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Amsterdam Airport

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Introduction

Amsterdam Airport Memo To: myboss@myairport.com 'Mr Townsend' From: patmcd904@orange.net 'Patrick McDonnell' CC: bridgetcampbell14@yahoo.com 'Bridget Campbell' Date: 4/26/2007 Re: Government Aid To Terminal 5 * What is Government Aid? "Government Aid" is help given to businesses by the government. Government Aid comes in many different forms. This Aid is usually given to companies to persuade them to start up in areas of low employment, so that the area's employment percentage will rise, helping to make the surrounding area, and possibly the country, more prosperous. By helping firms set up in "deprived" areas, the government hope to get their money back, through the "Multiplier Effect". If the business is set up, and prospers, more trade, and therefore money, is brought to the area, along with more people. These people earn more money through businesses in the local area, and they spend their money in the local area. These businesses are now more prosperous, and they must pay "Business Tax" to the government. The more prosperous a business is, the more they must pay. This is the Multiplier Effect, and how the government get their money back. Government Aid can be given through money, but also other forms. These include simple things such as Planning Permission, which is just allowing the construction of the project to take place. ...read more.

Middle

Small businesses are provided with more help than larger firms, because they can take on workers made redundant by larger businesses. Small firms account for around 97% of the 3.6 million businesses in Great Britain. Small businesses are given "Regional Investment Grants", given to firms with up to 25 employees in "Development Areas". "The Small Firms Loan Guarantee" is given to small firms without enough security to obtain a bank loan. It can guarantee between 70-85% of a loan of up to �250,000 for up to seven years. * How could the current government help Terminal 5? Heathrow Airport may get government aid in many different forms, as explained above. The government could provide aid for the construction of Terminal 5 through a cash grant. However, as explained above, the government only supplies cash grants to companies that really need it or companies that set up in poorer areas. BAA's proposed site for Terminal Five is neither, and the surrounding areas, such as the Thames Valley, are quite prosperous. The government could first give the Terminal Five project planning permission, so that construction may actually begin. This would greatly benefit BAA, as they could begin work on the Terminal. ...read more.

Conclusion

This decrease in demand has been caused by the terrorist attack on the United States. This drop in demand has been repeated in almost every airline, on almost every route flying to or nearby the United States, with many planes being "nearly empty" according to some pilots. Although this is bad news for Heathrow, this is also bad news for Amsterdam, as the slump is likely to hit most airports worldwide, with people being afraid to fly, in case terrorists hijack their flights. It seems that the BAA may have to ask for Government Aid, because of a loss of money, indirectly because of this terrorist attack. The airlines that operate in BAA controlled airports are losing money due to the drop in demand, and shares in these companies are being sold en masse, and are therefore losing value. This means that shares in BAA are also losing value and are being sold, and this is causing BAA to drop in value and therefore lose money. If the Britain's government does aid the BAA and British airlines, the BAA will only be able to use this to recover from the decline in share value, and not the construction of the new terminal, so I cannot see this affecting Amsterdam Airport too much. Michael Keating ?? ?? ?? ?? 1 ? Page 5 1 ...read more.

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