The point I was making is that a longer runway does not necessarily mean the airport will find the routes and aircraft that need that extra length to pay off the debt.

Absolutely,but without the extension I don't believe the airport can survive long term.
Summer routes are needed from A320s,not 190sr, notice to airport management get this done!

Why can't the airport survive long term without multiple A320s per day? I mean that busines model worked a treat for PIK, SEN, MME and DSA among others. I sometimes think that #avgeeks only see their local airport in terms of other airports. It's actually possible to be a succesful niche business, not glamorous but possible to make money.
If you scale up, you need to keep running at scale to turn a profit, when the first downturn hits, consolidation (to LGW in this case) will kill you as your cost base is massively out of kilter to your traffic.

The talk of SOU's financial position appears to be all based around passenger volume.

If passenger volume is roughly half of what it was before, but each airline is paying SOU double what Flybe did, then aviation income will be about the same. Ancillary revenue from spend and car parking will be down probably by the same proportion as passenger volume. On a 50/50 split of ancillary and aviation income then the airport's total take is about 25% lower than it was before.

If you then look at costs, the airport is running with around one third less staff than it did before.

I don't think the equation will be good or great, far from it. But I also would be surprised if it's burning money quite as quickly as some might think.

Albert Hall ,the airport manager has informed us that the airport is currently losing over 4 million a year,this is the reality,and in today's world that is a major concern.
as stated earlier the runway extension is the one thing that could give the airport a survival ticket,there are going to be regional airport casualties over the next few years,we don't want SOU to be one of them!

The Airport’s financial reports are in the public domain. - using companies house filings. It made more than £11m profit in 2018 on a revenue of £30m or so - a good business - but since then has lost heavily:

2019 - £2.3m
2020. -£17.1m
2021 - £9.2m

That’s near £30m of losses in the past 3 years, not counting the 2022 result (also more than likely negative)

That’s not going to help the balance sheet in any business.

It will be interesting to see what the owners do about that. Obviously a return to 2018 performance is desirable, but equally unlikely in the near term.

FF

Thanks for highlighting just how precarious the position the airport is in.
Regional connects arnt going to reverse the situation, fingers crossed the extension is done asap to give the airport.A chance

So how was the 2018 profit made?

Am I missing the joke here? These are examples of how to make money as a regional airport?

Rumor has it Sou staff will be going on strike for 3 days in November!!!!

New report by CAPA
 

Extracts from a new report by CAPA

FF

The demise of the UK’s Doncaster-Sheffield Airport must have set many municipal authorities’ nerves on edge. Now Southampton Airport on the English south coast says it will need to build back up quickly to at least 1.2 million passengers annually if it is to survive – while it will lose GBP4.5 million this year.

Candidly, the management admits it doesn’t deserve to survive if it cannot make money.

The remedy appears to be a runway extension on which work should begin in 2023, the usual objections having been overcome in the courts.

But supply doesn’t necessarily equate with demand, and with competitors for its catchment area – including the two London giants that are Heathrow and Gatwick, as well as Bournemouth, 30 miles to the west – there is much work to do just to get Southampton back to pre-pandemic levels.

This is part one of a two-part report.

Summary

• Following hard on the news of the impending closure of Doncaster-Sheffield airport, Southampton Airport says it needs 1.2 million annual passengers to survive.
• Southampton Airport says that it will lose GBP4.5 million this year.
• But the airport remains confident that a runway extension will get it back on track, as it will be able to attract A320-size jets.
• Southampton Airport lags the UK average for seat capacity rebound.
• Around 1.2 million passengers annually needed to break even: airport targets 3 million.

Many UK airport operators concerned with events at Doncaster-Sheffield

Several weeks ago the CAPA report UK’s Doncaster-Sheffield Airport to close? Alternative use options discussed went into some detail about the proposed closure of Doncaster-Sheffield Airport in the north of England and the reasons behind it.

That appears now to be a fait accompli, with the airport’s owners, the Peel Group, declaring on 26-Sep-2022 that it had plans to start suspending commercial operations there from 31-Oct-2022, owing to the airport's "fundamental and insufficient lack of current or prospective revenue streams". And despite the South Yorkshire Mayoral Combined Authority stating on 14-Sep that it had secured a "credible consortium interested in operating" the airport.

The new UK Prime Minister Liz Truss is reported to have said that the government would “protect” the airport, but that “protection” could be a long time coming – if indeed it arrives at all.

Many municipal authorities across the UK and further afield must be concerned at this development where they have leased or sold their airport to a private sector operator, which is most of them.



Airport land value can be extremely high

London City Airport is a case in point.

The airport being owned by a consortium of mainly foreign pension funds, which tend to take a hands-off approach to management, the value of the land there for housing alone (if the airport were ever to be deemed unviable) would be extremely high, which partly explains the very high and ever-increasing sale price whenever it changes hands.

Meanwhile, Doncaster-Sheffield is already partly developed as business park, with plenty of room for more, and is within 20 minutes of five motorways.

