Corporate Responsibility Report 2008

Transcription

1 Corporate Responsibility Report 2008 BAA and Heathrow Airport

2 Who does what at our airports Running an airport is a complex business. While we control some aspects directly, other aspects rely on working closely with stakeholders. BAA is responsible for planning and undertaking airport developments, operating the terminals, security, property management, retail facilities, fire services and cargo. The responsibilities of other organisations are illustrated below: 1 Airlines Responsible for checking-in passengers and their luggage, delivering hold luggage to its final destination, cargo, providing and fuelling aircraft, boarding passengers, passenger safety and on-board catering 2 NATS The National Air Traffic Services (NATS) looks after air traffic control and management, ensuring aircraft flying in UK airspace and over the eastern part of the North Atlantic are safely separated 3 Civil Aviation Authority (CAA) Controls all aircraft routes at UK airports, regulates airlines, airports and NATS. The CAA also sets airport charges at the London airports 4 The UK Border Agency The UK Border Agency is responsible for securing the UK s borders and controlling migration in the UK. They manage border control for the UK, enforcing immigration and customs regulations 5 Commercial services Individual businesses provide catering, shopping, car hire, car parking and banking services 6 Public transport operators Many independently-run bus, coach, taxi and rail companies provide connections to and from our airports

3 About BAA BAA is owned by Airport Development and Investment Limited (ADI), a consortium led by Spanish company Ferrovial, which operates construction, airports, highways and car parking service businesses. Who does what at our airports IFC About BAA 1 A responsible business 2 Our stakeholders 3 Chief executive Q&As 4 Our businesses UK airports We own and run Heathrow, Gatwick, Stansted, Southampton, Glasgow, Edinburgh and Aberdeen airports, providing commercial accommodation for 749 retail outlets and 186 restaurants. In 2008, over 145 million passengers passed through these airports, with 67 million using Heathrow Airport. We are in the process of selling Gatwick Airport. Rail We own and operate two public rail services Heathrow Express and Heathrow Connect. Other interests We have a 65% interest in and operate Naples Airport, and manage retail operations at Baltimore Washington International Airport, Boston Logan Airport and Pittsburgh International Airport. In 2008 we sold our retail business World Duty Free as well as a significant part of our property portfolio. The planned sale of our commercial property arm, Lynton, and our stake in the Airport Property Partnership was discontinued. About this report This report describes our performance in managing our most important corporate responsibility issues across all BAA airports with a focus on Heathrow. Information and data relate to the calendar year The report is structured around five components in which we: 1 Set out how a responsible approach is integral to how we do business. 2 Describe our approach to two significant strategic issues: airport expansion and improving passenger experience. 3 Examine the economic and social benefits of our business, and how we manage these through our supply chain, our construction methods. 4 Describe the main environmental impacts of BAA and the aviation industry. 5 Review the role of our people, safety and security. Issues are described in the same way throughout the report: Background. Approach. Performance. Plans. Assurance Our assurance programme aims to provide confidence to senior managers and stakeholders that we are addressing material issues, delivering against our policies and reporting accurate and comprehensive performance information. It includes internal audits and external certifications as well as independent assurance of selected information within our Corporate Responsibility reports. Det Norske Veritas (DNV) are assuring selected key performance indicators and airport targets for BAA and its airports, indicated in this report by DNV s logo. These were selected by BAA as part of a rolling programme across all Corporate Responsibility issues. DNV s Assurance Statement is provided on pages Further information In addition to this report we publish individual airport reports, available at Airport expansion 6 Passenger experience 8 Economy and society 10 Sustainable supply chain 14 Sustainable construction 15 Global environment Climate change 16 Local environment Air quality 20 Noise 22 Surface access 26 Other environment Waste 27 Water and land quality 28 Biodiversity 29 Our people 30 Security 32 Health and safety 33 Performance summary 34 Assurance statement 36 BAA Corporate Responsibility Report

4 A responsible business BAA s strategic framework While each BAA airport has its own unique vision, all share a common set of strategic intents. These convey how we run our business to enable each of our airports to achieve their vision. A common strategic framework ensures that each action taken by our airports and objectives for each employee can be linked to our strategic intents. Running Heathrow responsibly is an integral part of our business strategy and is essential for Heathrow to achieve its vision. In 2007, we reviewed our process for identifying and prioritising corporate responsibility issues. These issues are illustrated in Figure 2. In 2008, we integrated these issues within the strategies that underpin Heathrow s strategic intents and vision. These are subject to the performance measures and targets described through this report. Heathrow s chief operating officer and the airport managing directors are responsible for the delivery of BAA policies and strategies. BAA has sub-committees of both its board and its executive committee which review health, safety, security and environment performance. Each airport has its own governance group for these issues, reporting to the airport managing director. Heathrow s vision Heathrow connects the UK to the rest of the world. It is the country s only hub airport, providing frequent, direct links to the world s major cities. Heathrow s vision along with the strategic intents through which this vision will be delivered are illustrated in Figure 1. Our approach to corporate responsibility We believe that aviation provides a positive contribution and can grow responsibly while tackling environmental and social costs. We do not believe that the economic benefits generated by aviation mean that growth should be delivered at any cost rather we strive for an aviation industry that grows and operates in a sustainable manner and respects environmental limits. Figure 1: Heathrow s vision and strategic intents Deliver the business plan Win support for our airport vision Make Heathrow the preferred choice for passengers Improve airport operations every day Become Europe s hub of choice by making every journey better Succeed through airline success Run our airport responsibly, safely and securely We seek to improve performance where we have direct control over the management of issues. Where we do not have direct control, we seek to influence our stakeholders to bring change. Our approach is guided by our Corporate Responsibility policy, which can be reviewed at Governance BAA s board governs the company s longterm strategy, monitors the achievement of business objectives, and ensures that we meet our responsibilities to key stakeholders. The executive committee recommends business objectives and strategies to the board and ensures their delivery. Focus people and teams on service and results Transform the airport Figure 2: BAA s corporate responsibility issues Airport expansion Climate change Local environment Noise 1 Air quality Surface transport Waste Water Other environmental issues Sustainable construction Aviation and society National economic role Regional and local economic role Social benefits Passenger experience Our people Employee engagement Equal opportunities and diversity Developing and retaining people Managing change Operating airports safely and securely Airfield safety Health and safety Security Community 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 influence Ethical investment Human rights Management systems Note: priority issues are shown in bold. 1 Identified as priority primarily for Heathrow only. 2 BAA Corporate Responsibility Report 2008

5 Our stakeholders We seek to engage with our stakeholders through constructive dialogue in order to understand their views. Examples of how we engage with our stakeholders include: Local communities. At Heathrow, a hotline enables residents to contact us with questions and concerns. We publish community newsletters and hold forums where residents, councillors and other stakeholders talk with airport senior managers. Customers. Each year, we interview 70,000 passengers at our airports to understand customer perceptions and improve levels of service. Employees. We engage employees in a number of ways, including through surveys, appraisals and briefings. The aviation industry. We are members of Sustainable Aviation, a body representing airlines, airports, aerospace manufacturers and air service providers which drives the industry s sustainability strategy. We are also members of Flying Matters, a coalition promoting sustainable aviation growth. Airlines. We work with airlines to ensure effective deployment of environment, health and safety operating standards and in developing joint sustainability initiatives. Government. We formally respond to Government and Parliamentary consultations and inquiries. Local authorities. Local authorities are represented on airport consultative committees, where they receive updates and engage with our directors. Regulators. The CAA sets charges at London airports and, along with The Environment Agency, will become the independent regulators for Heathrow on noise and air quality respectively. The Competition Commission has recently conducted an inquiry into airport ownership. Non-governmental organisations. We work with organisations such as Forum for the Future to help shape our approach to sustainable development. Suppliers. We create opportunities for suppliers to meet and do business together at our airports. Case study 1 Maintaining community relations Heathrow Airtrack, a proposed new rail link to connect Terminal 5 at Heathrow to the national rail network at Staines to the south and west of the airport, will provide services to Reading, Guildford and London Waterloo. We understand that there is strong sentiment relating to large projects such as Airtrack and that our engagement with communities is key to gain their support. In 2008 we ran two public consultations for the Airtrack scheme. We will publish the results in 2009 which will indicate how the views of our stakeholders have influenced the proposed 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. 3

6 Chief executive Q&As BAA has faced significant challenges over the last year. How does corporate responsibility compete with other business priorities? It doesn t, says Colin Matthews, chief executive, who argues that a responsible approach to business is integral to the company s success. Underlying revenue 2,590m 2007: 2,226m Underlying operating profit 582m 2007: 713m Number of passengers 145m 2007: 150m Number of employees 13, : 11,729 You ve been in your role for a year. What are your views as you take stock of the last 12 months? Last year our business faced significant challenges. The global credit crisis meant fewer people passed through our airports. Our ownership structure was reviewed by the Competition Commission and the challenge of climate change has put aviation under an intense environmental spotlight. We also had a number of successes. We reorganised the business to focus on frontline operations at our airports and delivered improvements in passenger service. We put the finance in place to support future investment and continued to deliver our significant capital development programme. Going forward, we have a clear vision for Heathrow to become Europe s hub of choice by making every journey better. Over the next year, I will be focusing on three priorities to help deliver that vision: Continuously improving our passengers experience at Heathrow. Efficiently delivering our significant capital expenditure programme. Clearly setting out our views on the strategic issues for UK aviation, including how airports are regulated, and how we can grow within strict environmental limits. Why is corporate responsibility important to BAA? Managing the impacts of our business responsibly is fundamental to our success: our licence to operate and to grow depends on it. Those impacts are wide-ranging, from noise, air quality and climate change, through to ensuring that local people benefit from employment generated by our airports. We strive to balance the interests of our many stakeholders, to enhance the positive benefits that our airports can bring and to minimise the negative impacts. I don t believe that aviation expansion is a zero sum game and that we need to choose between growth and sustainability. I think that we can grow within environmental limits. Given that, it s right and in our company s long-term interests that corporate responsibility is treated not as a separate add-on activity, but is integral to everything we do, from day-to-day operations to planning for a third runway at Heathrow. At the T5 public inquiry, BAA called on the inspector to rule out a third runway. Now you ve changed your view, can you be trusted? I get asked this question a lot. I don t think it s right that we should make commitments Colin Matthews, chief executive 4 BAA Corporate Responsibility Report 2008

