As London City Airport's sale is announced, managing director Richard Gooding is preparing to operate the airport without too much input from current owners
The sale, which has been agreed and signed, is subject to EU competition clearance and is expected to be approved by November, when the new owners, including AIG and Credit Suisse, move in.
”It”s likely to take anything from four to six weeks,” Gooding revealed. ”But it feels like the airport is in limbo at the moment. The old owners aren”t having much input anymore and the new owners can”t do anything until clearance is given in November.”
Gooding believes that, when finalised, that the deal will represent significant steps for the airport”s expansion. ”The new owners are going to want a significant return on their investment, which for us means we are going to have to deliver results quickly. In short, we are going to have to produce more money very quickly by growing the airport faster then we”ve previously been able to do.”
”Investment can”t come from building another runway. We don”t have room for another one,” he admits. Instead investment will come from internal developments such as improving passenger facilities from shops to restaurants and improving capacity. Adding airlines is always a priority and Gooding admits ”yes, one or two of the smaller airlines will probably disappear this year. It”s always the way. But one or two other airlines will join us just as quickly.”
Route development is key and Gooding”s take on the situation is that it”s easier to sell to existing clients than it is to garner new ones. ”We are working with our larger carriers such as VLM, KLM and Air France with a view to increasing routes and services.”
The airport hosts about 20 flights a day to Amsterdam in each direction, and 16 flights a day to Edinburgh in each direction. ”It”s definitely a business travel airport. We don”t have long-haul leisure destinations. For example business travellers from London City don”t want Middle Eastern destinations. They want lots of choice on times for last minute European business flights. Europe is our key market."
Business Jets Only
The airport has been growing successfully year-on-year and Gooding is hopeful of an increase in private business jets. ”This side of our business has been growing by 40% year-on-year and it shows no signs of slowing. We are working on ways of gaining more space for private jets.”
He hails the efforts of NetJets, who he believes have dramatically changed the market through fractional ownership. ”That's time-share to you and I,” he laughs. ”It means that business travellers know where they stand with finances. Private jet owners don”t always know where they are with costs.”
The financial services industry has been quick to capitalise on the growth of fractional aircraft ownership and Gooding believes this is set to rise. But he's not too keen on business class-only operators working out of London City. ”It works well as a long-haul concept, but we aren”t in a position to have any long-haul routes just now. Our development isn”t there yet and I don”t think business-class only flights will work for short-haul European destinations, especially when the only difference you are likely to notice is a glass of complementary champagne.” But for what they do, business-class only flights have caught Gooding”s attention. ”The concept is a bit like a replacement for Concorde,” he says.
Innovation is key and Gooding is hopeful of the opportunities the Olympics will bring in 2012, but mindful of the pitfalls it will bring in 2013. ”London City is going to be the main airport for the Olympics because we are only two miles away. It's a bit of a no-brainer really,” he laughs. ”I suppose those travelling to the Olympics could always land at Heathrow then work their way across London. But that”s not really going to happen is it?”
In terms of capacity the summer months”when the Olympics will take place”is a bit of a dead month for business travel, according to Gooding. ”Most business travellers prefer to be lying on a beach with their family so it”s an opportune time for us to cater for the Olympics.”
But Gooding is fearful of the implications that 2012 will bring. ”I already know that when all the passengers fly back from the Olympics I”ll have to start worrying about passenger figures in 2013. The new owners will want to know where they've all gone and I'll be trying to explain why the numbers are so awful.
”The Olympics is an isolated incident and is key to regeneration in the area. But it's not going to have a strategic impact. For now, the in-house team and the new owners need to work on ways to improve first and foremost on airport investment. AIG and Credit Suisse know what they are doing. Between them they have significant aviation experience.”