Aviation Leading UK airports and airlines take off
T
he UK aviation sector appeared in good health in 2014, albeit a hefty addition of short-haul capacity across Europe produced concern at the impact on yields and a degree
of pain for some, notably at Monarch Airlines. Passenger numbers at UK airports rose by
four million in 2013 on 2012 and were up a further 10 million year on year to 235 million in the 12 months to August 2014 – a level last seen in 2008 and not far off the 2007 peak (chart: UK Airport Passenger Numbers). These numbers reflect improving
outbound leisure and business traffic, a healthy VFR market – fuelled by migrants from the enlarged EU (VFR traffic to Poland topped 1.2 million in 2013) – and rising numbers of inbound visitors.
UK airports Hardly surprisingly, Heathrow dominated with 31% of traffic or 73 million passengers in the 12 months to August, twice the size of Gatwick (37 million) which was close to double the size of Manchester (21.5 million). Heathrow passenger numbers grew 2%
in 2014, to 8% above the 2007 figure despite constraints on the airport – an achievement
The Deloitte view
Overall, 2014 has been a strong year for UK aviation. As the economy grew and consumer confidence recovered, the number of passengers continued to rise. Heathrow and Gatwick reported
record passenger numbers over the summer and British Airways and easyJet recorded strong passenger growth. This was particularly impressive set against the wider performance of European airlines, with profit warnings from Lufthansa, Air France, Ryanair and others. The impressive performance partially
reflects the fact that UK economic growth in 2014 has been more robust than that of most European countries. Looking forward, clouds seem to be
gathering on the economic horizon, with slowing economies in Germany and France. The UK economic outlook is also uncertain heading into an election year. In addition, there is the potential of disruption from political instability on the borders of Europe, in Ukraine and the Middle East, and from the growing Ebola epidemic. All these factors are likely to
lead to weaker demand next year. With oil prices falling and UK wages showing stubbornly little growth in real terms, the pressure on yields is likely to grow and there will need to be a continued focus on cost discipline to maintain margins. More parochially, the coming year
will be notable for the publication of the Davies Report on airport capacity in southeast England – although with the uncertainties created by a general election, this may not lead to a settled position on this key question.
Passenger numbers reached previous highs and profits at major UK carriers soared while Continental rivals stagnated. Ian Taylor reports
attributable to higher load factors and larger aircraft as more A380s flew from Heathrow. The airport continued the upgrade of its terminals, with a new Terminal 2 providing a unified home for Star Alliance carriers. Gatwick saw 6% passenger growth in the
12 months to August. EasyJet was the main reason, the carrier increasing capacity from the airport, where it is the biggest operator, by about 16% this summer, leaving Gatwick 6% up on its 2007 passenger numbers. Manchester grew 6% year on year, but carryings remained 2% down on 2007. Stansted slipped out of the top three in
the post-2008 downturn and remains five million passengers (-22%) short of its 2007 traffic despite 7% growth year on year to August. Ryanair provides the explanation. The carrier added services in the past 12 months after several years of wielding the axe. Whether Stansted will return to its former level, given Ryanair’s new focus on corporate travel, is debatable. Business passengers have proved reluctant to use Stansted and there is little reason to think this will change, especially given the early dismissal of the Essex airport as a potential hub by the Airports Commission.
24 | Travel Weekly Insight Annual Report 2014
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