7 Above The new T5 building at Heathrow Below T5 baggage reclaim hall that are not within our remit. Ultimately the decision on the development of vital national infrastructure like Heathrow Airport needs to be taken by the Government. We now have a clear government policy supporting the development of a third runway, which did not exist in In the past decade, globalisation has accelerated bringing associated increases in air travel. Over half of Heathrow s traffic is long-haul, yet Heathrow is falling behind competitors because of a shortage of runway capacity. That s why in today s world, we need a third runway, built within strict environmental limits. I accept that the decision to expand is a difficult one, particularly for those most closely affected in Sipson and Harmondsworth and surrounding villages. We will work hard to build strong links with our neighbours, listening carefully to their views. I will ensure that we work with the highest professional standards and integrity as we develop our expansion plans. How can you justify aviation s growing carbon emissions in an increasingly carbon constrained world? Aviation s emissions are relatively low, especially at a global level, though they are rising at a time when governments around the world are setting ambitious targets to reduce emissions. But we believe that through a combination of technological advances and participation in European and eventually global emissions trading, aviation can play its role in meeting the UK s overall reduction target of 80%. A recent report by Sustainable Aviation shows that the UK aviation industry can deliver technological improvements to bring carbon emissions back to today s levels by 2050, while passenger numbers continue to grow. Over the last year we ve seen the first A380 services starting at Heathrow a great example of the introduction of plane that is quieter and less polluting than the planes it will replace. I m also pleased that aviation will be included in the EU Emissions Trading Scheme from Alongside that, we re founder members of the Aviation Global Deal group, pushing for an international solution in this year s Copenhagen negotiations. Putting a price on carbon through emissions trading will provide a strong incentive for the development and use of new technologies. It will also provide a clear cap, so even if technology doesn t deliver as fast or as much as we anticipate, net emissions from aviation will not grow. We know that planes are quieter and cleaner, but they are still an annoyance for people who live close to an airport. How do you respond to this in the light of expansion? We understand that noise from aircraft is an issue for those living close to the airport. Minimising the impact of noise is one of our priorities. We encourage governments and manufacturers to develop quieter aircraft and reward airlines that use quieter aircraft through differential landing charges. We also fine airlines that breach noise limits and use the money for community projects. People living in the noisiest areas qualify for relocation assistance, and others living in high noise areas can apply for free double glazing and loft insulation. We offer noise insulation for community buildings such as schools and hospitals. The Government has made clear that a third runway will not go ahead unless there is no more overall noise than in 2002 and has asked the Civil Aviation Authority to act as an independent regulator on this issue in relation to expansion. As EU air quality limits coming into force in 2010 will not be met around Heathrow until 2015, how can you justify expansion plans? Let s be clear. Unless air quality limits are met, the Government will not allow additional flights at the airport. The Environment Agency will act as an independent regulator on air quality. We are determined to play our part to ensure air quality limits are met by influencing airlines to use cleaner aircraft and reducing emissions from our ground vehicles. We are also investing heavily to improve public transport around the airport. Given the current economic conditions, are you continuing with your plans for significant capital investment at Heathrow? Yes, we are fully committed to our investment plans for Heathrow. We aim to rebuild and refurbish airport facilities, providing London with an international gateway to be proud of, and deliver the best possible service for passengers and airlines. Our plans over the next five years include replacing Terminal 2 with a brand new building, and the continued refurbishment of Terminals 3 and 4. We will also invest in training our employees to ensure we are ever more focused on making passenger journeys as smooth and enjoyable as possible. You say passenger experience is a priority, doesn t the T5 experience indicate otherwise? We are delighted that T5 is working so well today, however we regret the significant disruption caused to passengers around its opening. We have learnt valuable lessons which we will use to avoid the same mistakes when opening future facilities. The problems were quickly resolved and the facility now provides one of the best passenger experiences of any terminal in Europe, according to the independent Airport Service Quality ranking. T5 has brought 30% more terminal capacity at the airport, freeing up the space needed to start rebuilding and refurbishing the other terminals to ensure the entire airport delivers the experience that passengers expect. We are committed to maintaining T5 s current high level of performance and improving the experience of passengers across our airports. BAA Corporate Responsibility Report

8 Airport expansion The demand for air travel in the UK has been increasing for more than 30 years and is predicted to continue to grow. We believe that airport expansion can be compatible with meeting environmental limits. Below Aerial photograph of Heathrow, The 2003 Future of Air Transport White Paper In 2003, the UK Government published The Future of Air Transport White Paper, setting out its plans to increase UK airport infrastructure up until 2030 and seeking to balance that growth with addressing aviation s environmental impacts. The White Paper stated that while the priority was to make the best use of existing runways, two new runways should be provided in the south-east in the period to 2030, the first at Stansted and the second at Heathrow, but only if strict noise and air quality limits could be met. It also safeguarded land for a second runway at Gatwick, in case a new runway at Heathrow could not meet the environmental limits. Land has been safeguarded at Edinburgh and Glasgow airports for expansion, although new runways will not be required at these airports until after Expansion at Stansted The Government has recently deferred BAA s planning inquiry for a second runway at Stansted pending BAA s decision on how it proposes to respond to the Competition Commission s final report. Expansion at Heathrow There has been significant growth in passenger numbers at Heathrow over recent decades. The airport currently handles 67 million passengers and 470,000 flights a year, compared with 48 million passengers and 427,000 flights a year in As a result, Heathrow s runways have been operating at around 95% capacity, compared to around 75% at its main European competitors. This has led to increased delays, lower resilience and fewer destinations served. This White Paper supported a third runway at Heathrow, but only if the following conditions could be met: There should be no more aircraft noise than in summer 2002 (see pages for more details). 6 BAA Corporate Responsibility Report 2008

9 Left Consultation on proposed development Below Piccadilly line at Heathrow Air quality must be within EU limits in force from Public transport improvements must be made to help manage road traffic congestion. Following further study, and an extensive consultation during 2008, the Government announced in January 2009 that those conditions could be met and that it supported expansion to a three-runway, sixterminal airport. Specific outcomes included: Support for a third runway and sixth terminal, but no mixed mode on existing runways. Initial capacity will be limited to 605,000 flights each year. Any expansion beyond this to the full capacity of 702,000 flights will be subject to a review to establish compliance with environmental conditions on noise, air quality and climate change. A new target (to be reviewed by the Committee on Climate Change in December 2009) was set for UK aviation to reduce CO 2 emissions by 2050 to below 2005 levels. The CAA and The Environment Agency have been appointed as the independent regulators on noise and air quality respectively. Additional slots for the third runway will only be used by the most fuel-efficient and low-emissions aircraft. The Cranford Agreement will end, which will allow aircraft to take off on the northern runway towards the east of London. Westerly preference and runway alternation will be maintained. Surface access measures Heathrow s expansion will be accompanied by a package of measures to improve transport links to the airport. This will include increasing the Piccadilly line capacity and introducing Crossrail from The Government welcomed BAA s lead on Airtrack, providing direct rail access to the airport from the south and west, and recommended schemes for connecting Heathrow to the Great Western mainline be reviewed. The Government also announced the High Speed 2 (HS2) proposal, a high-speed rail line linking Heathrow and the north-west of England, including a Heathrow International Interchange linking HS2 to the Great Western mainline and Crossrail. We believe that high-speed rail will complement rather than replace air travel. A new high-speed rail link would not remove the need for additional runway capacity at Heathrow, because a third runway would serve different markets to a new rail link. Chaired by Sir David Rowlands, the former Permanent Secretary to the Department for Transport (DfT), HS2 will report findings by the end of Managing expansion responsibly Airport expansion will deliver significant economic and social benefits (see pages 10-12). We also believe the expansion of aviation can be compatible with respecting environmental limits. Environmental impacts By incorporating aviation within the EU Emissions Trading Scheme (ETS), the climate impact of aviation will be addressed in the same way as with other polluting industries. Airlines will be given an emissions allowance and will have to buy permits if they exceed their quota (see page 19). This will incentivise the uptake of new technology and limit net emissions. Noise limits can be addressed through manufacturers designing quieter aircraft. Air quality limits can be met through improvements in road vehicle emissions and aircraft engines. Improvements to public transport will help to reduce road congestion (see page 22). Consulting communities We want to expand our airports with the support of our stakeholders and we listen to their views to inform the way we plan developments. We are required by law to carry out public consultations on proposals for airport expansion. We seek to consult for longer than the required period and continue to engage with local communities through meetings, newsletters and discussion forums. Read more about our efforts to engage with local communities on page 3. Compensation With expansion, factors such as house price depreciation (blight) can occur. Where negative impacts occur, compensation schemes are being made available for affected communities. The Property Market Support Bond scheme helps to protect local property values inside the expanded boundary of a three-runway Heathrow. It provides a bond to homeowners that guarantees the value of their property, so that they can sell properties in the area knowing that the property value will not be affected. The Home Owner Support Scheme protects property values in the Heathrow area forecast to fall within the 66dB LAeq noise contour of the new runway. The scheme allows property owners who wish to move and have been unable to sell their property for a price within 15% of the market value to sell their property to BAA at an unblighted price (once we have announced our decision to apply for planning permission). Homeowners able to sell within 15% of the market value can receive a contribution to sale costs of up to 5% of their sale price. As work progresses, BAA expect to periodically review these schemes to make sure they remain appropriate. BAA Corporate Responsibility Report

