Originally Posted by
tigertanaka
It will be interesting to see the plan to improve the profitability, although I think the underlying losses (ie stripping out Peel's fees and one offs) are closer to £1m rather than £2m - still big numbers in any case..
I think you have touched on the issue with a misquote, you can't increase profitability, as the airport has always made losses (
at least in living memory...), i.e it has never been "profitable", so you have to address & stem the losses before anything else. To do this you can attack costs though there is a tangible limit as to how much of a reduction can be made.
We are thus back to the key issue that to get anywhere at all then you have to increase revenues ! as to how effective this will be will depend upon the margin achieved in doing so.
So putting it bluntly "substantial increase in revenue, at as high a margin as possible " is all that is required. I have no way of defining substantial, though for a credible business model to be put forward I'd say that this should be clearly defined, as would be a breakdown in the components so as to support the margin thrown out by the business models calculations & assumptions.
As a starter in this process you need air services & pax to support them, which leads to increase in overheads, labour, marketing are just a few items. There may be existing resource in place to support any initial uplift in pax volumes, i.e. accommodation, airfield and pax facilities & access. However I can not see that current resource will support anywhere near the number of pax required to cover all current overheads i.e. the airport would continue to accumulate losses until a critical number of pax reached.
It is not just a about quoting a pax number, as substantial capital spend would be required to expand & improve current facilities, & upon the assumption that at this point the airport is still recording losses, then you have the addition costs & problems of raising the capital required to support the necessary expansion.
With all the above to address, then you have perhaps the biggest problem of attracting air services (
at any cost) to draw in the pax in the first instance.
In conclusion there is an almost impossible vicious circle to break to move any plan forward and it will necessarily require the support of heaps of speculative cash investment. This will also not come cheap as the greater the risk, the greater the cost of capital.= & so it goes on.
I really do just wonder if the mayor has a plan, or more importantly if he has is it anywhere near realistically achievable. Personally I'll repeat what I have said earlier that I don't see it as remotely achievable for the foreseeable future and that the whole project will become an ever increasing expense on the local authorities. Regretfully I can't see any viability at all and that it makes more sense to invest in transport infrastructure to support and create better access to airports already established, be it MAN, NCL, LBA etc.