Airport Expansion in a post Covid World
When London Luton Airport reached its planning consent capacity of 18 million passengers a year in 2019, this was achieved by introducing (in recent years) a discount and subsidy scheme financed by the airport operator, London Luton Airport Operations Ltd, and its owner Luton Borough Council (LBC). The airport is dominated exclusively by three big European low-cost airlines, EasyJet, Wizz Air and Ryanair, who provide over 95% of capacity.
LBC paid their share of these subsidies from their airport concession income. They obviously thought that this was a more pressing concern than filling austerity budget cuts and emergency reserves, now so obviously lacking when needed most.
Covid-19 has turned aviation on its head; the numbers flying have plummeted, and possibly understandably so, airlines have turned on the airports they serve to preserve their bottom lines at any cost.
A New York Times article from May 2020, lists the actions of the three airlines mentioned above in their negotiations with airports.
One is asking for long term discounts, or the complete waiver of all charges. The airports offering the best, i.e. lowest terms, will get the flights. “Capacity relocations will occur, airports will be desperate to fill capacity” says one CEO.
Another is asking for no fees at all this summer, with minimal rises on very long term contracts. “Once in a lifetime airport discount opportunity” says their CEO.
Another is holding, what have been called speed dating, twenty minute internet calls with airport operators. The best offers get the flights and nothing is off the table, including all charges, restart initiatives, and seasonal rebates – even Local Government support packages for marketing.
All well and good for the airline shareholders, but not so good for the staff they’ll still axe, those that are left (from whom they’ll expect more productivity for the same if not less money), or the raft of low-paid supporting roles at airports who will face the same choices and changes as those airline staff.
Barely a week after this article’s publication, showing how grim the future looks for airports dependant on low cost airlines, the Frankfurt airport owner also said that their forecasts are showing only 80-85% of 2019 passenger levels by 2023 at best, based on full service airlines.
Then we have yet another announcement by LBC that their Direct Consent Order application for airport expansion to 32 million passengers a year, will be extensively and expensively rewritten to make Luton “the most sustainable airport over the next twenty years”, and be submitted now in summer 2021.
LBC say that airport income will dry up for the immediate future, so where is the money coming from to pay for these continuing expansion plans?
With these new demands for rebates by the airlines that the airport is solely reliant on, how much income will any throughput bring, now and in the future?
What is the point of diverting more money from Council services where it is – in many cases life changing, to a cause which is now very much cost negative in the eyes of many more experienced airport operators than LBC.
The airport has space for 18 million passengers, without an extra penny being diverted from residents’ services. Surely the prudent option is to work refilling what capacity you have, rather than fritter more money away chasing what might never be?
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