/ 23 February 2008

New Heathrow terminal to be shoppers’ paradise

It has taken two decades to plan, 20 000 workers to build and cost an unprecedented £4,3-billion. But until now, the doors to the retail space at Terminal 5, at London’s Heathrow airport, which opens next month, have been firmly closed to the media, amid criticisms that the terminal is destined to be little more than a glorified shopping mall.

Given the first glimpse inside this week, the Guardian discovered that shopping will indeed be an integral part of the experience for the 27-million passengers expected to pass through the airport’s gates each year.

The operator, BAA — which has built the terminal for the exclusive use of British Airways — says that only 5% of the overall space is devoted to retail. That figure belies its breathtaking scale. Its 22 000 square metres of shops and restaurants will increase Heathrow’s total retail space by half.

Terminal 5 will have many firsts. Passengers will be able to dine at Gordon Ramsay’s first airport restaurant — for which he is boldly aiming for a Michelin star — while there is a footballers’ wives’ dream of a shopping avenue where the first Prada in a European airport rubs shoulders with Paul Smith, Gucci, Tiffany & Co, Mulberry and Christian Dior.

Nick Ziebland, retail director of Terminal 5, said BAA had identified customers’ priorities: ”Somewhere to sit. Lovely spaces, good restaurants, some sort of seasonality.” Passengers have also made clear their dislike of queuing.

Ziebland bravely sticks his neck out when he says that, provided check-in is straightforward, passengers will be whisked through security to ”airside” in just 10 to 15 minutes. BAA has already compromised by giving up retail space, originally for a large pub, to be used for additional security lanes.

All the retailers have been chosen by BAA, and the company has discretion over what the outlets can sell. One of the Harrods stores, for example, will sell only fashion and accessories. ”There will be no teddy bears or tins of shortbread here,” said Ziebland.

When the shopping gets tiring, refreshment beckons: on a corner site is Gordon Ramsay’s Plane Food, offering a ”time-guaranteed” menu to ensure passengers will not be late for their flight. The Wagamama restaurant is also another airport first, but, breaking with tradition, there will be no McDonald’s in the ”grab and go” section.

Upmarket stores are clustered together for the convenience of the big spenders. There is Paul Smith — with ”virtual” garden views through French windows, as well as Prada, Mulberry, Gucci and luxury stationers Smythson. Leather-covered seats in the public areas are designed by Foster + Partners and, airport authorities claim, there are 9 000 of them.

But BAA is more dependent on retail than it likes to admit, and the cash generated from retail, which includes car parking, brings in about half the total income for its Spanish owner, the Ferrovial group. In its latest accounts, the airport operator underlined the importance of shops to its finances. The company makes £4,30 a passenger in retail sales and generates a further £6,80 a passenger from landing fees. Retail accounts for around one-quarter of BAA revenues and, the company argues, it holds down the landing fees.

BAA has a cash flow of about £1-billion a year, which must finance capital expenditure of a further £1-billion a year, plus an annual interest bill of about £840-million. The sums do not add up and the City of London has warned that BAA could run out of cash by the end of the year unless it refinances £9-billion of debt.

The emphasis on retail, of course, is a gamble: about one-third of all Heathrow passengers, insiders say, don’t spend anything at all. — guardian.co.uk Â