30-Second Interview – Neil Garwood, Managing Director, Southampton Airport
Southampton Airport has enjoyed several years of strong growth and handled more than two million passengers for the first time in 2017. This made it the 18th largest airport in the UK based on terminal passengers. There have been a few changes at the UK South Coast facility in recent years, with the airport being acquired by AGS Airports Ltd in 2014, along with Glasgow and Aberdeen. More recently a new Managing Director was appointed, with Neil Garwood taking up the role on 1 June 2018. anna.aero’s Chief Analyst Nick Preston paid the new MD a visit to discuss Southampton’s strengths and the main challenges facing the airport, along with potential opportunities and plans for future growth.
anna.aero: Southampton Airport has enjoyed a strong few years in terms of passenger growth, breaking the two million passenger barrier for the first time in 2017. What has driven this growth and what traffic levels and growth are you forecasting for 2018 and the next few years?
Neil Garwood: “The growth we’ve seen in the last couple of years has been the result of some really targeted and effective route development activity and it’s been great to see a diversification of airlines. We’ve seen KLM come in, we’ve seen easyJet come in, Aer Lingus introduced Cork and that’s all happened in the last two years or so. Just this summer we started with Flylolo, so it’s been a really positive period as far as route development goes. It’s about relationships, and it’s about investment in the relationships with the airlines and continuing to sell the positives from the airport, our catchment area, our location, our approach to service and operational performance. Obviously there’s a financial element too, but all those things together, in terms of managing the relationship and building the relationship, it takes time, it doesn’t happen overnight, but it’s incredibly satisfying when that route development work pays off, in terms of new airlines and new routes.
“FlyLoLo is really exciting for us. The route to Skiathos in Greece is one we haven’t had before. They’ve got a great approach to opportunity and we hope we can develop potential new routes with them in the future. We’re in support mode for this summer for the Skiathos service and we’re in discussions about what they want to do in the future. They’ve got some great plans and ideas about how routes can be served, and we’ll work with them on that.
“In terms of 2018 passenger numbers, I think there’s an element of consolidation. Whereas last year was our busiest year ever, we topped the two million mark as you say which was fantastic and a really great achievement for us, this year there’s been a little bit of change in a couple of our routes. Unfortunately we lost our relationship with bmi regional earlier this year which is really regrettable because the Munich route was improving, but operationally the airline just couldn’t continue with it any longer. So an element of consolidation this year around continuing to try and stay around that two million mark, which we will, and then we expect to see more growth over the next few years.”
aa: The introduction of easyJet’s winter service to Geneva was a notable achievement for the airport in 2017. Did passenger numbers meet expectations in its first season and do you see any potential for further new routes with easyJet?
NG: “This was one of those routes we referred to where after a period of discussion and relationship building, getting to the stage of announcing a new airline is a real achievement, and an airline like easyJet with their brand and their presence, was a really great achievement for us. The Geneva route started in December last year and ran through until April, and yes it broadly met expectations. I think it’s always difficult in the first season because it’s a new airline, but we’re really happy, and it’s great that they’re coming back again for winter this year. The relationship with easyJet is good, they’re very clear on what they want, very easy to work with and very professional. It’s a positive addition to the airline mix at Southampton. In terms of additional routes, the potential’s always there. At the moment we’re focusing on them coming back for the winter season with Geneva, but those conversations will always happen, not just with easyJet but with every airline as far as opportunities for new routes go. There are no plans right now, let’s make the coming winter season as successful as we can and those opportunities are always there.”
aa: What do you consider to be Southampton’s main catchment area?
NG: “There are 1.5 million people within 30 minutes of the airport , and 3.5 million within one hour, so it’s a really impressive catchment size. I think when you look across the UK, that size of catchment is not common amongst regional airports. For us, it’s one of the core benefits as far as our success goes. Our relationships with airlines, certainly in terms of initial discussions, are quite often focused around the quality and strength of our catchment, and that’s not just in terms of numbers but also the number of supportive airport users. Those factors go hand-in-hand to make a really compelling proposition.”
aa: How important are Southampton’s multimodal transport connections? What percentage of your passengers arrive at the airport by train?