Southampton Airport anticipates a GBP4.5 million loss in 2022, but the future is rosier

So that concern must also be felt on the English south coast at Southampton Airport, once part of BAA plc and latterly owned by AGS Airports – a consortium of Spain’s Ferrovial S.A. and Australia’s Macquarie Infrastructure and Real Assets. The ‘A’ and ‘G’ of AGS are Aberdeen and Glasgow International Airports, which complete the group.

Southampton Airport’s operations director Steve Szalay 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).

It must be said straight away that there is no suggestion that the same fate experienced by Doncaster-Sheffield Airport awaits Southampton, and indeed, the opportunities there are at least equal to the threats. Both its owners are extremely well capitalised.

But then again, so is Peel Holdings (British infrastructure and property investment business), and both Ferrovial and Macquarie have a propensity to offload airports, or their share in them, as well as to take them on.

Indeed, recently there have been suggestions that Ferrovial could give up part, or even all, of its majority equity in London Heathrow Airport, as highlighted in the recent CAPA report: Ferrovial to sell stake in London Heathrow? Part one – French and Saudi interest in 25% ownership

Southampton lags UK average for seat capacity rebound

Nevertheless, 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.

In the week commencing 10-Oct-2022 capacity at Southampton stands at just less than 51% of what it was in the same week of 2019, and is barely above 2020 and 2021 levels.

In the UK as a whole it is almost 89%.

1.2 million passengers annually needed to break even

The airport’s management argues that to break even, what it requires is a passenger throughput of 1.2 million per annum (which broadly tallies with ACI and academic sector estimates on financial sustainability for airports generally). It is a level easily achieved previously when the airport reached over two mppa (see chart below), but uncertainty will remain while they are measured in the hundreds of thousands.

That figure would be facilitated by a 538ft (163m) runway extension which is scheduled to begin in 2023. It will extend the runway to almost 1900m, with a width of 37m. That should enable it to handle most small and mid-sized jet airliners.

Southampton is one of several airports in the UK where there has been stiff opposition to infrastructural enhancements, usually on environmental grounds. Within the past year CAPA has reported on two other examples: at Bristol in Misplaced 'environmental stand’ against Bristol Airport expansion, and at Liverpool in Liverpool Airport’s expansion master plan to be reviewed on environmental grounds.

In Southampton’s case it was successful at a judicial review. The final legal challenge to the runway extension was defeated at the Court of Appeal earlier in 2022.

'No airport has a right to exist if it can’t make money'

Mr Szalay is reported locally to have said, “Without the extension, there’s no nice way of putting it. We were screwed.”

He has also been reported to comment, "No airport has a right to exist if it can't make money"; a refreshingly honest opinion.

Southampton's target is three million passengers

On the positive side, the airport’s management believes the throughput can grow to three million passengers a year, which seems realistic, and 2,000 staff after the extension is built.

Before the COVID-19 pandemic, in 2019, it reached 1.8 million passengers, but that was a 10.5% shortfall on the previous year.

Traffic growth over the past decade has been patchy and uneven, reaching +14% in 2016, but with growth otherwise in single digits and also four years of falling traffic between 2010 and 2019 (no figures are available for 2014 and 2015).

The average annual growth figure in that period without those two years was just +1.3%.

The airport took a hit from the failure of Flybe just before the pandemic, resulting in an 84% passenger traffic loss in 2020, and a further -11.2% in 2021. But growth in the first seven months of 2022 was 365%.

Great reply, thanks for the detail. Interesting that the business model which once upon a time made them money isn't ever going to do so again. It looks like they need to step change up the way, or leave the market. No profitable future in high frequency, non loco regional connectivity it seems. For higher volume and cost sensitive travel, the Gatwick option is uncomfortably too close though.

Whispers of EXS interested in the airport, we shall see but that could be a goer with no footprint in the south at present!

Where are you taking that from - the "no extension we're screwed" bit? If so, that was presumably that was before it was agreed so what else is he going to say?

What SOU is struggling with now if having all its eggs in the Flybe basket. That might have been mentioned here before.

Flightfone
Very good indepth analysis,
It's clear that SOU hasn't performed as well as most regional airports,indeed also it can't go on for long with 51% capacity.Pre covid and before the demise of flybe the airport was doing very well but all has changed now. The lack of development in recent years, i.e. Stands,taxiways and most important the maximising the runway extension capabilities had now come back to bite hard. Down the road at Bournemouth it's a different matter and with its runway length it secures a continued bright future,be it limited to many European links. Regional airports like Exeter,Norwich,Southend, for example most be increasingly in danger of going in the direction of Doncaster,given the tough next few years others including I'm afraid Southampton must also be iadded to the list
​The land at Southampton must be worth a fortune for housing development!
With all this in mind there is no definite news on Southampton runway work starting, the airport needs to make money fast, it can only do this by getting things done know,not later

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That would be a first, as their model requires H24 operation.

All successful businesses have flexible business models!

One of the directors used to work there, so definitely a good connection. A320 / A321 neo should have a decent range, 320 to the canaries no problem.

Never gong to happen due to Bl**dy Awful Airports Plc locking them in to a Section 106 Agreement restricting operating hours to ease the passage of planning consent for airport re-development.

Maybe "W"'s into/out of SOU during the day from other bases so that long op hours not needed?