UK air travel market records 3rd slowest growth for 25 years – T5 to the rescue?

Passenger numbers at UK airports were up just 2.3% to 240.7 million in 2007, the lowest rate of growth since 2001. In fact, in the last 25 years growth has only been lower in 1991 (down 6.5% due to Gulf War I) and 2001 (up just 0.8%). Heathrow maintained its dominant position with 67.9 million passengers, though its share of UK airport traffic has fallen from 33% in 2002 to just 28% last year. Among the 24 members of the ‘1 million’ club (up from 21 members in 2006) traffic grew fastest at London City (+24%), East Midlands (+15%), Doncaster/Sheffield (+13%), Bournemouth (+13%) and Liverpool (+10%). Traffic fell at Glasgow International (down 1.1%) and Manchester (down 1% for the second successive year).

Image: UK had Bigest Ports in 1938 & in 2008 has the biggest Airports.
Slowing UK airport traffic has worrying precedents: before London’s Royal Docks became derelict (and were then converted into a thriving airport) they were the busiest port in the world. But while non-competitiveness and under-investment killed the docks, more dynamic market forces are responsible for recent UK airport declines.

Domestic traffic down 2%

This modest overall growth could be blamed on a slump in the UK domestic market where demand fell by 2.1% to 48.7 million passengers. All four of London’s major airports saw domestic traffic fall, though London City bucked the trend with an increase of 12%. In the regions, Manchester was down 8%, Newcastle 6%, Edinburgh 4%, Belfast International 2%, Glasgow was unchanged while Birmingham managed 1% growth. Belfast City witnessed 2% growth, Nottingham East Midlands 4%, while Aberdeen was up 5%. Strict and time-consuming security controls, improved rail services and environmental pressure on short-haul air travel, plus a general slowdown in the UK economy all appear to have been contributing factors.

International traffic up a modest 3-4%

Fortunately, demand for international air travel into and out of the UK continued to grow in 2007. Passenger numbers on EU flights grew by 3.7% to 125.6 million, while other international destinations saw demand grow by 3.3% to 66.4 million. However, certain individual countries performed much better (and worse) than the average. The biggest winners (and losers) are shown below:

Country Growth Pax 2007 Country Decline Pax 2007
Romania 71.4% 333,247 Oman -33.9% 165,252
New Zealand 59.9% 343,517 Trinidad & Tobago -25.4% 147,775
Morocco 37.5% 766,948 Taiwan -19.8% 103,034
Poland 30.7% 4,351,607 Bangladesh -18.6% 133,289
Lebanon 23.8% 119,622 Malaysia -18.5% 431,518
Qatar 22.3% 843,016 Gibraltar -10.0% 295,723
Luxembourg 20.4% 251,244 Tunisia -9.9% 651,301
Croatia 17.3% 658,492 Brunei -9.7% 103,632
Kenya 16.9% 649,676 Dominican Republic -8.7% 440,513
Saudi Arabia 16.5% 257,057 Jordan -6.6% 152,946
Source: UK CAA Annual Airport Data 2007
Minimum market size = 100,000 annual passengers

Other major markets (greater than one million annual passengers) that achieved double-digit growth were Hong Kong (15.4%), UAE (14.8%), Turkey (14.0%) and Portugal (11.0%). The emerging global BRIC countries (Brazil, Russia, India, China) saw growth of 11.2%, 9.7%, 6.7% and 7.8%. Among major markets there were notable declines for the Spanish Canary Islands (down 5.3%), Japan (down 4.9%) and the Czech Republic (down 4.1%). Singapore, Norway, Cyprus, Greece, Sweden, Ireland and Belgium all suffered year-on-year reductions in passenger numbers.

The biggest country markets remained Spain (35.5 million), USA (18.6 million), Ireland (12.3 million), France (11.8 million), Germany (11.6 million) and Italy (11.2 million).

Polish destinations growing fast

Drilling down a further level to examine individual foreign airports reveals further fascinating trends. Among the 54 foreign airports that had traffic flows of at least one million passengers with UK airports in 2007, the biggest winners and losers were:

Airport Growth Pax 2007 (m) Airport Decline Pax 2007 (m)
Krakow +38.8% 1.012 Cork -7.3% 1.427
Lisbon +18.5% 1.101 Brussels -6.9% 1.337
Rome FCO +18.1% 1.331 Toronto -6.3% 1.615
Murcia +18.1% 1.460 Tenerife South -5.9% 3.162
Pisa +17.4% 1.018 Arrecife -5.6% 1.612
Dubai +15.8% 3.236 Prague -4.6% 1.952
Hong Kong +15.4% 1.660 Frankfurt -3.7% 2.434
Milan Bergamo +13.1% 1.026 Rome CIA -3.6% 1.415
Warsaw +12.9% 1.183 Singapore -3.3% 1.230
Madrid +12.0% 2.477 Paphos -3.2% 1.405
Source: UK CAA Annual Airport Data 2007

Among smaller markets (greater than 100,000 annual passengers), traffic increased by over 50% to Kaunas, Auckland, Wroclaw, Marrakech, Katowice, Charleroi and Bremen. Airports witnessing a decline of greater than 20% from the UK included Muscat, Vilnius, Varna, Tehran and Paris Orly (blame the Eurostar).

The top 10 airport markets remained unchanged with the leading six airports maintaining the same ranking. Dublin (8.6 million) and Amsterdam (7.8 million) both grew very little, while Malaga (3rd) and Alicante (5th) both experienced small traffic reductions. New York JFK climbed from 8th to 7th thanks to almost 12% growth, while Dubai jumped two places from 10th to 8th on 16% growth.

2008 not looking good

With the UK economy under increasing pressure it seems that 2008 will also be a quiet year for growth, especially as last summer’s modest international traffic improvements occurred when the UK weather was awful. If the summer is any better this year (and it really can’t be any worse) even more people may stay at home (or at least give up a weekend break or two), resulting in further stagnation in the UK market.

Early indications are not encouraging. Traffic at the BAA’s seven UK airports was down 2% in January and although traffic was up 3.5% in February that was the result of the leap year. Comparing just the first 28 days of February reveals that traffic was actually down 0.5%. Maybe the opening of Heathrow Terminal 5 will get people travelling again…

Image: Check in desks
Hardly a case of under-investment: the €12bn T5 which opened yesterday. But early indicators are not good for BAA in 2008 – traffic at its seven UK airports was down 2% in January and 0.5% in February.

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