NG: “The surface access is massive for us. We’ve got the M27, the M3, and the main rail line to London and down to the South West right on our door step. There are some improvements we would look to see regarding East/West rail links and the M27, like any major route, can get busy at certain times, so there are always opportunities for the infrastructure to improve, but currently, we’re in an incredibly good position with those road and rail links. The railway station is only 99 steps from the terminal door. I think you’d find its one of the closest railway stations to any airport in the country, certainly one that takes you into a city centre. It’s an eight minute train journey into Southampton, and just over one hour to London. Our position and surface access offer a great product for Southampton Airport, whether it’s access to London, access to the local region or, wider, cross-country rail links up to the Midlands. At the moment about 18% of passengers come by rail which could be higher and we will work through our surface access strategy to increase that number. One of the ways to do that is to continue to bang the drum for surface access improvements in the local region, which are an absolute must if you’re going to make more of the links we have. We are incredibly proud of the surface access links and the proximity we have to all those networks and gateways that can take you around the region or around the rest of the country.”
aa: Is there a strategy for Southampton to act as a transfer hub for flights to regional France and or for incoming passengers from the Channel Islands to connect on to other services?
NG: “I think over time it’s something that we could make more of. We are a gateway to France and regional France in particular, and I think we’ve probably got links to more French airports than virtually any other airport in the UK. A real focus for Flybe has been regional France and that’s been something that’s been very successful for us. Similarly Southampton is the link to the Channel Islands in a lot of cases whether it be Jersey, Guernsey or Alderney. Those routes have always been important for Southampton going right back in history, and they will always will be. Are there ways we can build that connection between the Channel Islands and elsewhere or between regional France and elsewhere? Absolutely. I think the facilities we have at the moment in terms of walking distances and ease of transit from one part of the journey to another are fantastic. Could they be better? Yes, I think there could be an opportunity for us to improve over time and make more of it, but at the moment it’s minutes from arrival and back to the departure lounge for an onward connection so we already have a very, very good product and I think airlines recognise that. You do have to go back through security. There’s an opportunity there for us to say to ourselves, could we streamline the experience to such an extent that that doesn’t need to happen? That would be an objective we would want to look at for the future, because I think what that does is grow on what we are already trying to do here, which is to make the journey as convenient, straight forward, simple and enjoyable as it possibly can be.”
aa: Flybe (including its franchisees) will account for about 94% of the available departing weekly seats from Southampton during peak S18. Is the airport too reliant on one carrier?
NG: “What I would say is that whether an airline represents 1% of our business or a far bigger number, they’re all as important to us in terms of how we manage the relationship and in regards to how we work with them to make sure that they’re needs are met. Those needs could be financial or operational, they could be for new routes. All our airlines are as important when it comes to that relationship. You’re absolutely right, that Flybe are our biggest airline, and through their franchise partners, and providing aircraft for charter operations as well, that builds and builds in terms of their overall scale of operation. What that says to us is that, first and foremost, we’ve got a great relationship with Flybe. They have an operating model and aircraft that work fantastically well from Southampton and that’s something that’s seen that long-term relationship go from strength-to-strength. But I think that any airport would say that a sensible strategy would be to have a balance in terms of airline relationships and we’re no different. Whilst we absolutely cherish the relationship with Flybe and every other airline, I think it’s important over the long term to ensure that those relationships are, as far as possible, managed sensibly across the airport. If that means that there are route development opportunities with other airlines, great, but we will always protect, value and look after relationships with current operators.”
aa: Has Southampton reached its maximum potential with its existing infrastructure?
