Troubled airport XXX needs to diversify more

[V12]

Sorry DJ6 but still on message: if you're asking can many of the regional airports not benefitting from the loco flights survive when less than half of their revenues come from landing fees, IMHO surely not; the cost of conforming, insuring, employing etc for few aircraft that pay a decent landing fee can't make financial sense. Just look at the cost of RFF and ATC.

And there's a limit to how many breakers yards are needed. Redundant municipal airports on brown field sites must be prime developmental land, and councils looking to cut the cost of their local airport will surely be attracted by development potential. After all they want jobs and prosperity for their community, and if the planes have stopped coming in, bringing in investment, why fund it further?

Yes, smart private airport owners will already have seen local potential, but i doubt we can extract a credible national business model for under-utilised regional airports.

[HOODED]

"Now put the loco bases on a map and add driving catchment areas and the justification of many non-loco served airports just isn't there. On that basis 90% of air travellers are caught by LHR, LGW, LTN, STN, MAN, SOU, BRS, BHX, NCL, EDI, INV and ABZ."

Should LBA be on that list? Or does it also need to diversify more?

I think the answer to your question is no there is simply not enough other aviation related activities for all these airports to diversify into.

I suspect in the next few years a few more will become non airports, though aviation may well continue. DSA is in danger as is MME, mainly due to an owner who bought them cheap and intends to profit from the land they sit on as it did with Sheffield City. Sad but there are too many runways other than in the London area, but that's another topic!!

[LGS6753]

Airports with terminal facilities and some history of passenger flights (BLK, CWL, MME, CBG, CVT, DSA) are most likely to struggle because they are looking towards the diversification to allow them to pay for the facilities for additional passenger flights. Some people expect the revenue from training, scrappage, storage or whatever to be allowed to cross-subsidize passenger operations.

Most of these airports had their best years in the loco boom between around 2004 and 2008, when the Blair-Brown debt-fuelled binge was at its height. At that time, airlines were searching around to be the 'based' loco somewhere - anywhere! So Thomsonfly found itself at BOH, DSA and CVT, EUjet at Manston and BMIbaby at MME and CWL - they were the last entrants and got the dross. No surprise they've all effectively disappeared.

Kemble has been successful despite never having hosted airline operations because it's run privately as essentially an aviation-property business. Lots of aircraft stored for long periods; land leased for parting-out; hangars used for distribution, engineering training and more; even new hangars built for light aircraft!

These marginal airports are big chunks of property with runways attached. The more sophisticated the type of use made of the runway, the more expensive the ancillary services such as ATC, nav aids etc; to say nothing of the costs of keeping passenger handling services ticking over.

CVT seems to be making progress having lowered its sights, DSA's and Teesside's owners are struggling with the concept, despite being a property company. CWL has St Athan on its doorstep, and the coastal airports (CWL, BLK, NQY, MME, PIK, Manston, BOH) are going to struggle to find distribution businesses to locate there.

I'm sure all could be used as housing, but whether there is enough aviation-related 'diversification' available is open to question.

[SWBKCB]

And there's a limit to how many breakers yards are needed. Redundant municipal airports on brown field sites must be prime developmental land, and councils looking to cut the cost of their local airport will surely be attracted by development potential.

V12 - how many of the airports mentioned are council owned? PIK and CWL are owned by national governments, NCL and MAN (and BOH/EMA) have significant local government holdings but we aren't really talking about them - can only think of NQY, of any others?

Local councils do like airports though - but they aren't interested in buckets and spade flights but a London link or failing that connection to the outside world through the likes of AMS - any airport providing this should be able to get the local politicos on side

Scrapping/storage certainly seems to be the new 'Ryanair' i.e. the saviour of local airports. How many is it now - Kemble, Lasham, Bruntingthorpe, Norwich, Teesside, St. Athan with Newquay and Prestwick trying to get in on the act (anything happening at Llanbedr?).

[ShyTorque]

The constant refrain is that airport XXX needs to diversify more.

I just wish they'd all become a little helicopter friendly and not try to rip the backside out of the job, especially the outrageously extortionate costs of landing at LHR.

[DaveReidUK]

Originally Posted by CelticRambler

Unfortunately, there is a misconception in the airline industry that aircraft have to be kept flying to make money

If an aircraft isn't flying, it's on the ground. If it's on the ground, how is it making money ?

I'd say that was a truism, not a misconception.

[CelticRambler]

Originally Posted by DaveReidUK

If an aircraft isn't flying, it's on the ground. If it's on the ground, how is it making money ?

Firstly by not burning through your cash reserves ; and secondly (with a change of tense and attitude) by being available to those with more commercial creativity than anyone in the airline industry has shown in the last fifty years. It does, however, require the cooperation of an open-minded regional airport manager for maximum profitability.