10 Passenger experience BAA is focused on improving the experience of the 145 million travellers who pass through our airports each year. Background Congested airports, with limited capacity, mean that the experience of travelling through our London airports is not always as good as we would like it to be. We are working hard to refurbish our airports and build new terminals to improve our passengers experience. Our approach Our aim is to continually improve our passengers experience by providing modern, clean, efficient terminals and great customer service. The Government s approval for expansion at Heathrow sets the foundation to deliver an airport the UK can be proud of. We are increasing the use of real-time monitoring at Heathrow to assess how smoothly passengers pass through our airport, enabling us to plan and allocate ASQ Score Worst Q Q Q3 07 Q1 08 Q4 08 Q Heathrow Comparable airports worldwide our resources more efficiently. This has already resulted in a significant improvement in our security queuing performance: 95% of the time, passengers wait for no longer than five minutes in security queues. Working with partners Figure 3: Heathrow s improvement in relation to comparable airports Of the passenger processes in the airport terminal, BAA are only solely responsible for security. This means that the overall passenger experience depends on the performance of airlines, handling companies and Government agencies working in partnership with BAA to improve the end-to-end passenger experience. In 2008, we negotiated service level agreements with the UK Borders Agency at Heathrow which aim to deliver faster immigration clearance. Queues at airline check-in counters can also cause passenger frustration, so we work with airlines and their ground handling agents to Figure 4: Overall airport experience and security queuing time Heathrow Best support the use of off-site check-in and selfservice check-in machines. For example, at Heathrow, we have implemented mobile phone boarding cards with bmi and Lufthansa, allowing passengers to check in online with an electronic boarding card sent to their mobile device. Our performance BAA We regularly participate in the international Airport Service Quality (ASQ) survey. During 2008, we used the results to drive service improvements for customers. Figure 3 shows the improvement in Heathrow s performance relative to comparable airports over the past year. We frequently ask passengers their views about service and quality at BAA airports. We research customer perceptions through our Quality of Service Monitor (QSM) survey, which involves around 70,000 passengers a year. Passengers are asked to rate around 40 aspects of their departure experience and 20 aspects of their arrival experience. We set targets for our airports to improve scores in the QSM survey each year. Key QSM indicators include crowding, comfort, cleanliness, queuing, security, retail and restaurants. The average score for overall airport experience across BAA airports improved from 3.95 in 2007 to 4.06 in The average score for queuing time improved from 3.77 in 2007 to 4.12 in Figure 4 shows our performance in overall airport experience and security queuing time for Heathrow since We believe that the better airport experience reflects the improvements to customer service brought about by the opening of T5, which eased capacity at other terminals, as well as general improvements in areas such as cleaning and security times. QSM Score Queuing time at Security (departing passengers only) Overall airport experience departing passengers only Overall airport experience arriving passengers only In August 2008, 99% of passengers waited less than five minutes in the central search areas, compared with 75% in August 2007 and 45% in August We have achieved this by implementing new technology, standardising the security process, recruiting around 600 more security staff and adding security lanes. 8 BAA Corporate Responsibility Report 2008

11 Our plans BAA In 2009 we will: Continuously improve the passenger experience, reflected in improved QSM scores, aiming to make every journey better for passengers. Maintain and improve on performance against the regulated Service Quality Regime measures. Conduct a review of the QSM survey to focus more attention on aspects that are most important to passengers. Heathrow Between 2008 and 2012 Heathrow is investing 4.1 billion to refurbish and renew facilities. This will transform passengers experience of the airport and will provide London with a continuously improving international gateway. A new terminal will replace Terminal 2. Terminals 3 and 4 are being refurbished, including forecourt redevelopments, check-in refurbishment and extension, refreshed departures lounges, new air bridges ready for the new A380 super-jumbo, baggage upgrades and many other improvements. Our approach to sustainable construction is outlined on page 15. Read more about our approach to improving the passenger experience in our individual airport corporate responsibility reports available at Case study 2 Terminal 5 opening BAA opened Terminal 5 in March The first week of operation suffered disruption to service resulting from some problems that were the responsibility of both BAA and British Airways. We have learnt valuable lessons which we will use to avoid the same mistakes when opening future facilities. The problems were quickly resolved and the facility now provides one of the best passenger experiences of any terminal in Europe, according to the independent Airport Service Quality ranking. T5 has brought 30% more terminal capacity at the airport, freeing up the space needed to start rebuilding and refurbishing the other terminals, to ensure the entire airport delivers the experience that passengers expect. 9

12 Economy and society: National economic contribution As well as directly providing over 180,000 UK jobs, aviation benefits the UK economy by facilitating trade and attracting investment. National economic contribution The air transport industry makes a critical economic contribution as an enabler of business. It influences decisions on where businesses locate, helps improve productivity throughout industry and promotes foreign investment and international trade. The UK s investment in aviation has helped the country become one of Europe s leading destinations for foreign investment and corporate headquarters. A 2008 study by York Aviation, an aviation policy consultancy, for the City of London confirmed that aviation services are a critical and expanding requirement for the City and for London as a whole. In 2006, Oxford Economic Forecasting, an economic forecasting and policy organisation, updated its 1999 report, The Contribution of the Aviation Industry to the UK Economy. This found that the aviation industry contributes 11.4 billion to the UK economy, supporting more than 520,000 direct and indirect jobs over a quarter of which are within airport boundaries. Although BAA does not currently pay corporation tax because of interest payments arising from debt, we remain a significant UK tax payer. The contribution to tourism The UK is the world s sixth largest international tourism destination, in terms of the number of visitors. In 2007, over threequarters of the 33 million overseas visitors to the UK arrived by air, accounting for 86% of the UK s tourism revenue of 16 billion. Tourism accounts for around 3.5% of UK GDP. Air fares and convenience at airports influence decisions about where to visit. It is important to maintain sufficient airport capacity, both to support continued airline competition and affordable fares for passengers, and to ensure that passengers have positive experiences as they travel. Regional economic role Air travel helps the economies of Scotland, Wales, Northern Ireland and the English regions. Airports, as employers, providers of services and investors in infrastructure, are important economic generators in their own right and facilitate and attract other business activities. Good connections to international markets ensure these regions benefit from inward investment and help businesses in the regions compete. Maintaining the UK s position This economic and social contribution is at risk. As illustrated in Figure 5, by 2010, Heathrow will have slipped to seventh in the international airport ranking by number of destinations served, from second in Heathrow s two runways are 95% full, whereas our main competitors have 25% spare capacity. This will affect the UK s ability to respond to international business demand. The potential damage to the UK s economy if we are unable to meet the demands of trading with emerging economies should be clearly evaluated. If the UK constrains aviation growth while our European competitors encourage it, the country will be disadvantaged. Figure 5: Number of destinations served 1990 Heathrow ranked second in Europe 2004 Heathrow ranked fourth in Europe 2010 Heathrow ranked seventh in Europe Destinations Destinations Destinations Frankfurt Heathrow Paris CDG Amsterdam Frankfurt Amsterdam Paris CDG Heathrow Frankfurt Paris CDG Amsterdam Munich Rome Madrid Heathrow 10 BAA Corporate Responsibility Report 2008

13 Economy and society: Heathrow s contribution As the UK s largest airport, Heathrow has significant impacts at a regional and local level. We work to optimise these benefits. Our approach We invest in economic and community development activities that benefit people living around Heathrow, involving other companies operating at the airport to maximise the opportunities available to local communities. We focus our support on: Education and employment programmes that increase local skills. Training programmes that help airport staff. Programmes that create business links between local companies and Heathrow. Projects to improve the environment. Programmes run by charities, local schools and community groups that benefit the environment and encourage community development. We encourage our employees to volunteer and fundraise in their local communities. Six days paid annual leave is offered to employees for volunteering activities. Involvement in regional and local partnerships We participate in and financially support a number of partnerships and agencies to support Heathrow s local economy. We provided funding support of over 150,000 in We are represented at senior level on: Think London. West London Business. The Thames Valley Economic Partnership. We chair: The Hillingdon Sustainable Economy Taskforce. Heathrow City Partnership. The Feltham Area Regeneration Steering 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. Figure 6: Importance of Heathrow to local jobs Total number of people in employment Number of people employed at Heathrow Percentage of people in employment who work at Heathrow Understanding Airport Employment training days, helping local teachers and career advisers find out about Heathrow jobs and skills. An intern programme where seven students from Thames Valley University s Airline Relations and Airport Management course spent six weeks on paid BAA work placements. Jobs for local residents As illustrated in Figure 6, the airport provides jobs for a high proportion of people living near Heathrow. We support Routes to Work a scheme largely funded by the London Development Agency and managed by Heathrow City Partnership helping residents to find construction and retail jobs at Heathrow. In 2008, the project helped 134 residents access jobs. Apprentice and NVQ programmes Proportion who work at Heathrow Ealing 153, ,200 5,338 5, % 3.5% 1 in 29 1 in 29 Hillingdon 120, ,000 8,295 8, % 7.2% 1 in 14 1 in 14 Hounslow 105, ,000 10,748 10, % 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, % 11.4% 1 in 8 1 in 9 Our performance Heathrow Compensation and community investment across our airports 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 figure includes 6 million spent on mitigation schemes at our airports. The BAA Communities Trust has made grants of over 4 million since In 2008, the Trust invested 220,000 in education, skills, environment and charitable support schemes around Heathrow. Youth training and careers In 2008 we supported a range of programmes to help local pupils and teachers find out about Heathrow jobs and the skills required by airport employers, including: The updated Heathrow Careers and Economy teacher resource pack, available at The primary schools Build a Terminal challenge, involving 2,095 pupils from 38 schools learning basic construction principles and teamwork. The Surrey retail merchandising challenge, where 446 pupils created a visual merchandising display for a Heathrow retail outlet. As illustrated in Figure 7, BAA is committed to providing local people with access to training opportunities BAA s engineering advanced apprenticeship has been running for over 30 years. In 2008, 20 apprentices completed the programme at Heathrow and were given permanent jobs. We manage apprenticeships and NVQs on behalf of other Heathrow companies as part of our Retail Academy. Programmes are funded by the Learning and Skills Council and delivered in partnership with VT Training. In 2008, 58 employees of companies operating at Heathrow gained apprenticeships and 131 people received NVQs as a result of Retail Academy programmes. BAA Corporate Responsibility Report

