As the economic crisis hits regional airports, they are working harder than ever to attract new carriers and compete on the world stage, says Alex McWhirter.
Regional air services are feeling the pinch from the economic downturn. A number of routes and services have been dropped and there’s little light at the end of the tunnel.
Go back a few years and it was very different – budget carriers were setting up shop in the regions, opening new routes and driving down the cost of flying to mainland Europe. At the same time, several long-haul carriers appeared, enabling travellers to access the world from their local airport rather than forcing them to trek to Heathrow.
But the budget carriers show no loyalty to any route or airport. Finding there were better pickings to be had in serving the holiday sunspots rather than business cities, they began dropping routes and tinkering with schedules, making it less convenient to conduct a full day’s work overseas.
For example, Yorkshire-based Jet2 abandoned several routes from Manchester, including those to Amsterdam and Barcelona, while Easyjet cut flight frequency on the important Newcastle-Paris Charles de Gaulle route. Two years ago, a Geordie could book Easyjet for a day trip and would arrive in CDG at 1000. They then had the whole day at their disposal until the last flight home at 2120. But Easyjet is no longer an option for day-trippers. Its single weekday flight now leaves Newcastle at 1710 so not only are day trips impossible but travellers must now find the cash for costly Paris accommodation.
The long-haul market is no healthier. This winter, Air India’s Birmingham-Toronto link defected to Heathrow. Two of Manchester’s long-standing customers, American Airlines and Singapore Airlines, cut flight frequency to Chicago and Singapore respectively, and Bmi is withdrawing its Las Vegas route following the scrapping of Manchester-Chicago. Fortunately, American is set to restore its daily flight at the beginning of this month. Another notable cancellation was the decision by BA to cut its long-running Manchester-New York JFK service.
The decline set in when BA began to wind down its loss-making regional network. Eventually, it pulled out of the regions entirely, except for its domestic services, with Exeter-based Flybe taking them over. The move led critics to accuse BA of being “London Airways”.
Tim Jeans, managing director of budget carrier Monarch Airlines, recalls the days when BA operated an extensive regional network. “At one time BA served something like 35 European cities from Manchester alone,” he says. “These ranged from Copenhagen, Stockholm, Hamburg and Berlin to Nice, Madrid, Milan and Rome.”
Jeans explains why budget carriers are not launching new regional services. “We’ve found the city market more affected by the recession than the summer market,” he says. “Capacity is the key. At this time, airlines will not operate routes or add extra frequency that won’t offer [profit] margins.”
Jeans adds: “For a point-to-point business route to succeed, you must have the right schedule. We have a flight linking Manchester and Barcelona which, because of its 0800 departure, means we pick up a substantial volume of business traffic.
“But when Bmibaby arrived on the route we actually found our traffic going up by more than the extra capacity being added by them, because Bmibaby flies in the afternoon so its schedule complemented ours.”
It is the hub airlines that are proving the exception to this doom and gloom. They continue to maintain schedules through thick and thin. Some are even adding new routes – Turkish Airlines has added flights to Istanbul from Birmingham, while KLM launches a service from Liverpool to Schiphol this March.
Unlike their point-to-point counterparts, airlines such as Air France, Emirates, KLM and Lufthansa can spread their risks because they aren’t solely dependent on carrying passengers between the regions and destinations such as Paris, Dubai, Amsterdam and Frankfurt. Between 40 and 70 per cent of these airlines’ passengers (depending on the route, time of day, etc) departing from the likes of Southampton, Bristol, Cardiff, Birmingham, Manchester, Norwich and Newcastle will be using the hub as a springboard for destinations further afield. That is why Lufthansa has found sufficient passengers to fill an A320 for its peak morning flight out of Manchester to Frankfurt, whereas point-to-point carrier Flybe can only secure enough custom at that time for a small regional jet.
Cardiff airport is a fan of the hub strategy. Steve Hodgetts, business development director at Cardiff, says: “We tell people that time spent on the road to Heathrow can be spent more productively doing work on a laptop at Schiphol. Regional airports need to educate passengers that it’s the door-to-door time that matters. A carrier such as KLM has a clear strategy of short-circuiting the traffic that would normally use BA over Heathrow. Few of our other routes or operators can bring the permanence that KLM can. KLM alone carries 180,000 passengers through Cardiff and provides us with 10 per cent of our total traffic [all routes, both scheduled and charter]. It’s by far the biggest business operator at our airport.”