[Phileas Fogg]

It does, however, require the cooperation of an open-minded regional airport manager for maximum profitability.

So a commercial airliner can make money sitting on ground only if other(s) dip their hands in their pockets to subsidise it happening?

[Capetonian]

If an aircraft flying is 'burning through your cash reserves' rather than making money, there is something wrong with your revenue management policy.

Apart from turning aircraft on the ground into temporary gambling salons, restaurants, bars, or brothels, none of which is very practical, I can't think how they can make money. Looking forward to hearing more from those who think differently on this.

[Phileas Fogg]

This has to be alone the line of Celtic's other Ramblings that Rhoose and other airports should become theme parks and amusement arcades for juveniles that have got nothing better to do:

CelticRambler

It makes commercial sense to have it free 24 hours a day and do everything possible to make the airport the hottest spot in South Wales. What could possibly be better than making the landside part of the terminal a place that (young) people really want to be and be seen? Make sure they've got easy access on public transport, great (cheap) coffee and snacks and cool spaces to hang out.

Advantage one: extra footfall for the other retailers; advantage two: brand awareness for any airline associated with the terminal; advantage three: airport makes money from non-flying passengers and can indulge in commercial innovation, for example no landing charges for commercial flights <20 seats and, what the heck, maybe pay the APD too.

Make it into a place worth visiting in its own right, then you'll start getting boyfriends surprising their girlfriends, or parents surprising their children, by surprising them with "oh, actually we're not stopping today, you're flying to [Paris/Rome/NewYork] and now "Cardiff" gets a reputation for being even more of a fun place and people start coming from the other side of the Severn.

All for the price of free WiFi and pulling a few heads out of the sand.

[racedo]

This has to be alone the line of Celtic's other Ramblings that Rhoose and other airports should become theme parks and amusement arcades for juveniles that have got nothing better to do:

I can see where he is coming from in having the airport as a venue destination where flights are a part of it but not the main part.

Probable for one or two Airport sites doubtful more than that.

[Phileas Fogg]

I can see where he is coming from in having the airport as a venue destination where flights are a part of it but not the main part.

Would that be like one of these petrol stations that now doubles up as a 7/11 or 24/7 shop?

One nips in to fill the car with fuel, rushes to the cash counter only to get stuck behind a long queue of people buying their Sunday newspaper, their pint of milk, their bag of potato chips and so on ...

[racedo]

Would that be like one of these petrol stations that now doubles up as a 7/11 or 24/7 shop?

Sadly yes.

As indicated it would likely only be of use to a few places that are close to significant urban populations but then this brings its own issues relating to noise regulations.

Unfortunately investors will not seek to invest resources into this as usage is suspect.

[Donkey497]

As most airports are a reasonable distance from the centre of population, principally for safety & noise/pollution control reasons, from a convenience point of view, it seems unlikely that these could become centres for socialising and recreation.




Likewise, it is ingrained in society that socialising happens in each community's central communal areas which sort of rules out "socially displaced" locations like airports.




Being brutally honest with yourself, can you ever see yourself answering the question "So what are you doing this weekend?" with "thought I'd hang out at Heathrow. It's got a superb chilled atmosphere and there's always something interesting to do."






Transportation of large numbers of people and volumes of goods is the raison d'etre for airports, nothing else. By itself, travelling is inherently stressful, so the congregation of large numbers of stressed individuals is never going to promote a dolce vita ambience.
So overall, I can't see a great demand for parties at airports in the future.....

[CelticRambler]

When I talk to businesses in provincial locations, they are unanimous in saying that they would love to be able to work with their local airport and any aircraft operator who would provide the service that they, as customers, want not something dictated by the AOCs accountant based on trying to steal a piece of someone else's pie and supposedly "efficient use of the aircraft".

The service station analogy is reasonable, and it doesn't take much creative thinking to resolve the problem of confused queues, so yes - there's every incentive to integrate a 1500m runway + a/c into the local business infrastructure and invite the people of the area to write a better business plan.

Originally Posted by Capetonian

If an aircraft flying is 'burning through your cash reserves' rather than making money, there is something wrong with your revenue management policy.

I think we have more than enough past and present examples to show that the "industry standard" in this respect is hopelessly out of touch with commercial reality.

[Phileas Fogg]

Sadly yes.

In that case I'm glad I got out of hit, this is how we buy our fuel here, ever seen red Coca Cola?