14 Economy and society continued We provided financial support to the West London Construction Training Centre, established by Carillion Construction Training during the construction of T5, which helped 49 young people to complete apprenticeships in Our Retail Academy won Business in the Community s National Example of Excellence for Total Talent through our approach to developing skills in the community and the workplace. Supporting local business Figure 7: Economy Number of suppliers attending Heathrow Meet the Buyers Estimated value of business generated by Heathrow Meet the Buyers ( m) Number of people accessing airport jobs as a result of BAA training programmes Number of people completing apprenticeships managed or supported by BAA not yet published Number of people completing NVQs managed by BAA We lead Heathrow Meet the Buyers, an annual event helping local businesses to promote their goods and services directly to major companies and public sector agencies based in and around the airport. As illustrated in Figure 7, 260 suppliers attended the 2008 event. A survey of Heathrow s 2007 Meet the Buyers estimated that 5.1 million of new business was generated. Supporting community programmes Fulcrum Challenge The BAA Communities Trust funded the Fulcrum Challenge, a youth development charity, for a third year. Through this, 22 schoolchildren aged between 16 and 18 from around Heathrow spent two weeks rebuilding a Himalayan primary school in the remote Spiti Valley, Nepal. The scheme contributed towards an ASDAN personal development qualification. Sustainability in schools In partnership with Green Corridor, an environmental charity, we launched an education programme to get local students thinking about the environment. 150 students from five secondary schools spent two days at Heathrow learning about the airport s environmental features. Back at school, they explored the environmental impact of their school building and developed action plans to reduce energy use. The programme was supported by 20,000 from the BAA Communities Trust. BAA Heathrow Community and Environment Awards We launched the BAA Heathrow Community and Environment Awards, in conjunction with the charity Groundwork Thames Valley. Local schools, community groups and voluntary organisations can apply for grants of up to 2,500 to support local projects. The awards are funded with donations from BAA, the BAA Communities Trust and passenger foreign coin collections. Around 60 organisations across the boroughs around Heathrow received awards worth 115,000. Young Firefighters The Heathrow Fire Service launched Young Firefighters, which brought 12 students aged 11 to 17 to the airport to learn about firefighting. The scheme emphasises the fire service s principles of communication, teamwork, motivation and leadership. All students received a personal achievement certificate. The participants were selected for the scheme through Connexions, an organisation supporting young people at risk from social exclusion and unemployment. Other key charities supported in 2008 Our employees selected Marie Curie Cancer Care as the first Heathrow charity of the year. We raised 240,000 through events and passenger donations. This will help Marie Curie provide 12,000 nurse hours. Employees have chosen Age Concern and Help the Aged as the 2009 charity of the year. We provide 1 million each year to the Hillingdon Community Trust, a charity funding community projects in the south of Hillingdon. We provide office accommodation and core funding for Green Corridor. Supporting volunteering The I-Volunteer awards give BAA volunteers and fundraisers the chance to win between 2,000 and 5,000 for their chosen charity. A total of 93 Heathrow employees entered the awards, up a third from 2007, winning a total of 34,000 from the BAA Communities Trust. Our plans Heathrow In 2009, we will: Align our community investment and economic development programmes to ensure they are maximising local value. Work with local authorities and other partners to secure public funding to sustain programmes supporting unemployed local residents into Heathrow jobs. Increase the number of airport staff (BAA and non-baa) benefiting from recognised training programmes by at least 10%. Deliver programmes that help at least 4,000 school pupils to understand more about airport skills and careers. Raise over 200,000 for our charity of the year, Age Concern and Help the Aged. Launch a grants scheme to fund local projects from money collected from aircraft noise infringements. Read more about our efforts to support local communities in our individual airport corporate responsibility reports, available at 12 BAA Corporate Responsibility Report 2008

15 Case study 3 Heathrow Apprenticeship Fair The first ever Heathrow Apprenticeship Fair was held in February The Fair helps young people from schools around Heathrow to find out about employment and training opportunities offered by companies based at the airport or within BAA s supply chain. The Fair was attended by over 600 young people, parents and teachers from 32 schools and colleges within the boroughs of Ealing, Hillingdon, Hounslow, Slough and Spelthorne. Twenty companies offering over 200 apprenticeships attended the event. 13

16 Sustainable supply chain Background Suppliers can play an important role in helping companies meet their corporate responsibility objectives. For example, waste management suppliers can help companies to achieve recycling goals and construction suppliers enable energy efficiency improvements in new facilities. Good corporate responsibility management practice also indicates quality in supply chains. Association with poor performing suppliers can damage a company s reputation. Our approach BAA spends more than 1.5 billion each year with suppliers, approximately 70% with construction suppliers. Our supplier relationships involve multimillion pound contracts running over several years. This provides an opportunity to work with suppliers to deliver our corporate responsibility objectives. We recognise the need to promote high sustainability standards to our suppliers and are working to translate our experience in construction to other parts of our supply chain. While we have not yet set sustainability targets for non-construction suppliers, we assess potential new suppliers on their sustainability performance as part of the tender process. We want our business to benefit the people and economies around our airports. We recognise the benefits of buying from local suppliers where possible and our Meet the Buyer events provide opportunities for local businesses to meet BAA s partner companies to discuss business opportunities (read more on page 12). Our performance BAA 2008 target Re-launch the Supplier Evaluation Process, linking supplier performance to awarding future capital projects Performance We monitor the sustainability performance of our construction suppliers through a Supplier Evaluation Process. This requires suppliers to implement sustainability management systems and demonstrate continual improvements in health and safety, waste, energy use and environmentally sensitive materials. The average sustainability score of the 19 suppliers that were assessed in 2008 was 82.4%. We conducted a sustainability workshop for 19 senior representatives from our top-tier construction suppliers target Implement our new Responsible Supplier Policy Performance We made some progress towards meeting this target through developing an audit procedure to measure and understand supplier activity and by subscribing to a service providing information on whether our suppliers have used child labour or undertaken poor environmental practice. We intend to build on this initial work to fully deploy our new policy in Our plans We plan to refocus our approach to ethical supply chain management. This will involve redesigning our procedures to manage sustainability risks and extend good practices with construction suppliers throughout our supply chain. In 2009, we will link sustainability performance directly to awarding new contracts. 14 BAA Corporate Responsibility Report 2008

17 Sustainable construction Background Airport expansion, building refurbishments and infrastructure upgrades involve significant construction. It is important to minimise impacts on the environment from energy and resource use and the production of waste, and to ensure building materials are from more sustainable sources. Steps must be taken to protect communities from local impacts such as noise and dust and to ensure that building design enables greater energy and resource efficiency. Our approach The BAA Capital Projects Sustainability Management Process ensures that we consider sustainability at every stage of a project. It is aligned with environmental management standard ISO The process focuses on: Designing more energy-efficient buildings and promoting renewable energy technologies. Reducing waste and increasing recycling. Improving the sustainability credentials of construction materials. Efficient water use. Our construction projects include steps to minimise ground and water pollution, disruption to local communities, and dust and noise. We inspect sites for archaeological importance and conduct excavations. We use ecological surveys to minimise biodiversity impacts. Our performance 2008 target 90% of project managers trained in sustainability management process BAA performance We conducted sustainability training for 86% of project leaders (113 people) and piloted sustainability training for 19 development managers target 80% of projects to have sustainable management processes in place BAA performance We developed key performance indicators (KPIs) for BAA project teams to confirm their commitment to sustainability. The KPIs covered adoption of BAA sustainability management systems, consideration of energy efficiency, waste management, and awareness of BAA policy to reduce environmentally sensitive construction materials. We monitored awareness of the KPIs across 24 of our most complex, highvalue Group-wide projects. By December 2008, 21 (87.5%) projects had signed up to follow the principles target 80% of projects to meet energy and materials targets BAA performance Processes to measure energy and materials performance (other than timber) were not developed during We intend to develop methods to report against this target in Heathrow performance During 2008, free heat recovered from the T5 energy centre s combined heat and power facility for use in the terminal saved 6,820 tonnes of CO 2 compared with a conventional gas boiler. Read more about energy and climate change in the climate change section on pages target Recycle or compost 85% of construction waste We required preparation of Site Waste Management Plans (SWMP) on BAA projects before legislation was introduced in April The SWMP predicts waste types and quantities likely to arise from projects and provides the template from assessing measures to reduce and recycle. Heathrow performance We recycled 65% of Heathrow s construction waste, falling short of our 85% target as some projects with limited waste storage space arranged night-time waste collections when Materials Recovery Facilities (MRFs) were closed. We have corrected this by making arrangements to store waste at a licensed off-airport waste logistics centre for daytime delivery to designated MRFs target 80% procurement of Forest Stewardship Council (FSC) construction timber (temporary and permanent works) BAA performance In 2008 we continued our membership of the World Wide Fund for Nature, Forest and Trade Network, which independently assesses our approach and performance relating to responsible procurement of timber products. We increased the number of suppliers required to contribute to our timber evaluation process to 18 from 5 in The review of 2008 certified timber procurement (completion date April 2009), which will enable us to report progress against our timber procurement targets target 80% elimination of formaldehyde in bound boards and products, internal structures and fit-out and finishings BAA performance We are unable to report progress against this goal as the data collection process was not created and we will review carrying this forward in Our plans Heathrow Extend tracking of basic sustainability KPIs across Heathrow projects, with enhanced sustainability assurance on selected projects. Heathrow East Terminal development to be designed to exceed the 2006 Building Regulation s minimum energy performance by 20% based on energy efficiency measures, with a further 20% carbon reduction from on-site renewable energy generation. Develop quantifiable measures of sustainable construction. BAA 2010 Targets 100% procurement of FSC construction and FSC virgin timber products. 100% elimination of HFC and HCFCs in BAA-owned equipment. 100% of solvent-based products to achieve Blue Angel Eco Label or EU Ecolabel Class II accreditation, or be replaced with water-based solvent. Recycle/compost at least 85% of construction waste. 80% of projects to meet our materials targets BAA Corporate Responsibility Report

18 Global environment Climate change Background There is consensus that climate change is caused by human activity, primarily burning fossil fuels which generates greenhouse gases. Carbon dioxide (CO 2 ) is a primary greenhouse gas, but other emissions, such as nitrogen oxides (NOx), also have an impact. The Intergovernmental Panel on Climate Change (IPCC) estimates aviation s total impact to be around 3.5% of the total human contribution to climate change. By 2050, the IPCC estimates that aviation could account for 5%, although scenarios range from 3.5% to 15%. The DfT estimates that UK aviation comprised 6.4% of the UK s total CO 2 emissions in 2006 (37.5 million tonnes of CO 2 ). In January 2009, the DfT forecasted that UK aviation emissions could rise to around 60 million tonnes of CO 2 by As the UK reduces its emissions to meet its 80% reduction target by 2050, aviation will represent a greater proportion of the UK s total emissions. Inclusion of aviation in the EU ETS, however, will cap aviation s net emissions at 97% of the average level. Our approach We believe that our industry s contribution to climate change should be addressed and we work with stakeholders to pursue the best measures to achieve this. Where we have direct control over emissions we aim to lead the airport industry in managing them. Where we do not have direct control, such as over emissions from flights, we use our influence to encourage the airline industry and policy makers to tackle climate change. Turn to page 7 to read how expansion plans relate to the UK s climate change targets. Measuring the climate impact of airports In last year s Corporate Responsibility Report we committed to producing a carbon footprint for our airports. The footprint for 2008 for Heathrow is shown in the box on page 18. During 2009 we will use the carbon footprint to establish an updated climate change strategy for Heathrow. Our performance Climate impact of airports The emissions over which Heathrow has direct control are shown in the carbon footprint on page 18 and total 340,480 tonnes of CO 2. The most significant contributor to these emissions is from energy used in buildings and infrastructure (fixed sources), accounting for over 98% of Heathrow s direct emissions. BAA BAA has set targets to reduce our absolute CO 2 emissions from fixed sources by: 15% on 1990 levels by March % on 1990 levels by March For 2008 we have amended our greenhouse gas (GHG) reporting methodology to align with the Department for Environment, Food and Rural Affairs (DEFRA) GHG Guidelines This recommends that companies use a rolling average carbon conversion factor of This compares to the long-term carbon factor of 0.43 that was applied in The effects of this is to increase CO 2 associated with BAA s electricity consumption by 25%. In 2008, CO 2 emissions from fixed sources were 529,646 tonnes. This compares to 436,229 tonnes reported in our 2007 Corporate Responsibility Report. This increase relates to the change in the carbon conversion factor and is not representative of BAA s overall level of energy consumption, as shown in Figure 8. This shows that BAA s actual use of energy has remained relatively flat over the past four years. In making the change to calculating CO 2 emissions from our fixed sources we have also considered the effect on meeting our two long-term targets. Although it is now likely that we will not be able to meet our 2010 target we remain confident in meeting our 2020 target through: focused energy reduction strategies across all BAA airports; continued improvement of energy efficiency across all BAA airports; UK Government commitments to decarbonise the UK energy mix as part of the Climate Change Bill. We will shortly be publishing an energy strategy for Heathrow outlining how we will meet our 2020 CO 2 target at the airport. Heathrow 2008 target Reduce CO 2 emissions by 3% against business-as-usual forecast through improvements in energy efficiency. The target was achieved, with performance at Heathrow for 2008 amounting to 8.6% below the business-as-usual forecast, which represents a scenario when CO 2 is not actively managed. Key activities contributing towards this performance are grouped under three elements in Heathrow s energy strategy: Energy demand management. New building design. Energy supply and generation. Energy demand management Energy demand management describes practical initiatives to reduce our use of energy through switching equipment off when not needed and using equipment more effectively. At Heathrow this has helped us 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 Business Centre GWh savings at Terminal 4 through auditing. 0.4 GWh savings through improving car park lighting GWh savings by using waste heat from our combined heat and power station to heat T5. We regained accreditation to the Carbon Trust Standard, a leading emissions reduction award scheme, and together developed an energy-saving video for employees. Figure 8: Buildings energy use from fixed sources (GWz) Gas oil Gas Electricity 16 BAA Corporate Responsibility Report 2008

