What will happen with Heathrow's expansion plans?

BAA, the company which runs seven UK airports, has agreed to a �10bn takeover bid from Spanish transport group Ferrovial.

The agreement - which follows a long courtship, including two earlier attempts by Ferrovial to take over BAA - spurns a higher offer from a rival bidder, a consortium led by investment banking giant Goldman Sachs.

But what happens next?

And what effect would a successful bid have on air travellers and shareholders, and on the UK as a whole?

What will it mean for passengers if BAA is taken over?

In the short term, the millions of passengers passing through BAA's airports - Heathrow, Gatwick, Stansted or four others from Southampton to Aberdeen - are unlikely to see much of a difference.

Neither the service offered by the airlines they use, nor the facilities available at the airports, will alter.

Further out, however, either deal could mean changes.

We would hope it would lead to facilities that passengers actually want, rather than the gold-plated Taj Mahal palaces that BAA have been building Michael O'Leary

BAA has been criticised in some quarters for focusing on the retail side of its airports at the expense of other services - although the Air Transport Users' Committee says surveys show most passengers rather like the opportunity to shop.

And BAA's extensive plans to build a new runway at Heathrow - Terminal Five there is already well under way - and add a runway at Stansted by 2013 could also be on the table, although the Civil Aviation Authority says those plans need to be kept intact by any new owner.

Ryanair chief executive Michael O'Leary - long a critic of what he has said are high charges imposed on airlines by BAA for using its airports - said a takeover could lead to lower charges.

"We would hope it would lead to... the building of facilities at terminals that passengers actually want, rather than the gold-plated Taj Mahal palaces that BAA have been building at excessive cost," he told BBC Radio's Today programme.

Whichever bid succeeds, however, the debt the company carries will go up - and that could mean higher charges for services to passengers and for airlines.

How about shareholders?

At first glance, the deals currently on the table are a vindication for BAA's management, who had spurned an earlier bid in March from Ferrovial pricing BAA at about 810 pence a share.

BAA PASSENGER NUMBERS* Heathrow - 67.7 million a year Gatwick - 32 million Stansted - 22 million Southampton - 1.5 million Glasgow - 8.7 million Edinburgh - 8 million Aberdeen - 2.7 million Source: BAA Check BAA shares

That, they said, undervalued the company - and given that Ferrovial is now offering cash and shares worth 950.25 pence, they would seem to have been right.

BAA shares have risen more than 50% since the start of this year, rising by a fifth in the past two weeks alone.

Goldman's consortium, meanwhile, is offering 955.25 pence, up from its own original offer of 870 pence in April. Consortium members are understood to be seething at BAA's decision to back a lower offer - and have until 16 June to mount a counter-attack.

This isn't the first Spanish bid for a big British company, is it?

Absolutely not. Banking group Abbey was the first really high-profile name to be bought by a Spanish rival, becoming part of Banco Santander in 2004 with a price tag of some �8.5bn.

At the time, UK shareholders were warned that if they held onto Santander stock after the deal, they might find themselves having to fill in Spanish tax returns. Unsurprisingly, most sold.

What will happen to plans for expanded capacity?

The most recent example of the trend is mobile phone group O2, which recently completed its transition from one former state monopoly to another.

Having started life as the mobile arm of British Telecom before becoming a separate company in 2001, it completed a takeover by Spain's Telefonica in March.

But why are we selling our airports to a foreign group? Wasn't there a storm in the US recently when seaports were being sold?

Interestingly, the US argument involved a British company too.

P&O, which operates ports around the globe, was being taken over by Dubai's DP World. Six of them, however, are in the US - and many politicians and commentators found it a step too far for a foreign firm, let alone a Middle Eastern one, to control its ports.

Other security experts dismissed the complaints as overblown. Security, after all, was regulated by the US government, which ought to apply the same rules whoever owned the ports. If those rules were lax, that could hardly be blamed on DP World.

In the end, the Dubai group agreed to sell off the US ports as part of the deal.

But the US has plenty of other rules which prevent foreign takeovers if they are not found to be in the interests of national security - as well as specific rules banning foreign majority ownership of, for instance, broadcasters and airlines.

There are no such rules in the UK. Indeed, UK firms are widely seen as easier to buy than those in other countries, and rarely is weakening of national security mooted as a downside.

With communications companies, carmakers, electricity suppliers and now ports, too, in foreign hands, it could be hard to argue that BAA is any different.

Why are these two bidders so keen to get their hands on BAA?

For one thing, BAA - while not a monopoly - is certainly by far the dominant player in the UK airports business.

Its finances are healthy, its profits are good, and demand - in the shape of passenger numbers - just keeps soaring.

There is a cloud on the horizon, however. The Office of Fair Trading has threatened to mount an investigation into whether BAA's pole position was in the public interest.

If the inquiry goes ahead, it could conceivably end with BAA having to offload one or more of its major airports.

Still, that might not be altogether a bad thing for a bidder.

Any sale would be likely to attract a sizeable premium - which would do wonders for reducing the debt load incurred as a result of the takeover.