[Jes]

Manston's Long Term Proposals to Airports Commission

19 July 2013

...separate dedicated areas

An Airport ‘Campus’ development sitting outside but adjacent to the Airport,
potentially comprising:

a mix of B1, B2 and B8 development of 1.0 - 1.5m sq ft,
tertiary education facilities including an aviation/aerospace training academy,
2-3 hotels and possibly a modest conference/trade-hall/exhibition space and PFS; an integrated airport village incorporating a small village/campus centre
of convenience shop units, a small ‘express’ style supermarket, pub,
crèche, GP surgery/dentist and a combination of student accommodation –
500 units, 300 low cost houses for rent and 700 houses for sale;
a factory outlet park offering up to 250,000 sq ft of units; the existing Manston Business Park will continue to be built out as a logistics and
manufacturing (eg food processing) centre and be integrated into the overall airport campus project area.

[Capetonian]

Quote:
Originally Posted by Capetonian
If an aircraft flying is 'burning through your cash reserves' rather than making money, there is something wrong with your revenue management policy.

I think we have more than enough past and present examples to show that the "industry standard" in this respect is hopelessly out of touch with commercial reality.

You are very quick to rubbish the ideas of others but you are not coming up with any tangibles of your own. Maybe you are only talking in vague terms because you think you have a business plan and you think that if you reveal someone else will jump in before you.

There is a fundamental precept in business that you use your assets to produce revenue/profit. In the aviation industry that means that the aircraft produce revenue flying and don't produce revenue, may even cost money, when not flying. Airport and airlines look at alternative revenue streams, and rightly so, but their core business remains unchanged and that is what the customer wants. I don't go to my local Audi dealer to be sold a Christmas tree, and I don't go to the airport to get a massage or buy a raffle ticket for a Lamborghini, and I find having that all thrust in my face quite an annoyance.

What is the 'commercial reality' that you are referring to that the 'industry standard' is so out of touch with?

[PAXboy]

A fascinating thread and I shall try to be brief (you know what I'm like )

There certainly is too much regional capacity - but if govts ignore the key hub for 50 years - then regions are going to expand. The MPS can now blame failure of the regions on the local govt and not themselves.

I do think that the out-of-town facilities can be better used. The UK is now well used to going to malls and 'shopping villages'. The airports have parking, facilities and the noise levels of new activities will always be quieter than aircraft!

• go-karting
• paint ball
• adventure games that require space
• teaching cycle, motorcycle and car proficiency + skid pan (Blue light as already mentioned)
• other track day events that need straight lines!
• used to be called 'raves' but big parties need hangar sized space

For those that do close to air traffic: all of the above + new housing estates + shopping malls + schools i.e. New Towns. They already have all the infrastructure of access roads and all utilities and flat space. That reduces the start up cost significantly.

Since many new houses are needed, redundant airports are the best place to start. Investors that buy airports for redevelopment should be encouraged, Brown field sites are all we have. Yes - I know that we lose when we lose a local airport but should it be subsidised ot benefit the community?

On Sunday evening, we passed through MUC (after a very enjoyable 5 day break) and the airport had a complete xmas market in full swing. They have a large (fully undercover) space that is used for marketing events, product launches and festivals. on Sunday at 19:00 the fair was CROWDED!

Pax arriving/leaving, those staying at the airport hotel, visitors from the local area? YES, I know MUC is a regional airport and a Hub in it's own right - but they are still doing things to attract more people and money.

[CelticRambler]

Originally Posted by Capetonian

What is the 'commercial reality' that you are referring to that the 'industry standard' is so out of touch with?

Making a profit as a priority over generating revenue, and if that means using your assets in ways other than their primary purpose, then that's a legitimate use.

Once upon a time, people did go to the local airport for its social/amenity/leisure value; now most terminals have become little more than glorified bus-stops, expensive to use and maintain. Customers/passengers don't want to spend any longer there than absolutely necessary and airport managers rejoice in statistics that show how many hundreds of thousands of people pass through their facility.

Knock, Norwich, Kerry and Exeter (and others) reward their passengers by charging them for the privilege of passing through, yet it is the 70% of passengers travelling for "family or leisure" purposes that make the airport viable. Anyone with real business accumen would gently extract 50€$£ per person of pure profit from this 70% and their non-flying entourage by offering the "Christmas tree" experience, and another 20€ from the minority business class to avoid it.

Or to take the petrol station example: if you don't want to queue behind the guys and gals buying their milk, paper and a weeks worth of chocolate, use the 24h self-service pump and pay by credit card.

Alternatively, take the example of a good quality, not-quite-town-centre hotel that buys a classic car, parks it out the front and offers a chauffeur service into the city. 90% of the guests will never use the service, but they'll happily pay a premium to stay in that hotel instead of another because that car, that service, that opportunity to take a souvenir photo, makes them feel special.

And yes, you're right: I do think the business plan will work. As of yesterday, there's about 6m€ worth of funding available to the AOC holder who will agree to fly a minimum of zero block-hours per month - with all costs properly itemised and justified, of course.