19 New building design New building design describes our work to improve the energy efficiency and fabric of new buildings and refurbishments. The Heathrow East Terminal The proposed Heathrow East Terminal will be built on the existing site of Terminal 2, Flight Connections Centre and Queens Building and will accommodate 30 million passengers per year. The new building is being designed to meet two targets: A 40.5% CO 2 reduction compared to 2006 building regulations, with on site renewable energy contributing a 20% CO 2 reduction. The building will meet these targets by: Reducing heat loss during winter and solar gains in summer. Using energy-efficient heating, lighting, cooling and electrical systems above energy regulation requirements. Terminal 5 The main terminal building is glazed on all facades, giving the building a light and airy atmosphere, and reducing the need for artificial lighting. To prevent solar gain, louvres shade all but the north facade. These are angled to prevent the summer sun penetrating the building, but allow in the winter sun, which is lower in the sky. The building has energy-efficient light fittings throughout. Individual sets of lights can be set according to the need at a particular time of day or for certain weather conditions. The terminal is cooled by water supplied by efficient ammonia chillers. This removes the need for multiple air-conditioning units and refrigerators. Waste heat from the combined heat and power station delivered to T5 by a new underground pipeline supplies 85% of T5 s heat demand. Energy supply and generation A new energy centre is required at Heathrow to meet rising energy demand and to replace old equipment. In 2008, we identified options for meeting energy demand while reducing CO 2 emissions. This identified combined heat and power (CHP) as an economically and energy efficient way of reducing CO 2 emissions at Heathrow. Climate impact of flights We do not have direct control over climate emissions from flights but believe that aviation should meet its external costs and contribute to the goal of avoiding dangerous climate change. We welcome the completion of the Climate Change Bill in November 2008, which established a binding reduction in UK CO 2 emissions of 80% by 2050 as well as the recommendation of Adair Turner, chairman of the Committee on Climate Change, that aviation should play a role in meeting this target. We believe that this reduction can be achieved through improved efficiencies, and the industry s participation in emission trading. Below T5 Energy Centre BAA Corporate Responsibility Report

20 Global environment continued Carbon footprint Heathrow Airport carbon footprint BAA commissioned Entec to develop a methodology for calculating the carbon footprint of its airports. Heathrow s Limited s footprint is described below. Entec has drawn on best practice guidelines such as the Greenhouse Gas Protocol on Corporate Accounting and Reporting. These define emissions over which an organisation has direct control as well as other emissions that can be reported voluntarily. Heathrow s direct carbon emissions 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 offices is included. Electricity used for running trains has been included under other emissions, as Heathrow has less control over these emissions. Heathrow s 2008 direct emissions are calculated as 340,480 tonnes of CO 2. 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 Heathrow s direct emissions. Other emissions In addition to the activities included in Heathrow s 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 influencing behaviour. The following carbon emission sources have been included: aircraft movements on the ground and close to the airport (arrivals and departures up to 3,000 ft). This represents the limit of airport influence 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 employee s road, rail and air business travel. Figure 10 summarises carbon emissions from other airport sources and illustrates the significant contribution from aircraft emissions both on the ground and in the departing and arrival phase of flights. Taken together, other airport emissions amounted to 1.8 million tonnes in The carbon footprint does not include emissions from aircraft in flight. These are regulated and managed through national polices, notably the EU ETS. The DfT calculate CO 2 emissions from flights for the UK as a whole as well as broken down by airport. Carbon emissions for flights departing Heathrow were 17.1 million tonnes in 2005 (the most recent year for which calculations were published). It is Entec s view that this work represents a significant step forward for Heathrow s carbon management strategy and Entec recommends that BAA continue to develop and report against this methodology. Figure 9: Direct carbon emissions Facilities Electricity 242,134 tonnes 72% Facilities Natural Gas 93,483 tonnes 27% Other 1% Facilities Other Fuel 2,171 tonnes Facilities Refrigerants 1,295 tonnes Airside Fuel Use 1,376 tonnes Business Travel 22 tonnes Figure 10: Other carbon emissions Direct emissions Heathrow direct emissions 340,480 tonnes Other emissions Passenger transport 248,856 tonnes Staff transport Airside fuel third party 40,219 tonnes Waste and water 25,805 tonnes Business travel 299 tonnes 132,960 tonnes Aircraft in LTO 1,350,100 tonnes Ground 635,044 tonnes Approaching 285,668 tonnes Departing 429,389 tonnes Full details of Heathrow s carbon footprint are due to be published in a separate report mid This will also contain data for all BAA airports. 18 BAA Corporate Responsibility Report 2008

21 Improving efficiency In December 2008, industry group Sustainable Aviation issued a CO 2 reduction roadmap. This demonstrates that CO 2 emissions from UK aviation can be reduced to 2000 levels by 2050, through new technologies, operational efficiencies and low carbon fuels. View the roadmap at Emissions trading An open emissions trading scheme (ETS) represents the most efficient and effective way for aviation to address its climate impact. Emissions trading means that part of the industry s climate impact will be offset by reductions in other industries, but paid for by the aviation industry. The European Commission completed legislation during 2008 that means that arriving and departing EU flights will be part of the EU ETS from Our plans BAA targets To reduce our absolute CO 2 emissions from fixed sources by: 15% on 1990 levels by March % on 1990 levels by March Heathrow targets To reduce CO 2 emissions from fixed sources at Heathrow by 6% against the 2009 business-as-usual forecast. We plan to publish our carbon footprint alongside our approach to managing other sources of CO 2 and will play an active role in the Aviation Global Deal group. Read more about our approach to reducing energy use and climate impacts in our individual airport corporate responsibility reports available at The cap set for aviation from 2012 is stringent, with the industry having to purchase 15% of its permits. We view this legislation as an interim step towards a global aviation climate policy framework. We are a founder of the Aviation Global Deal (AGD) group which is promoting aviation s inclusion in the global climate agreement to be negotiated in Copenhagen in Tax The 2008 DfT Emissions Cost Assessment demonstrates that Air Passenger Duty more than covers the aviation industry s external costs of CO 2 emissions. However, we believe that Air Passenger Duty remains a blunt instrument and does not create incentives to improve environmental performance. We continue to press the Government to revise or remove this new tax from 2012, when aviation will be included within the EU ETS. Working in partnership We participate in The UK Corporate Leaders Group on Climate Change. In 2008 we were signatories to two high-profile initiatives in the form of an open letter to UK party leaders as well as to policy makers taking part in the Poznan negotiations. Read our latest position on climate change in responses to Government and Parliamentary inquiries on our website ( BAA Corporate Responsibility Report

22 Local environment Air quality Background Aircraft, ground vehicles and traffic at and around airports produce a number of pollutants, particularly nitrogen dioxide (NO 2 ) and fine particles (PM 10 ), which can affect human health and the local environment. Housing and industry also contribute. The EU Air Quality Framework Directives set limits for airborne pollutants. NO 2 limits must be met by 2010, although a new EU directive allows member states to apply for an extension until The Government is expected to apply for this extension for areas exceeding the limit in the UK. The most recent modelling for Heathrow was carried out by the DfT. This indicated that the annual average EU limit for NO 2 will not be met in the immediate surroundings of Heathrow, where the airport is a key source, until This is in common with many areas of London as well as other locations across the UK and Europe. PM 10 concentrations around Heathrow meet the relevant EU limits and permitted levels of pollutants have not been breached at our other airports in recent years. Our approach Heathrow s licence to expand relies on addressing air quality at and around the airport. Air quality is measured in and around the airport at monitoring sites operated by BAA, local authorities and Government. In 2008, PM2.5 was added to the list of pollutants measured at all BAA-funded air quality monitoring sites located outside of the airport perimeter. In addition, we commission emissions inventories and dispersion modelling from time to time to assess NOx emissions from Heathrow s operations as well as from roads, rail, buildings and industry around the airport. Concentrations increase significantly near the major roads as they are a major source of NOx. The influence of Heathrow gradually declines with distance from the airport. We support increased use of public transport to and from our airports and reduction in the use of private vehicles (see page 26). Alongside implementing policy changes and scientific development in air quality management and better airport air quality assessment, our Air Quality Action Plan has two core elements: 1. Encouraging reductions in aircraft emissions Aircraft engines must be manufactured to meet emissions and noise standards. These are set by the International Civil Aviation Organisation s Committee on Aviation Environmental Protection (CAEP). A NOx emission standard, called CAEP/4, applied to new aircraft types from 1 January 2004 and a new standard, CAEP/6 (which is 12% lower than CAEP/4), came into force from January We believe that the aviation industry can operate within environmental limits if we engage with government, regulatory bodies, airlines and aircraft manufacturers to adopt more stringent NOx emission standards. We levy a NOx emissions charge on aircraft that take off and land at Heathrow, encouraging airlines to use lower-emission engines. Figure 12: Air quality monitoring sites around Heathrow Slough Colnbrook Green Gates London Hillingdon Harlington Figure 11: Percentage of air traffic movements with NOx emissions at least 20% better than CAEP/4 standard Tackling ground-based emissions Ground-based emissions result primarily from vehicles operated by BAA and other companies involved in ground operations, as well as by airlines using auxiliary power units (APUs). APUs are small engines used to power aircraft lighting, air conditioning and controls when the main engines are turned off. We are working with airlines and ground handlers to reduce the use of APUs. Approximately 200 companies operate airside vehicle fleets at Heathrow, ranging in size from a few vehicles to many hundreds. BAA Heathrow run the Clean Vehicles Programme (CVP), a voluntary scheme, to incentivise companies to reduce emissions from their fleets. Vehicles that operate at Heathrow must have a Vehicle Apron Pass from BAA. We are updating the criteria used to award passes to ensure only vehicles with the lowest emissions are allowed to operate. Oxford Avenue Cranford We use this evidence to focus our efforts on the most significant emissions sources. This involves tackling our own emissions and encouraging airlines and other companies that use our airports to do the same. These data are also used to assess the impact Heathrow has on the local area. Oaks Road DEFRA (National Network) BAA Local Authority Modelling data in Figure 13 shows concentrations of NOx along a line running north from Heathrow s boundary to the M4. Reproduced from Ordnance Survey 1:1250 landline, 1:10k and 1:50k Raster by permission of Ordnance Survey on behalf of The Controller of Her Majesty s Stationery Office, Crown Copyright. All rights reserved. BAA Ltd, O.S. Licence Number AL BAA Corporate Responsibility Report 2008

