Extracts from part 2 of the CAPA Report
No surprises here.
FF
In part one of this report CAPA highlighted that Southampton Airport’s Operations Director Steve Szalay had said recently that the airport was likely to record a GBP4.5 million loss in 2022 (slightly down from an earlier estimate), when most other British airports are indicating that they anticipate an operating profit, if only a small one.
A loss during which air transport has come close to the same seat capacity levels and passenger business as 2019 in the UK is worrying.
And unfortunately, Southampton has not come close to those capacity levels, lagging the UK average.
2019 levels 'unachievable' without a runway extension
Mr Szalay is convinced that it would be impossible to reach 2019 passenger numbers again without the runway extension, because once Flybe was lost, “there was no other airline with a big enough fleet that can operate off our runway.”
In other words, there are now insufficient airlines in the UK with small enough aircraft to keep regional airports like Southampton going. They are increasingly dependent on foreign airlines, and it was that dependence which did for Doncaster-Sheffield, then the effective pull-out by Wizz Air being the fatal blow.
Indeed, many airports will also be concerned by the news that Loganair, now the UK’s largest regional airline, is up for sale.
Presently Loganair is the largest operator at Southampton, both by seat capacity (29.4%) and movements (36.7%).
Regional/commuter airlines dominate capacity
The emphasis on small aircraft can be gauged from the fact that more than 75% of seat capacity at Southampton is on regional/commuter airlines, with full service carriers accounting for 19.6% and low cost airlines – which are still the driving force in the UK as a whole – having a minuscule 5.2%.
It is nearby Bournemouth Airport (which has reached 2019 capacity levels since Jun-2022) that has cornered the low cost market in the area, with 74% of its capacity in that domain. Bournemouth’s runway is 2270m long and can handle Ryanair’s Boeing 737-800s and MAX-8s.
Mr Szalay said, "Once we've got the runway extension, then we can be open to a whole host of airlines who, for example, operate with Airbus A320s and then we're viable again. We can connect to anywhere in Europe."
A depleted route network; (new) Flybe’s return is gradual; British Airways has significant seasonal presence
But supply does not necessarily mean demand, which often has to be created, or resurrected.
The airport’s current route map is a depleted version of what it was before Flybe’s downfall: much of the capacity to the Channel Islands (Jersey and Guernsey); a gaggle of routes to northern Britain where rail travel is impractical; three routes to hub airports (Manchester, Dublin and Amsterdam); and four holiday routes to the southern Iberian peninsula.
Flybe was supposed to resume services to French regional cities this summer. Currently it serves Avignon on a seasonal basis, and British Airways has a raft of seasonal services to cities in the UK and Europe, some of which are not currently operating.
There is at least potential for further development there, although Flybe will take time to build up its previous strength.
And that compares unfavourably with the pre-pandemic network, when there were services to Paris and numerous other French cities as well.
Convenience hasn’t been enough
Southampton's convenience compared to London Heathrow was a selling point, but never enough to attract a range of services to key European commercial centres.
Now that Heathrow has its third runway (although that is still many years away), Southampton may never be able to challenge the UK’s primary gateway for the full range of traffic it covets, but it is capable of attracting some of them.
Benefits from having a rail station and from being within the ‘Solent Freeport’
Southampton is one of the UK regional airports that have their own rail station (Southampton Airport Parkway), and it is situated on the main London Waterloo line, which is adjacent to the airport and continues to the west. There are also services connecting at Basingstoke into the English Midlands and beyond. It doubles as a ‘park and ride’ station for city commuters.
Another benefit for the airport is that the Solent (the strait between the Isle of Wight and Great Britain) was designated a ‘Freeport’ (special economic zone) in the 2021 UK Budget, one of eight new ones across the UK.
Opportunity to build a low level ‘airport city’ to the north and east
Mr Szalay has indicated that once the runway extension is built more attention will be given to the ‘Navigator Quarter’ – land to the east and north of the airport where businesses will benefit from low taxes as part of the Solent Freeport project.
He says that he would prefer the usage to be based on green technology. As the region is the home of the Spitfire (a World War 2 fighter aircraft), “we could say we’re the home of electronic aircraft”.
The likelihood is that Southampton will remain a ‘niche’ full service/commuter airport, with greater capacity on viable routes
It is difficult to gauge Southampton’s prospects for future success until the runway extension is completed and available for use by larger aircraft.
There are several different factors in play.
With Heathrow so close (60 miles, mainly by motorway), there may never be adequate demand for more than daily services to main business cities, and lack of frequency in that domain is not helpful.
The runway should be able to help attract low cost carriers but the price has to be right, and it will mean having to go head-to-head with Bournemouth (30 miles) and London Gatwick (85 miles by motorway).
Ultimately, Southampton's future may continue to be as a niche airport, but with greater capacity on routes that can bear it.