LONDON — Outdated and overcrowded, Heathrow Airport begins a long-awaited makeover next year that will radically transform the busy transit hub.

Airport executives are hoping to usher in a new era with the opening of Terminal 5 in March — the first plank in a proposed lengthy revamp. The government is also due to rule on controversial plans to build a third runway and a sixth terminal at the airport amid warnings from users and lawmakers alike that it is in danger of losing its premier European status.

Heathrow has come under increasing criticism for delays, lost baggage, poor services and long lines at security checkpoints due to counterterrorism measures.

The experience became so bad for passengers that Britain's competition watchdog recommended a cap on the service charge that BAA PLC — the British airport operator — levies on airlines, citing unacceptable delays and accusing the company of acting "against the public interest."

But BAA, which was taken over by Spanish construction company Ferrovial SA earlier this year, says that the lack of capacity is Heathrow's biggest problem and is putting faith in its renovation plans.

EXPANSION PLANS

Heathrow, designed to serve about 45 million passengers a year, now handles around 68 million.

To deal with the existing crush and an anticipated increase, BAA plans to rebuild, refurbish or redesign all airport buildings and facilities over the next five years — meaning that most passengers arriving for the 2012 Olympic Games will be traveling through terminals that don't currently exist.

"We are working hard to meet the 2012 deadline," Mike Foster, strategy director at BAA, told delegates at the annual World Travel Market in London recently. "We think that's an important milestone to set and deliver."

The first step is the opening of the $8.8 billion (4.3 billion pounds; 6 billion euros) Terminal 5, which will have capacity for 30 million passengers annually.

The result of a drawn-out battle with local residents and pressure groups — it took BAA nine years from its first planning application to get the green light for construction — the facility is also BAA's attempt to restore the glamour of air travel to travelers worn down by the airport's disorderly service.

SHOPPING, DINING

Designed by Richard Rogers, the British architect behind the glass-and-steel Pompidou Center in Paris, the terminal will boast Tiffany, Prada and Harrods outlets as well as a 180-seat restaurant by celebrity chef Gordon Ramsay.

However, the gleaming new gateway won't provide any immediate new capacity increase — as soon as it opens, BAA will shut down other areas of the airport for the pre-Olympics refurbishment.

Expanding further will depend on whether the government decides to press on with plans to build a third runway and a sixth terminal by 2020, which would allow Heathrow to handle 702,000 takeoffs and landings each year by 2030, compared to the current limit of 480,000.

The government, aware of Heathrow's importance for the health of the British economy, has already indicated tacit approval.

"If nothing changes, Heath-row's status as a world-class airport will be gradually eroded — jobs will be lost and the economy will suffer," British Transport Secretary Ruth Kelly said while announcing a public consultation on the proposal last month. "London and the U.K.'s nations and regions alike are reliant on the international connections that the Heathrow hub provides."

Compared with Heathrow's two runways, Schipol in Amsterdam has five, Charles De Gaulle in Paris four and Frankfurt three.

"This is a serious wake-up call," said British Airways Chief Executive Willie Walsh.

"London is the business capital of the world, and if we want to maintain that position, we have got to have proper infrastructure."

However, environmental group Greenpeace estimates that the rise in climate change pollution from the increased capacity would be equivalent to the entire annual emissions of Kenya, and accuses BAA and the major airlines of chasing profits.

TRADE-OFFS

Building the new facilities would involve destroying 700 homes, including an entire small village, and significantly increase noise levels for 2 million local residents.

An even bigger concern, according to Howard Wheeldon, an aviation analyst at consulting firm BGC Partners in London, is funding the expansion.

BAA has so far declined to provide details on costs, beyond saying they would be in the single billions of pounds, or funding. An increase in landing charges is likely to cover some of the expense.

"Somehow, BAA will need to finance the project — not easy when its credit rating is already down to junk status as it struggles to refinance 9 billion pounds ($18.4 billion; 12.5 billion euros) of Terminal 5 and other airport development debt," Wheeldon said. "Chances of it ever seeing the light of day must be remote."

In the meantime, amid the planning battles and ongoing work, passengers already tired of the "Heathrow hassle" will have to endure traveling through a construction site and temporary facilities for some years to come.

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