COMMENT: 2003 And All That
This is the time of the year when we look back over the last 12 months and also try to guess what is to come. SARS and Gulf War 2 dominated the early part of 2003 and last week”s Department of Transport report The Future of Air Transport (or in fact series of reports) sought to set out a definitive course for the airline and airport industry.
Whilst medical troubles in the Far East (and Canada too) dominated aviation news a year ago and caused serious traffic declines for airlines (and hotels) operating in that area, in Europe at least regional traffic continued to flourish helped by intense competition.
British Airways essentially had a good year all things considered. It continued to substantially reduce staffing levels but some people were asking questions in terms of the way forward marketing-wise. No new blood at senior level over the last three years. Does that mean that Ayling”s team was OK? When previously BA was strident ”the World”s Favourite Airline” it now slumbers. Very quietly the airline changed terminals for the better at Moscow and Paris (and maybe elsewhere too), dropped its Paddington check-in facility at a time when BAA is attempting to reduce road traffic to the airport, tried out Internet in the Sky without telling many, opened new lounges, completed the massive 747 business class upgrade, discovered (too late) that people would fly on Concorde if it was promoted properly and perhaps most serious of all lost its way with a series of strikes at Heathrow in July. To close a terminal when you know that the airline has no spare seats for the next day is a serious dereliction of duty some are saying. It has been pointed out that Ryanair, who probably put more passengers through Stansted than BA at T1, do not employ any landside handling staff at the airport at all, just a few supervisors. It is all sub-contracted out at a vastly cheaper cost and no perks. easyJet is going the same way too with a new deal announced at Luton last week. To its credit BA regained its position in the Footsie 100 and the latest figures (”60m net profit for the first six months of its financial year) show it to be more profitable than Air France (net profit 2002/2003 E120m) and Lufthansa (”a nearly balanced operating result” is suggested for 2003 with a home economy much the worse for wear). Club World is the standard that other airlines aim for in business class but its implementation lacked clout. British Airways is making progress. The final judgement is ”bottoms on seat” and a sensible return for investors.
The ”Future of Air Transport” document asks as many questions as it answers with the biggest question concerning the civil servant with the crystal ball who predicted 500m passengers by 2030. Has he not considered what happened with the trains? The rise in travel just flattened out. Statistics can prove anything and yes the age of the motorcar followed by the age of the aeroplane has not helped the railways. The facts seem to prove that growth for the iron track stopped in 1930 with 1,250m passengers. Numbers for the last few years have hovered around 970m. Will the same happen with the airlines? How many flights can you (or do you want to) make in a year? And do we have the landside support for the projected numbers?
The ”airport in the middle” of nowhere, Stansted, is the political choice for London”s first new 21st century runway. But who is going to pay for it? Not the government and not the airlines based at Heathrow if they have their way. The passenger charges at Stansted need to be carefully looked at and to include an investment component. The easy solution is to sell Gatwick, but will any of the LHR airlines try to challenge their landlord and go to Europe on a question of monopoly? Last summer, an inquiry by MPs called for the break-up of BAA's monopoly. The Transport Select Committee claimed the ownership structure of UK airports was "deeply flawed". Since the era of Norman Payne BAA Plc has out-manoeuvred the airlines in terms of politics, and still continues to do so. And if we do have an enlarged Stansted is anything going to be done about the railway branch line that now supports the dreary subterranean station marking the end of the track? Perhaps Eurostar could have a diversion due north into Essex? Maybe a really fast dedicated rail link to central London? The success of Stansted stems from the time that the then airport director Terry Morgan persuaded Ryanair to move across from Luton. Returning to the airport Terry has been responsible for the Irish airline”s exclusive purpose-built terminal. In order to make a two-runway Stansted work he has to convince other carriers to move or expand considerably. In the past both American and Continental have failed.
And yes the report did offer the likelihood of a third runway at Heathrow. BAR UK, the official mouthpiece for the combined airlines, is right in praising this strong possibility.
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Here”s is to a happy, healthy and prosperous 2004.
The ABTN Team