23 Our performance Heathrow air quality BAA, the Government and local authorities monitor air quality at a number of fixed sites in and around Heathrow. Figure 14 shows the NO 2 trends from December 2002 to December 2008 at monitoring sites around Heathrow. The sites are shown in Figure 12. Air quality levels complied with the 2010 EU limits at five of the sites close to Heathrow. One of those that breached the limit, the London Hillingdon site, just north of the M4, is significantly affected by road traffic (non-airport related) emissions. The Oxford Avenue site is just above the 2010 limit, but within the EU acceptable range. Figure 13: Transect showing NOx concentrations North of Heathrow NO X concentration (µg/m 3 ) Perimeter Road A ,000 1,500 M4 2,000 2,500 Distance (m) All sources Aircraft Other airport Total airport Roads Background Figure 14: NO 2 trends around Heathrow Data on air quality around Heathrow are available on the website While the number of CAEP/4-class aircraft using Heathrow has increased by over 2,000 since 2005, the percentage of aircraft movements with the lowest NOx emissions, at least 20% below CAEP/4 (CAEP/4-20%), has fallen. The average percentage of flights meeting CAEP/4-20% criteria are shown in Figure 11. Running annual mean NO 2 /µg m EU limit value We are investigating the reason for this decline but expect that raising the NOx component of landing charges at twice the rate of the underlying landing charge increase will help reverse this decline. Ground-based emissions 0 Jan London Harlington London Hillingdon Hounslow Cranford Slough Colnbrook Heathrow Oakes Road Heathrow Green Gates Hillingdon 3 Oxford Avenue 2008 target: To improve APU compliance as measured by turnaround audits by 10% from 2007 baseline of 65%. Pre-conditioned air and mains electricity are provided for aircraft. At Heathrow, 90% of stands are fitted with electricity connections and 21% provide pre-conditioned air. We made progress during the year in improving compliance with APU use restrictions and increased the number of compliance audits from We are also improving the methodology by which compliance is measured. Due to concerns with the 2007 baseline data we have decided to report progress on our air quality target in 2009 by using 2008 data as a new baseline (75% compliance). In recognition of this, the target has been rated as not achieved. At Heathrow 21% of the vehicles in BAA s fleet are now hybrid petrol/ electric, or run on liquid petroleum gas. Our plans Heathrow We will continue to reduce emissions for which we are directly responsible and will encourage companies operating in and around Heathrow to do the same by: Encouraging the use of aircraft with the lowest NOx emissions. Increasing membership of the Cleaner Vehicles Partnership. Increasing the proportion of vehicles in BAA s airside fleet that are new, or run on alternative fuels. Enforcing Operating Safety Instructions that encourage the use of cleaner vehicles and limit the use of air pollutant emissions sources, such as APUs. Undertaking an air quality emissions inventory. Defining an air quality performance standard. Read more about our approach to air quality in our individual airport corporate responsibility reports, available at BAA Corporate Responsibility Report

24 Local environment continued Noise Background While technology has enabled quieter aircraft, noise levels continue to be a community concern. LAeq is the most common international measure for aircraft noise. This measures the average noise experienced over a particular time period. In the UK the defined period for daytime aircraft noise is from 7am to 11pm. Our approach Figure 15: Population (000s) and area (km 2 ) affected by noise Heathrow Gatwick Stansted population area km 2 population area km 2 population area km The DfT sets noise policy at Heathrow, Gatwick and Stansted, and local planning authorities set noise controls at other UK airports. To meet these controls and our own noise objectives we focus on the following areas: Encouraging the use of quieter aircraft and operating practices To monitor compliance with our noise reduction measures, we match noise data with aircraft track radar data. We provide airlines with regular feedback and work together to improve compliance. For example, in 2008, we helped Aegean Airlines to improve departure track-keeping (following set departure routes) at Stansted from 43% to 100%. Figure 19 (page 24) illustrates the proportion of aircraft on track at our London airports. Our efforts to reduce ground noise include: Providing engine test pens. Supporting restrictions on aircraft reverse thrust at night. Restricting the use of APUs and offering alternative power sources at stands. Take-off noise The UK Government imposes take-off restrictions to control noise at Heathrow, Gatwick and Stansted. For example, aircraft must reach a minimum height of 1,000 ft, within 6.5 km from the start of their takeoff. We fine airlines that exceed specified noise limits and use the money to fund local community projects. The UK Government also sets noise preferential routes to avoid aircraft flying over populated areas as much as possible. We have the power to fine airlines if they significantly deviate from these routes and are not willing to engage to improve their performance. Landing noise BAA helped to develop a voluntary arrivals code of practice which advocates the use of continuous descent approaches (CDA). Our definition of CDA allows aircraft one short segment of level flight below 6,000 feet resulting in them being generally higher than those aircraft that follow a series of stepped descents. This minimises noisy changes in engine tone, and can reduce average noise on the ground by up to 5 decibels. Work is under way with a range of stakeholders to improve the way in which CDA is defined, measured and communicated. Further information can be obtained directly from BAA through Aircraft noise at night The Government has set strict noise controls on night-flight operations at Heathrow, Gatwick and Stansted. Between and 07.00, the noisiest aircraft cannot be scheduled to land or take off. Between and 06.00, aircraft movements are limited to a specific number using a noise points quota system for each airport. This quota corresponds to points allocated to different types of aircraft depending on their noise classification. The quietest aircraft receive the fewest points, so these aircraft use up the least amount of the quota. This system encourages airlines that want to fly at night to use the quietest aircraft. The Government has stated that there will be no increase in night flights at Heathrow, Gatwick and Stansted between 2006 and Support for communities affected by noise We offer noise compensation and mitigation schemes that surpass Government requirements and were developed following consultation with local communities. We provide: Noise insulation for schools, hospitals and community buildings near the airport. Financial assistance towards the cost of moving for people living in the most affected areas. Noise insulation for dwellings in the airport vicinity. In 2008, approximately 10,000 households were invited to take part in the noise insulation schemes. Around 3,000 households accepted the invitation. Our Community Buildings Noise Insulation Scheme provides up to 5 million each year to address noise insulation at Heathrow. Growth in airport capacity is likely to mean that some communities will be significantly affected by new take-off flight paths and landing routes. In these cases we will: Offer noise insulation for homes subject to medium to high levels of noise. Offer to buy homes subject to high levels of noise. For more information on the Community Buildings Noise Insulation Scheme, Residential Noise Insulation Schemes and the Home Relocation Assistance Scheme please visit 22 BAA Corporate Responsibility Report 2008

25 Keeping local communities better informed In 2007 and 2008, we commissioned studies benchmarking our approach to noise against other airports. This showed that we are among the leading companies for noise management and local community compensation. The study also highlighted that we could do more to communicate on noise issues. We do this through: A dedicated website for aircraft noise, which includes a flight-tracking feature Noise information booklets for Heathrow, Gatwick and Stansted which are available online. noise Our performance BAA and Heathrow Population and areas affected by noise Figure 15 shows the population and area exposed to 57dB LAeq (16 hour) noise contour at Heathrow. Planning proposals at our 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 aircraft movements, changes in types of aircraft in the fleet, prevailing wind direction, population statistics and terrain. Noise infringements As Figure 16 shows, the number of infringements fell by 39% at our London airports and by 37% at Heathrow. Primarily, this was the result of fewer delays by heavier aircraft at night. We issued 121 fines at Heathrow in 2008, totalling 71,500. Figure 16: Aircraft exceeding Department for Transport take-off noise limits (London airports) Heathrow Night Day BAA Night Day Figure 17: Noise complaints Total number of complaints Average complainants per quarter Heathrow Gatwick Stansted Heathrow Gatwick Stansted BAA Corporate Responsibility Report

