London Briefing: It has been said that British Airways is principally a pension fund with a relatively minor business, called an airline, attached. Many businesses in the UK have been similarly described, mostly because of the scale of the funding problems faced by many corporate pension schemes. BA's most recent difficulties were not, of course, of the pension variety but arose because of a dispute at the (outsourced) company that supplies the airline's vast catering needs.
As a matter of fact, those cancelled flights were not really the fault of the striking Gate Gourmet workers. In a blast from the industrial relations past, BA's baggage handlers walked out in sympathy. Aircraft can get by without food but missing baggage is more of a headache. We didn't need reminding, but most of us observed, yet again, that the modern airline experience is a tad less glamorous than it used to be. Most, but not all, of the ramifications of the dispute made the headlines. Writing in London's Evening Standard, Andrew Gilligan (latterly of the BBC and the infamous dodgy Iraq dossier 'sexing up' affair), told us that there is an impoverished village near Lagos airport that relies entirely on the food leftovers from BA's flights in and out of Nigeria. In 1998 the village starved when BA suspended flights during a political crisis. Presumably, hunger has once again visited these poor people as a result of an arcane industrial relations dispute back in London.
If BA is a pension fund with an ancillary airline business attached, Heathrow, and any other British airport I could name, is a shopping mall with a couple of runways attached. Heathrow plays host to no less than five branches of Accessorize, shops that offer a "modern, inspirational, globally sourced collection of every kind of fashion accessory" and five branches of Austin Reed. And four branches of Bally, the upmarket shoe and bag retailer. And six branches of the Body Shop. And four (or possibly five) branches of Harrods. And 10 branches of Boots the chemist (remember there are still only four terminal buildings). And at least 22 coffee shops (only five of which are Starbucks).
I don't think anyone has ever successfully counted the number of establishments that serve food.
Of course, none of us can wait for the opening of Terminal 5, scheduled for March 2008. The fact that this vast project is so far coming in on time and on budget is attracting lots of wry comment: we don't usually do such big infrastructure projects so well. Terminal 5 will add, apparently, capacity to handle another 30 million passengers a year, against a current run rate of around 65-70 million a year. How many extra branches of all those different retailers are going to be located in the new building? Call me a cynic, but the fact that the project is being so well run has to have something to do with the vast retailing opportunity that it represents to the UK's beleaguered shopkeepers. They can't wait to start selling, and even one day lost between now and 2008 probably represents a catastrophic loss of sales.
Heathrow has profound effects on communities closer to home, not just in Lagos. Gilligan's fascinating article traces 40 years of Heathrow as one of London's largest employers of the Asian community. The brutal truth is that these people were originally employed because they worked harder and for less money than local workers. The suspicion of the Gate Gourmet workers, and many other people employed in one way or another by Heathrow, is that things have come full circle with firms now seeking to hire Polish labour to replace the expensive (relatively at least) Asians, who have now fully integrated into London and the wider British community.
When globalisation, or whatever it is, produces unemployment amongst people who earn next to nothing to begin with, even the most economically liberal commentator must pause to take stock. Employment opportunities in the UK are still relatively abundant so most of these displaced people should find work of one kind or another. And the world of work has always been this way, particularly for the unskilled. But it is an increasingly harsh world.
Chris Johns is an investment strategist with Collins Stewart. All opinions are personal.
