO2trends from December 2002 toDecember 2008 at monitoring sites aroundHeathrow. The sites are shown in Figure 12.

Air quality levels complied with the 2010 EU

limits at ve of the sites close to Heathrow.One of those that breached the limit, theLondon Hillingdon site, just north of theM4, is signicantly affected by road trafc(non-airport related) emissions. The OxfordAvenue site is just above the 2010 limit, butwithin the EU acceptable range.

Data on air quality around Heathroware available on the websitewww.heathrowairwatch.org.uk

While the number of CAEP/4-class aircraftusing Heathrow has increased by over 2,000since 2005, the percentage of aircraftmovements with the lowest NOx emissions,at least 20% below CAEP/4 (CAEP/4 -20%),has fallen. The average percentage of ightsmeeting CAEP/4 -20% criteria are shownin Figure 11.

We are investigating the reason for thisdecline but expect that raising the NOxcomponent of landing charges at twicethe rate of the underlying landing chargeincrease will help reverse this decline.

Ground-basedemissions

2008 target:To improve APU compliance as measuredby turnaround audits by 10% from 2007baseline of 65%.

Pre-conditioned air and mains electricity areprovided for aircraft. At Heathrow, 90% ofstands are tted with electricity connectionsand 21% provide pre-conditioned air.

We made progress during the year inimproving compliance with APU userestrictions and increased the number ofcompliance audits from 2007. We are alsoimproving the methodology by which

compliance is measured.

Due to concerns with the 2007 baseline datawe have decided to report progress on ourair quality target in 2009 by using 2008 dataas a new baseline (75% compliance). In

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London Harlington London Hillingdon Hounslow Cranford Slough ColnbrookHeathrow Oakes Road Heathrow Green Gates Hillingdon 3 Oxford Avenue

Jan 97 98 99 00 01 02 03 04 05 06 07 08

Figure 13:TransectshowingNOxconcentrationsNorthofHeathrow

Figure 14:NO2trendsaroundHeathrow

recognition of this, the target has beenrated as not achieved.

At Heathrow 21% of the vehicles in BAAseet are now hybrid petrol/ electric, or runon liquid petroleum gas.

Ourplans

Heathrow

We will continue to reduce emissions forwhich we are directly responsible and willencourage companies operating in and

around Heathrow to do the same by:Encouraging the use of aircraft with thelowest NOx emissions.Increasing membership of the CleanerVehicles Partnership.

Increasing the proportion of vehicles inBAAs airside eet that are new, or runon alternative fuels.Enforcing Operating Safety Instructionsthat encourage the use of cleaner vehiclesand limit the use of air pollutant emissionssources, such as APUs.Undertaking an air qualityemissions inventory.Dening an air quality performance standard.

Read more about our approach toair quality in our individual airportcorporate responsibility reports,

available at www.baa.com


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Figure 15:Population(000s)andarea(km2)affectedbynoise


Noise

Background

While technology has enabled quieteraircraft, noise levels continue to be acommunity concern.

LAeq is the most common internationalmeasure for aircraft noise. This measures theaverage noise experienced over a particulartime period. In the UK the dened period fordaytime aircraft noise is from 7am to 11pm.

Ourapproach

The DfT sets noise policy at Heathrow, Gatwickand Stansted, and local planning authorities setnoise controls at other UK airports. To meetthese controls and our own noise objectives wefocus on the following areas:

Encouragingtheuseofquieteraircraftandoperatingpractices

To monitor compliance with our noisereduction measures, we match noise data withaircraft track radar data. We provide airlineswith regular feedback and work together toimprove compliance. For example, in 2008, wehelped Aegean Airlines to improve departuretrack-keeping (following set departureroutes) at Stansted from 43% to 100%.

Figure 19 (page 24) illustrates the proportionof aircraft on track at our London airports.

Our efforts to reduce ground noise include:Providing engine test pens.Supporting restrictions on aircraft reversethrust at night.Restricting the use of APUs and offeringalternative power sources at stands.

Take-offnoise

The UK Government imposes take-offrestrictions to control noise at Heathrow,Gatwick and Stansted. For example, aircraftmust reach a minimum height of 1,000 ft,within 6.5 km from the start of their take-off. We ne airlines that exceed speciednoise limits and use the money to fund localcommunity projects.

The UK Government also sets noisepreferential routes to avoid aircraft ying

over populated areas as much as possible.We have the power to ne airlines if theysignicantly deviate from these routesand are not willing to engage to improvetheir performance.

Landingnoise

BAA helped to develop a voluntary arrivalscode of practice which advocates the use ofcontinuous descent approaches (CDA). Ourdenition of CDA allows aircraft one shortsegment of level ight below 6,000 feetresulting in them being generally higher thanthose aircraft that follow a series of steppeddescents. This minimises noisy changes inengine tone, and can reduce average noiseon the ground by up to 5 decibels. Work isunder way with a range of stakeholders toimprove the way in which CDA is dened,measured and communicated. Furtherinformation can be obtained directly fromBAA through www.baa.com

Aircraftnoiseatnight

The Government has set strict noise controlson night-ight operations at Heathrow,Gatwick and Stansted.