26 Local environment continued Figure 18: CDA Compliance Average % CDA per quarter London airports Heathrow Figure 19: Proportion of aircraft on track % on Track London airports Heathrow Figure 20: Use of Chapter 3-high aircraft % of Chapter 3-high aircraft London airports Heathrow Noise complaints 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. Complaints are reported in three ways: The number of individual callers. The number of complaints registered. The number of occasions we were contacted. The numbers of complaints and complainants are highly variable between airports and do not necessarily reflect contour area or population. Figure 17 shows the number of complaints and complainants at our London airports. Landing noise Figure 18 shows that the average percentage of aircraft achieving CDA increased at our London airports, but declined slightly at Heathrow, albeit Heathrow maintains a very high level of compliance. Departure routes Figure 19 shows that the average percentage of aircraft adhering to published departure routes remained consistently high across our London airports and at Heathrow. Quieter aircraft Over recent years, when aircraft are built, they need to meet international noise standards known as Chapters. Since 2006, all new aircraft have been required to meet Chapter 4 standards. Since 2002, Chapter 2 aircraft have been banned and there has been a steady decline in the noisier aircraft meeting Chapter 3 standards (known as Chapter 3-high). This is illustrated in Figure 20. Noise action plan In 2007, we stated that we would consult on and publish the Heathrow noise action plan by April 2008 and implement 2008 actions by December Progress has been made in developing this action plan, although it has not been completed due to DEFRA guidelines not being published during Consultation will commence during Our plans This year at Heathrow we will be continuing to seek improved performance against all the current operational noise abatement procedures. Through our work with airlines, NATS and groups such as Sustainable Aviation we expect to see further improvements in this area of aircraft noise management. The 57 dba Leq 16hour contour provides a basis for action to reduce noise and is the basis of planning conditions at a number of airports, including Heathrow. To help ensure we continue to meet the contour limits at limits at Heathrow we will be providing further financial incentives to use quieter Chapter 4 aircraft through our landing fees. However we recognise that the contour area does not fully reflect community concerns. Given that, we will also benchmark our approach to noise management against other international airports to ensure that we are doing all that we can to address the impacts of noise. The benchmarking covers our operational procedures, our mitigation and compensation approach and our communications. We will report on the outcomes of that benchmarking in our next report. We will consult on our draft Noise Action Plan during the summer of 2009 and see this as an important opportunity to gather feedback on our approach to managing aircraft noise. We expect the final Action Plan to be published early in Read more about our approach to noise in our individual airport corporate responsibility reports available at 24 BAA Corporate Responsibility Report 2008

27 Case study 4 Engaging with United Airlines to reduce noise In 2008, we worked with United Airlines to improve their use of CDA, a practice which reduces landing noise by avoiding sudden changes in engine tone. Our Heathrow noise team contacted United Airlines, advising them that it could reduce noise for local communities by improving compliance with the landing technique. With the agreement of senior management at the airline, we sent their pilots copies of the Arrivals Code of Practice, a voluntary code which advocates the use of CDA. We then began tracking the pilots use of CDA and gave feedback on their performance after they landed at Heathrow. By working in partnership in this way we helped United Airlines improve its use of CDA from 44.5% to 73%. 25

28 Surface access Background Without careful management, airport expansion can contribute to traffic congestion, affecting journey times and impacting the environment. Efficient public transport is crucial for sustainable airport growth. Where public transport is not possible, increasing private journey efficiency should be encouraged. Our approach Improving surface access around our airports is a business critical issue for BAA. Expanding Heathrow and improving passenger experience depend on the airport s public transport quality. Our surface access strategy objectives are to: Increase passenger and employee use of public transport to and from our airports by improving the quality, coverage and frequency of services. Reduce the number of vehicle trips to and from our airports for passengers and employees. Measure and reduce surface access CO2 and NOx emissions per passenger. We develop Airport Surface Access Strategies (ASAS) and company travel plans at our airports in partnership with Government departments, transport providers and airlines. The ASAS commit BAA and our partners to support new public transport services and infrastructure and to provide incentives for its use. We approach this through regular Transport Forums at our airports, bringing together passengers, service providers and local authorities to agree strategies and targets for increasing public transport use. Investing in public transport In partnership with bus and coach operators we develop services to and from our airports, and provide funding to set up new routes. We work with the Government and other authorities to improve rail services for our customers and staff. In addition to the 1 billion already invested in rail infrastructure over the last decade, we are currently investing 5.2 million in developing the first stages of the Heathrow Airtrack rail project to Heathrow T5. Encouraging public transport use We encourage fewer private car journeys made to drop off or pick up passengers by promoting the use of parking facilities, bus services and shared taxis. BAA is seeking the powers to introduce Civil Parking Enforcement at airports to help reduce congestion by enabling greater control of forecourts. We subsidise the cost of rail and local bus journeys for employees. We also offer prioritised parking for car sharers, incentives for cycle purchase and a free travel zone around Heathrow. Reducing freight impacts We reduce the environmental and congestion impacts of supplying goods to our airports through consolidating deliveries. Our performance BAA (London) In 2008, the proportion of passengers using public transport to access our London airports increased by 1.9%, and by 2.3% at Heathrow, as illustrated in Figure 21. Heathrow At Heathrow, we are on track to meet our goal to increase the proportion of people travelling to and from Heathrow by public transport to 40% by If the verified data supports this, we will work towards our next target of achieving a 45% public transport mode share by Heathrow s 2008 public transport schemes We continued to develop a Transport and Works Act application for permission to construct the Airtrack rail project to T5. We opened a new public transport Interchange at T5. Figure 21: Public transport use to and from our London airports (% passengers) BAA London airports Heathrow Our plans Heathrow Target for 2013 To increase the proportion of people travelling to and from Heathrow by public transport to a consistent 40%. Target for 2015 (with delivery of the Airtrack rail project) To increase the proportion of people travelling to and from Heathrow by public transport to 45%. Read more about our surface access approach and performance in our individual airport corporate responsibility reports available at 26 BAA Corporate Responsibility Report 2008

29 Other environment Waste Our performance Our plans Background Reducing waste and recycling reduces landfill costs, minimises consumption of nonrenewable resources and limits carbon emissions. Hazardous waste must be disposed of appropriately, to avoid damage to the environment. Our approach Over half of the 51,929 tonnes of waste produced at our airports each year is generated at Heathrow. Approximately 90% of the total is generated by the companies and passengers using our airports. Around 10% is generated by our own activities. Our two-yearly action plan is published on Read about our approach to managing construction waste on page 15. Influencing our business partners At Heathrow we encourage good waste management practices among airport waste producers by requiring internal waste transfer notes, setting performance standards and conducting daily compliance inspections. Food waste from aircraft has to be disposed of according to Government regulations which restrict recycling. We require airlines to separate food waste from the aircraft cabin waste stream so that we can recycle cabin waste. We currently recycle approximately 60% of aircraft cabin waste. BAA performance Total waste produced decreased for the third consecutive year, from 55,615 tonnes in 2007 to 51,929 tonnes in Waste per passenger fell from 0.37 kg to 0.36 kg. 1 In 2008, recycling rates increased to 36.8%, compared with 29.4% in Per passenger data is being reviewed for consistency across reporting years. Heathrow performance 2008 target Increase recycling for general waste handled by the airport waste contract from 37.35% in 2007 to 38% by 31 December Our recycling rate increased to 44% from 37%, with T5 achieving 63%. The new building has facilities for recycling passenger waste, 25 bin rooms for segregating retail and catering waste, and two dedicated airside facilities for aircraft cabin waste. The remaining 56% of waste was sent to landfill. Other Heathrow waste management activities: We composted and re-used 1,200 tonnes of green landscaping waste. We introduced passenger recycling bins in all terminals. We introduced a process to collect cooking oil from all retailers, which is converted into biofuel. Heathrow targets for 2009 Increase recycling for the general waste handled by the airport waste contract to 45% by 31 December BAA targets for 2010 Recycle 40% of waste. Zero growth in waste produced per passenger, against a baseline of average waste per passenger between 2005 and BAA targets for 2020 Zero waste to landfill. Recycle 70% of BAA waste. Reduce BAA waste per passenger, against a 2010 baseline. Reduce BAA hazardous waste per passenger against a 2010 baseline. Read more about our approach to waste in our individual airport corporate responsibility reports available at Figure 22: Waste production and recycling Total waste produced (tonnes) Waste produced per 000 passengers (kgs) % of waste recycled Heathrow BAA Heathrow BAA Heathrow BAA BAA Corporate Responsibility Report

30 Other environment continued Water and land quality Background Airport operations and developments increase pressure on local water supplies and require infrastructure and processes to prevent chemical pollution of water systems. Our approach We manage water quality, water consumption, flood risk and land quality through our environmental management systems, water quality strategy and water action plan. We closely monitor the presence of chemicals and other substances in water and at our larger airports we collect and treat the surface run-off water which is not suitable for direct discharge. We charge the companies that operate at our airports according to the amount of water they use. We monitor our own water consumption and investigate any exceptional use. Our performance BAA performance We received no enforcement notices or prosecutions relating to our water quality performance during As illustrated in Figures 23 and 24 water use at all our airports decreased from 4,646,859m 3 in 2007 to 4,496,204m 3 in This is the third consecutive year in which total water consumption has decreased. While water per passenger has reduced over the past three years, there was a slight increase between 2007 and In 2008, we began implementing the 11 water and land quality environmental performance standards developed in Heathrow performance In 2008, total water consumption decreased by 8% compared with 2007, to 2,260,154 tonnes. Water use per passenger fell from litres to litres. 2 A project to update Heathrow s older toilet facilities, including introducing water-efficient taps, contributed to the reduction target Develop and publish the Heathrow Water Resources Action Plan for In 2008, we developed a action plan (in order to align with other waste and water management timeframes). This sets out the actions we will take over the next two years to deliver our water objectives. In 2010, we will develop a five-year action plan for Additional activity We are investigating new technologies to reduce the impact of de-icing runways, taxiways and aircraft and in 2008 we commissioned a study looking into processes for capturing de-iceant run-off for recycling. Our plans BAA targets In 2009 we will develop a long-term water strategy for Heathrow, including KPIs that will help identify long-term goals. The strategy will be shared with other BAA airports. Heathrow targets Water quality BAA Asset Stewardship performance standards implemented for all BAA-owned surface water critical assets (infrastructure necessary to manage surface water flows and prevent pollution) by 31 December Water use Reduce water consumption by 4% against the business-as-usual forecast between January and December 2009 through improvements in water conservation. Read more about our approach to improving water and land quality and reducing water use in our individual airport corporate responsibility reports available at Figure 23: Total water consumption across all BAA airports (1,000m 3 ) 03 4, , , , , ,496 Figure 24: Water consumption per passenger across all BAA airports (litres) Per passenger data is being reviewed for consistency across reporting years. 28 BAA Corporate Responsibility Report 2008