Another hub airline is Lufthansa. Marianne Sammann, general manager for the UK and Ireland, explains how “the strengths of our hubs in Frankfurt and Munich allow us to stay in this market”. She admits that the economic downturn has led to a “slight drop” in passengers but says: “We believe we are doing better than the market overall. People must still travel to do business.”
Lufthansa’s most popular destinations from the UK include India, China and South Africa. Sammann says: “The US also features because, although Frankfurt is a back-haul, we cover cities that cannot be reached direct. Flights to practically all European cities are patronised but especially those in Eastern Europe.”
One point-to-point service that is doing well is Paris but from airports such as Southampton, Bristol, Exeter and Cardiff. Rail operator Eurostar may carry the bulk of London-area traffic to Paris, but once it moved its departure point from Waterloo to St Pancras it became less convenient for travellers living in the west and south-west. Hodgetts says: “Eurostar isn’t an option for travellers in south Wales because of the time it takes to reach St Pancras. We conducted a Paris race between Flybe and Eurostar and saw a clear victory for air.”
There is a mixed picture concerning direct long-haul flying from the regions. Some good news is the fact that US Airways will start flying from Birmingham to Philadelphia in May. This is another service feeding a hub airport, with the airline offering many connections to the US hinterland.
It was Manchester that led the way in developing long-haul services some 20 years ago, but the UK’s second-largest airport suffered a setback when some of the carriers it fought so hard to woo decided to pull out. Over the past ten years, Manchester has lost long-haul flights from Air Canada, Air India, BA, Bmi, Cathay Pacific, Malaysia Airlines and Qantas. Andrew Cornish, the airport’s managing director, says: “We’ll never be isolated from the world economy. Our US business is down 6 per cent but the rest of the world is up by more than 7 per cent. It is the Gulf-based carriers that are doing really well.”
Once again, flight connections can make or break a route. The likes of Emirates, Etihad and Qatar Airways connect travellers via the Gulf to cities in the Middle East, Africa, Asia and Australasia. So what is Manchester doing to entice new business carriers? Cornish says: “Together with the Northwest Regional Development Agency we are spending a lot of time talking to airlines with a view to them coming to Manchester – when we tell them half the BBC is moving here, for example, they show a lot more interest. Airlines have come and gone from here because, although they had no trouble filling the back of the plane, they couldn’t fill enough seats in their premium cabins and that is where the money is made.
“The fact is that 1,000 of the 2,000 companies in the north-west are US firms, and we are working harder than ever with local companies with a view to them using the airlines here.”
Manchester is pinning its hopes on the arrival of the Boeing 787 Dreamliner, which is designed for economical point-to-point services. “Carriers we have spoken to in Asia and Australasia are keen to come here once they take delivery of their B787s,” Cornish says. (No carrier yet operates the B787 because of delivery delays.)
Manchester is confident of the future. Cornish speaks with pride about the £171 million spent on capital improvements over the past three years. The work includes four new executive lounges and facilities for faster security clearance.
It’s notable that Emirates, which departs twice daily for Dubai, is constructing a 180-seater, 8,000 sqm lounge that will be ready at the end of June. Cornish says: “We want to make the facilities here equal to those at a world-class airport.”
Regional airports: the highs and lows
Highs
- Regional travellers have gained choice on long-distance routes. Before liberalisation, few foreign carriers were served by regional airports but as the market opened up, various US, Middle Eastern and Asian carriers arrived to provide regional passengers with a host of new travel possibilities.
- The arrival of budget carriers has driven down the cost of flying to mainland Europe. They inaugurated new routes that had been neglected by conventional airlines.
- European hub carriers such as Air France, KLM, Lufthansa and SAS have popped up in more and more regional airports, honing their schedules to offer regional passengers worldwide access.
Lows
- Long-haul carriers find it easy to fill the back of planes with economy class passengers but lucrative premium class customers, the ones who generate the profit, are harder to come by. This has prompted some long-haul carriers to quit the regions.
- The downturn has seen an end to the traffic boom of recent years. With fewer passengers, some budget carriers have decided to pull business routes altogether, while others have downgraded schedules, making them less attractive.
- Ever fiercer competition from budget airlines and hub carriers prompted BA to wind down its unprofitable regional network. Now, its only regional routes are its domestic links to and from London.