Between 23.00 and 07.00, the noisiest aircraftcannot be scheduled to land or take off.Between 23.30 and 06.00, aircraftmovements are limited to a specic numberusing a noise points quota system for eachairport. This quota corresponds to pointsallocated to different types of aircraftdepending on their noise classication. Thequietest aircraft receive the fewest points, sothese aircraft use up the least amount of thequota. This system encourages airlines thatwant to y at night to use the quietest aircraft.

The Government has stated that there willbe no increase in night ights at Heathrow,

Gatwick and Stansted between 2006and 2012.

Supportforcommunitiesaffectedbynoise

We offer noise compensation and mitigationschemes that surpass Governmentrequirements and were developed followingconsultation with local communities.We provide:

Noise insulation for schools, hospitalsand community buildings near the airport.Financial assistance towards the costof moving for people living in the mostaffected areas.Noise insulation for dwellings in theairport vicinity.

In 2008, approximately 10,000 householdswere invited to take part in the noiseinsulation schemes. Around 3,000households accepted the invitation.

Our Community Buildings Noise InsulationScheme provides up to 5 million each yearto address noise insulation at Heathrow.

Growth in airport capacity is likely to meanthat some communities will be signicantlyaffected by new take-off ight paths andlanding routes. In these cases we will:

Offer noise insulation for homes subjectto medium to high levels of noise.Offer to buy homes subject to high levelsof noise.

For more information on the CommunityBuildings Noise Insulation Scheme, ResidentialNoise Insulation Schemes and the HomeRelocation Assistance Scheme please visit

www.baa.com/noise

Heathrow Gatwick Stansted

population area km2 population area km2 population area km2

2002 258.3 126.9 3.5 45.2 2 31.7

2003 263.7 126.9 4.2 46.1 2.3 33.3

2004 239.7 117.4 4.5 48 2.9 29.9

2005 251.7 117.2 4.7 49.3 2 27.4

2006 258 117.4 4.5 46.7 2 29.3

2007 251.9 119.6 4.8 48.9 2.5 30.8

Local environmentcontinued


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03 220

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BAACorporate Responsibility Report 2008 23

Keepinglocalcommunitiesbetterinformed

In 2007 and 2008, we commissioned studiesbenchmarking our approach to noise againstother airports. This showed that we areamong the leading companies for noisemanagement and local communitycompensation. The study also highlightedthat we could do more to communicateon noise issues. We do this through:

A dedicated website for aircraft noise,which includes a ight-tracking feature

http://lhr.webtrak-lochard.comNoise information booklets for Heathrow,Gatwick and Stansted which are availableonline. www.heathrowairport.com/noise

Ourperformance

BAAandHeathrow

Populationandareasaffectedbynoise

Figure 15 shows the population and areaexposed to 57dB LAeq (16 hour) noisecontour at Heathrow. Planning proposals atour airports are often linked to this contour.Figure 15 shows Government data,although 2008 data is not yet available.

Contours are affected by several factors,including the number of aircraftmovements, changes in types of aircraftin the eet, prevailing wind direction,population statistics and terrain.

Noiseinfringements

As Figure 16 shows, the number ofinfringements fell by 39% at our Londonairports and by 37% at Heathrow. Primarily,this was the result of fewer delays by heavieraircraft at night.

We issued 121 nes at Heathrow in 2008,totalling 71,500.

Figure 17:Noisecomplaints

Figure 16:AircraftexceedingDepartmentforTransporttake-offnoiselimits

(London airports)


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fChapter3-highaircraft



Local environmentcontinued

Noisecomplaints

We dene a noise complaint as: a report orrequest for information from a member ofthe community regarding a noise incidentor operating procedure, excluding generalproperty enquiries and instances wherethey state they do not want it recordedas a complaint.

Complaints are reported in three ways:The number of individual callers.The number of complaints registered.

The number of occasions we werecontacted.

The numbers of complaints andcomplainants are highly variable betweenairports and do not necessarily reectcontour area or population.

Figure 17 shows the number of complaintsand complainants at our London airports.

Landingnoise

Figure 18 shows that the average percentageof aircraft achieving CDA increased at ourLondon airports, but declined slightly atHeathrow, albeit Heathrow maintains a veryhigh level of compliance.

Departureroutes

Figure 19 shows that the average percentageof aircraft adhering to published departureroutes remained consistently high across ourLondon airports and at Heathrow.

Quieteraircraft

Over recent years, when aircraft are built,they need to meet international noisestandard

baa corp responsibility 2008

Documents