31 Biodiversity Background Preventing habitat loss and pollution around an airport helps support the diversity of plant and animal species in the local area. However, as birds endanger aircraft safety through bird-strike, they must be deterred from the airfield by controlling insects and small mammals on which they feed. Our approach We aim to use land efficiently, minimising the impacts of our operations and developments on local wildlife and habitats. We set aside over 220 hectares of BAA-owned land to conserve or enhance biodiversity. Each of our airports manages biodiversity according to local needs. For example, at Heathrow, where our land is in urban surroundings, we manage several sites to enhance biodiversity and to create natural recreational spaces for local communities. Our performance BAA performance We share our plans for managing sites with significant ecological or recreational value with residents, local authorities and conservation groups. In 2008, we created new biodiversity performance standards which set out the minimum performance required for managing the impacts of developments and operations on biodiversity. Heathrow performance 2008 target Achieve the Wildlife Trust s Biodiversity Benchmark award In 2008, the Royal Society of Wildlife Trusts awarded Heathrow the Biodiversity Benchmark for land management in relation to nine off-airport conservation sites. The Biodiversity Benchmark is a rigorous certification scheme that requires companies to manage their landholdings for the benefit of biodiversity. We also focused on increasing understanding and widening involvement in our biodiversity management activities. Our conservation ecologist co-ordinated four local community walk and talk events at Heathrow s Two Bridges Farm and Oaks Road recreational sites. Community members learned about the flora and fauna of the sites, including habitats for breeding toads, butterflies, dragonflies and birds. Other Heathrow biodiversity management highlights in 2008: Recording new species for the first time at four of our sites and rare species at two others. Reinstating coppicing at the Causeway Nature Reserve. Building two stag-beetle nests. Increasing surveying and monitoring at all sites. New fencing and pathways at Oaks Road site. Our plans Heathrow In 2009 we plan to: Publish Heathrow s biodiversity action plan. Review and publish Heathrow s biodiversity strategy. Develop a working partnership with Hounslow Council in the management of wet woodland and reed beds for rare species. Establish a Heathrow conservation volunteer group with The Green Corridor. Read more about our approach to improving biodiversity in our individual airport corporate responsibility reports available at Case study 5 Planting for the community Our Two Bridges Farm conservation site, set amongst urban landscapes around Heathrow, provides habitat for wildlife and a recreational area for the local community. In 2008, 20 employees from the Heathrow logistics team took action to restore woodland which was damaged by fire. The team volunteered to plant 600 native whips young trees grown from seeds collected from local ancient woodland including oak, willow, field maple, hornbeam and hazel. The plantation will encourage insect diversity, providing an ideal food source for native species. This will attract birds and bats and other animals that feed on insects. The plantation will connect isolated woodland areas across the site, providing a corridor and secure habitat for wildlife and a basking site for reptiles. As well as benefiting the environment, our employees learned new skills and made a difference in their local community. These plantations are a legacy which will benefit the local community and wildlife for generations to come. James Webster, Heathrow s Conservation Ecologist

32 Our people Background Competitive pay and benefits, career development and equal opportunities are fundamental to attracting, retaining and supporting employees. Encouraging greater diversity helps BAA to benefit from a broader cultural resource and to better serve customers with different needs. Our approach To attract and retain the best people, we: Encourage employees to make personal progress through training and career development. Encourage diversity by creating an inclusive workplace. Help employees to balance work and home commitments by offering flexible work options. Our performance Internal promotions and turnover rates BAA performance BAA employs 13,213 people in the UK, compared with 11,729 in We increased internal promotions in 2008 to 1,726 from 1,383 in 2007 and recruited fewer employees externally, with 2,243 joining BAA compared with 2,653 in The employee turnover rate for the year was 9.82% compared with 11.6% in 2007 and 12% in Heathrow performance Heathrow accounts for just under half of BAA s workforce, with 5,863 employees. In 2008, external recruits remained constant at around 1,200. Internal promotions increased to 718 compared with 604 in The employee turnover rate at Heathrow for the year was 6.89% compared with 10.87% in 2007 and 11.15% in Trade unions We negotiate pay and employment policies with three trade unions: Unite, Public and Commercial Services Union (PCS) and Prospect. BAA performance We consulted with our trade unions on the final salary pension scheme closure, reaching an agreement which guarantees the scheme will be retained for current members for at least six years. Heathrow performance We agreed new working arrangements with our security employees, developing closer and more direct relationships between managers and their team. We believe this will support employee engagement and increase the quality of service for customers. Pay and benefits 2008 was the final year of a three-year pay deal negotiated with our employees. Our negotiations for the next pay review will begin in All staff are eligible for a bonus based on company performance. Managers bonuses reflect the company s performance and achievement of their personal objectives. We have long-term incentive plans for all staff including: A Bonus Saver Plan for all employees. An Executive Share Option Plan for senior management. BAA performance Our pension scheme has 22,284 members 7,469 are pensioners, 4,069 are deferred members and the remainder are still employed at BAA. During 2008, we closed our final salary pension fund to new entrants and introduced a defined contribution, money purchase scheme for future recruits. BAA airports each run schemes to reward employees after ten years and 25 years of service. Approximately 23% of employees have been with the company for ten years, and 4% for 20 years. Heathrow performance Approximately 21% of Heathrow employees have been with the company for ten years, and 4.5% for 20 years. Diversity Our diversity policy commits us to treating employees and potential recruits equally. We have a comprehensive bullying and harassment policy. BAA performance More than 20% of our employees are from a non-white ethnic background. Women account for just over a third of all employees and just under a third of managers at BAA. The percentage of women in senior management fell from 28% in 2007 to 21% in 2008, due to proportionately more female managers opting for voluntary redundancy through our Simplification programme. Heathrow performance The percentage of non-white employees at Heathrow is nearly 35%, reflecting London s diverse demographic. The number of female employees at Heathrow is consistent with the overall BAA number. Learning and development We aim to provide our employees with the knowledge, skills and support required to run our airports effectively. The BAA virtual university, Uni, provides access to learning and information about the courses staff can take. BAA performance In 2008, 2,644 employees visited Uni. We provided 768 courses to staff, including e-learning, which were attended by 9,686 employees. Heathrow performance At Heathrow, 4,403 employees took part in courses on offer. Managing change We completed implementation of the new structure brought in by the Simplification programme in Other programmes increased the number of security guards at our airports and restructured our organisation; bringing more people into customer-facing roles, and putting decisionmaking as close as possible to the front line. For all affected employees, a redeployment process, New Connections, is available. This helps people find alternative roles in BAA where possible, or outside the company otherwise. BAA redundancies In 2008, we made 441 redundancies, having reduced the number of non-customer-facing staff by 1,100 from 2,860. At the same time, however, we increased operational staff by 1,643. Heathrow redundancies Our restructuring plans also impacted Heathrow. Of the 441 redundancies, 119 occurred there. 30 BAA Corporate Responsibility Report 2008

33 Employee engagement and communication We engage with our employees informally through team meetings and formally through surveys. We did not undertake our annual Make Your Mark employee survey in 2008 because we felt that many of the questions in the survey were outdated. Airwaves magazine communicates company issues to employees, helping promote a stronger sense of engagement with BAA values. Staff can sign up to our SMS updates to be alerted about major issues involving BAA before they are announced in the media, fostering an inclusive culture. Our CEO Chatback programme allows employees to engage on matters discussed by the chief executive. By dialling a freephone number, they can listen to issues and leave a message or ask a question. Whistle-blowing Most employee concerns are dealt with directly by managers. Our Speak Up policy enables employees to report issues without fear of repercussions. We provide a confidential, independently managed phone line through Safecall. Our policy is to thoroughly investigate all issues raised using the phone line. BAA performance In 2008, eight people called the phone line. Six have been successfully closed and the remainder are under investigation. Our plans BAA Launch a new employee survey, which will be delivered two to three times per year as a pulse check. Create a results-focused organisation by improving performance-management and achieving commercial and operational excellence through a strong managerial presence. Implement a new approach to talent management. Improve employee relations with a new national consultative structure. Read more about our approach to people management in our individual airport corporate responsibility reports available at Case study 6 Acting out We want passengers journey through our airports to be smooth and event free. That means equipping our employees with the skills to make snap decisions and respond to issues efficiently and quickly. Our Conflict Management training, introduced in September 2008, uses actors to recreate real-life scenarios, helping staff to identify and manage potentially confrontational situations. Our security training team and front-life staff developed scenarios from their experiences in their role. Three sessions take staff through four learning stages, including spotting potential conflicts, theatre role play, breakout practice, and tactics and strategies for handling conflict. So far, 1,800 employees have taken part, and the feedback has been positive, with participants commenting on the realism of the scenarios. We aim to deliver the training to 4,500 employees, including security officers, service team leaders, information desk staff and customer hosts. 31

34 Security Background The threat to aviation from international terrorism will remain high for the foreseeable future. Likewise, controlling the UK border against serious crime such as organised illegal immigration and smuggling and protecting staff and passengers from injury and theft is an ongoing concern. The challenge for airports is how to maintain smooth and efficient airport operations, while implementing security measures that meet the range of threats and comply with security regulations. Our approach Ensuring the safety and security of passengers, our employees and partners is critical to the success of our business. A highly-trained and engaged security team is our best resource for tackling security threats. We train our security personnel to levels exceeding those mandated by the Government. Searching passengers and hand luggage is the most visible form of security at our airports, but our employees are involved in many other aspects of security, including: Securing airport perimeters. Searching airport employees. Providing the infrastructure for screening hold baggage. Managing secure area access. Security technology We continue 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 equipment to meet changing security threats and reduce waiting times. Collaborative working We have a systematic risk management process. This enables us to identify risks, develop plans to deal with incidents and resume normal business operations quickly. Co-ordination between all organisations involved in airport security, including the police, border agencies, airlines and cargo handling companies, is vital to ensure an integrated airport security plan. We provide two channels for agencies to share information on security threats and criminal activity at our airports: the Airport Security Committee and the Multi-Agency Threat and Risk Assessment Group (MATRA). We have programmes to ensure non-security personnel remain vigilant and are able to recognise potential risks. Our airports take different approaches, including providing DVDs, training sessions and awareness leaflets. Measuring effectiveness and efficiency We measure the effectiveness of our security processes and use an independent organisation to audit and test our security arrangements. We monitor flow rates and queuing times and assess perceptions of our security systems by interviewing passengers and monitoring complaints. Read the results of the passenger surveys on page 8. Demonstrations During 2008, environmental campaigners concerned over airport expansion plans and climate change held demonstrations at Heathrow, Gatwick and Edinburgh airports. We recognise the right to peaceful protest and our security teams work closely with the police to enable demonstrations to occur without compromising safety and security at our airports. Our performance In 2008 BAA Reduced security queue times (see passenger experience section on page 8). Installed new advanced cabin baggage x-ray equipment, walk-through metal detectors and explosives trace detection equipment. Removed the one bag restriction. Introduced a new body search standard to our security officer refresher training programmes. Heathrow Refurbished and upgraded all our security checkpoints. Trialled a system allowing passengers to keep their laptops. Installed new automated queue measurement systems. Our plans Heathrow plans for 2009 Install automated clearance systems for e-passport holders at Heathrow. Continue to focus on passenger security, using leading technology and intensive training to ensure highest standards are maintained. Read more about our efforts to increase the efficiency and effectiveness of security in our individual airport corporate responsibility reports available at 32 BAA Corporate Responsibility Report 2008