NG: “The runway is relatively short, one of the shortest for a regional airport in the UK, so that does create some operational issues for certain aircraft and that is something we would like to address. I think every airport has got its wish list and we’re no different. Yes we would love a longer runway and a larger departures area, but we make do with the infrastructure we have. It’s fit for purpose, suitable and well maintained. There are always opportunities to seek some investment, to grow and develop part of the estate, whether that be the runway, terminal space, or car parking for example, and that will feature in some of our future development plans, but at the moment we certainly have what we need to manage.
“The most recent master plan document from 2006 talked about runway developments, it talked about infrastructure developments and it talked about the strength of the airport in terms of the catchment area and in terms of economic contribution and job creation. If we fast forward to the present day, we are in the process of updating our master plan. We’re not quite finished, but it’s very close. It’s no secret that we have ambitions around airport growth. As you say, in the last few years there were some reports regarding our aspirations around runway development. They’re still there. Our ability to grow our economic contribution to the region, the number of jobs on site and the routes that we connect to are all core elements for the future growth and development of the airport. We’re in a phase at the moment of updating plans and relatively soon we’ll be in a position to come out and say what they look like. The key point is that the plans that we’ve had for development in the past are still there, they’ve never gone away, they’ve just not been brought forward for a range of reasons, not least that after the last master plan was issued, many things happened, including the economic crisis, which shelved many investment plans across the industry. For the moment our infrastructure is stable and solid. For growth whether it be stands, runways, car parks, it all get’s considered, but sustainability is important.”
aa: What are the main challenges facing air service development from Southampton in the near-to-medium term?
NG: “At a macro level, clarity over Brexit is becoming increasingly crucial. We are now investing time in contingency planning, which is time consuming, and potentially and hopefully abortive. None-the-less, we’ve got to do it, because the potential for a no-deal scenario and subsequently for grounded aircraft, is a possibility, so we need to prepare for it. It’s not something that anyone wants and I think the sooner we have clarity about exactly what the arrangements will look like, the better. It’s a challenge in that, without confidence, clear decision making is difficult. I don’t think there is a level of confidence yet around what the post-Brexit environment is going to look like. When that confidence comes, then I think some of the obstacles to route development or development generally can be lifted.
“In a similar vein, I feel that Air Passenger Duty [APD] is a challenge to growth. It’s a tax on flying. In one respect it’s a tax on regional airport growth because it puts us at a loss in comparison with a European airport before we’ve even opened discussions with an airline, and let’s not forget airline’s can put their aircraft anywhere they choose. There’s already that element that we have to overcome before we can compete on even ground.”
aa: What are Southampton’s main strengths and what are some of the main opportunities for the airport to exploit in terms of new airlines and routes? What are your main unserved target markets or destinations?
NG: “There are a number of top level strengths that place Southampton on a very positive footing. The first is location. The airport is well positioned for access to London, the Channel Islands, and in terms of our location in the UK, well positioned for the region, whether that be the South, or Hampshire more specifically, and some of the local surrounding areas. We are well positioned in terms of surface access links, and that goes further and wider than just the local region. So the location is a massive selling point. The second point is our strong and affluent catchment, which includes a high level of support for the airport. We have a lot of community engagement, a lot of activity with local schools, local business groups, local politicians. There is a huge amount of support for the value that the airport brings to the local region through its economic contribution, through job creation, through inward investment and through route connections, whether they be for business or leisure travel, so there’s a supportive community that wants the airport to succeed as a gateway within the local region.
“In terms of target routes, you could list half a dozen big cities in Europe that we don’t serve. We have a clear understanding of the people in our local catchment that are flying to those destinations from other airports, and that for us is really important information to discuss with airlines, to say this is the strength of the catchment area, this is the number of people that are flying from within that catchment area to these locations, but they’re not going from Southampton. Within that is the debate around how Southampton could provide that connection. There are opportunities around serving core European destinations that we don’t serve at the moment. Madrid, Rome, Berlin, you can take your pick of core routes that have hundreds of thousands of visitors from within our catchment area every year travelling through larger airports. That for us shows an opportunity and forms one part of our discussion with airlines about how we can grow and develop routes.”