Smooth flight ahead or turbulent times for our airports?
I have a fear of flying and airports are not generally my favourite place to be. With that said, it doesn’t change my desire to know what is going on behind the scenes. In fact, I feel it rather enhances it.
The last couple of years have seen our local airports going through a period of flux. Long standing airlines have withdrawn altogether from the market or swapped between George Best Belfast City Airport and Belfast International Airport. New routes have been established and new airlines have appeared.
Business is buzzing
At Belfast City Airport, Brian Ambrose, chief executive, says their business in 2013 has been significantly up compared to the previous year, making it the most successful year in the airport’s history. He told me: “The airport is buzzing again. We are returning to the level of business we were doing before the market collapsed in 2007. This year has given us the confidence to say that the domestic market is performing well again and all of the graphs are heading in the right direction.”
Approximately 2.6 million passengers travelled through Belfast City Airport last year and, thanks to this boost in business, they have plans to bring in more routes to some of the main European capital destinations.
Mr Ambrose continued: “The MTV awards coming to Belfast really represented a turning point for us. Belfast has had a couple of good years for inbound tourism. We have had major events such as the G8 and the World Police and Fire Games. Our product has changed and developed, with Titanic Belfast and the Causeway centre attracting visitors from all over the world. We are also benefiting from the arrival of large corporations such as NYSE and Citi Group, who need convenient access to other locations.”
Positive stories have been coming through thick and fast, with airlines and airports around the UK hailing increasing passenger numbers. With this rise in demand are we the consumer likely to see a return to high cost air travel? Mr Ambrose thinks not:
“The change in flight prices is permanent. Typically you can book a return fare for £100 and that’s something that is well established. I don’t expect this will change as the demand on the industry increases.”
2014 will see the long awaited Public Inquiry into the removal of the seats for sale limit currently placed on Belfast City Airport. The restriction, which is part of their planning agreement, dates back to when the terminal was housed in a PortaKabin and limits the number of seats they can sell from the airport each year.
Mr Ambrose said: “If you can imagine a hotelier legally entitled to sell 100 bedrooms but only being able to sell those bedrooms to 50 people – it makes no sense. If it is removed we can welcome more visitors to Northern Ireland within our 48,000 flight cap. We have obviously had great support from those within the hospitality sector and 2014 will hopefully see its removal. We believe government realise the importance of direct air access, in particular to Europe and North America, and I am confident we will work effectively to realise this ambition.”
When it comes to the airline industry, Northern Ireland presents a competitive landscape. Not only do we have two airports located within 25 miles of each other, we also have Dublin Airport situated a two hour drive down the road.
Mr Ambrose continued: “For airlines, we are an island off an island and that is attractive because we don’t have any other way to reach business or leisure destinations easily. Our sales team look at the market and find the domestic and European routes that we don’t serve. When we identify a gap we speak to airlines and airports to see if it is a possibility. Airlines are always looking at a way to better utilise their aircrafts. On short haul routes we will go head to head with Belfast International Airport nearly every time.”
Only one winner
At Belfast International Airport there were over 4 million air passengers and almost 50,000 tonnes of airfreight catered for during 2013. However Uel Hoey, business development director, feels that the Northern Ireland market is particularly volatile at the moment: “This year we have ended up with a strong beginning and end, but we saw a dip in passenger numbers during the summer, purely as a result of some established BIA traffic being displaced to Belfast City Airport. The two Belfast airports have, for a number of years, been and remain engaged in an internal conflict for a diminished market of overall NI air passengers and, while we are fully focussed on this tit-for-tat, Dublin Airport is receiving all of the air traffic growth generated from and into Northern Ireland through marketing heavily in Northern Ireland. Much of this traffic growth should be happening through Northern Ireland airports as a result of tourism product upgrades.”
He continued: “If there was a sensible set of engagement rules driven by government policy to allow air networks and routes to build sustainably, rather than simply transfer from one airport to another and back again, the basis for growth in the air travel sector here would be much more solid.”
Mr Hoey feels that the ‘apparent success’ of one airport is merely a sign that the ‘deck chairs have been moved around again’, rather than it demonstrating any significant benefit to the Northern Ireland economy.
“Belfast International Airport sits on a vast, central site, convenient to the entire population of our relatively small region, offering round-the-clock operations and unconstrained capability to fly to global destinations. Between three airports, Northern Ireland boasts four operational runways, a veritably envious scenario compared to other regions in the UK and Europe who experience genuine limits on their air transport capacity. Take as an obvious example the south east of England. Yet, notwithstanding this lavish bounty, overall air traffic through local airports has diminished by 1.25 million annual passengers (-15%) over the past five years. Surely that must be an indictment upon how the regional air transport sector is being overseen, at a time when genuine growth in air traffic in support of trade, investment and tourism is imperative for the local economy.”
Call for change
An issue on which both airports agree on is the unique situation they face with air passenger duty. Mr Hoey said: “We are heavily punished by the structure of the UK taxation system, particularly when our neighbouring market in Dublin is making it very easy for airlines to do business. Our travellers face costs on departure from each UK destination point, which means that if you are going from Belfast to Liverpool, for example, you will pay on both flights. Dublin Airport is the only one growing because they have an integrated plan encompassing the tourism, marketing and tax support system to make that happen.”
A glimmer of hope came two years ago when Belfast International Airport almost lost their Belfast to New York route with United Airlines due to the higher tax burden the airline was facing compared to their Dublin flight. The chancellor devolved power over the tax on long haul flights to the Northern Ireland executive and they abolished it in time to preserve this vital service.
It is clear that those in power do recognise that both airports suffer at the hands of a geographical disadvantage. This disadvantage will be further enhanced if Dublin Airport proceeds with plans to remove all tax from April 2014. Watch this space for further developments.