Bristol Airport looks to break the 10 million passenger mark and builds to achieve it

Bristol lies at the core of the geographically largest English region

Bristol is located at the gateway to the Southwest of England (from the east - London - and from the north) and the Southwest is the largest of the nine official English regions, with an area of 9,200 square miles (23,830 square kilometres). It comprises Bristol, a city and unitary authority, as well as the counties of Gloucestershire, Dorset, Wiltshire, Devon, Cornwall and the Isles of Scilly.

The population of the southwest of England is around 5.3 million and, setting aside the Isles of Scilly (population 2000) and the small airport there, but including Land's End Airport, there are six airports with scheduled airline service and one airport for every 882,000 people.

The Southwest of England

The Southwest England region has the greatest number of scheduled airports per capita in England, and by some margin.

A regional centre with modern industries, and highly ranked on economic performance scales

Traditionally an industrial and port city, Bristol underwent a shift in its economy in the 20th Century, in favour of aeronautical manufacturing (including the manufacture of Concorde). More recently again to the financial services sector (Bristol is the financial focus point for the southwest region), and to electronics and silicon-based industries. The population of Bristol is 445,000 and of the metropolitan city region just over one million. Bristol has one of the highest GVA (Gross Value Added) figures of any of the English "core" cities, a collective advocacy group of eight large regional cities outside of London.

The largest airport in the southwest region is Bristol Airport, with services to more than 100 cities. Alone amongst the region's airports, Bristol has a vision of becoming a "world leading regional airport with ten million passengers passing through it each year," according to a statement made by the chief executive in 2012. Plans for the development of the airport to meet this goal were approved by North Somerset Council in 2011, and subsequent construction activities are referred to later in this report. Passenger traffic in 2014 totalled 6.3 million, making it the eighth busiest UK airport.

A broad airline mix but no home-based ones

Bristol Airport has a broad mix of airline types: LCCs, FSCs, regional and charter carriers (see below for further detail). This state of affairs resulted from decisions taken by previous owners not to "put all their eggs in one basket" during the period of rapid growth by low cost airlines. Bristol has previously hosted trans-Atlantic air service by Continental Airlines (now United Airlines) but is yet to attract any of the three main Gulf carriers.

In 2015 Bristol is an airport with a similar feature to many others in the UK: it does not have a home based airline. This contrasts with Leeds Bradford (Jet2), and coincidentally, Exeter (Flybe), which is a competitor airport to Bristol, even though it is 90 miles away. Bristol is reliant on carriers that are not based there and they are split between 71% UK carriers and 29% foreign airlines, as measured by seat capacity.

The table below compares Bristol Airport to peer airports - two established large city/region airports Birmingham and Manchester, one of which (Birmingham) is a competitor, and two smaller city/region airports that are also close enough to compete with Bristol for most types of traffic, i.e. Southampton and Exeter. The table indicates their respective global rankings as represented by various metrics as of the week commencing 07-Dec-2015. It also gives their passenger total for 2014 (rounded up or down to the nearest 0.1 million), city region population and ratio of passengers to population in 2014 . The latter two columns are only a rough guide as catchment areas can vary considerably, to well outside that boundary.

Global rankings by assorted metrics:

Airport/metric	ASKs	Seats	Frequencies	Cargo payload	Pax 2014 (million)	City-region population (million)	Ratio: pax to local population 2014
Bristol	318	292	299	910	6.3	1	6.3
Birmingham	157	189	189	235	9.7	2.8	3.46
Manchester	74	103	110	137	22	2.8	7.85
Southampton	794	512	393	743	1.8	1.5	1.2
Exeter	1212	1210	1216	1398	0.8	0.5	1.6
Cardiff	979	1017	1098	1132	1	0.9	1.1

Source: CAPA Airport Profiles/Author Research
Note: In the first four columns a lower number means the airport is higher in the rankings. In the final column a higher score suggests a higher proportion of local passengers is using the airport.

Using this very basic rule of thumb Bristol performs quite well compared with some of its peers, being bettered only by Manchester, whose actual catchment area for mid and long haul scheduled flights, and charter services in particular, extends well beyond the immediate city region.

Bristol also ranks highly in respect of ASKs, seats and frequencies in comparison with the smaller cities, though not so well with respect to cargo payload, where it is ranked lower than the smaller Southampton Airport.

Bristol and Cardiff will challenge for the right to host long haul services

It is interesting to compare Bristol and Cardiff airports. They cover a similar catchment area although Bristol is six times larger than the Welsh capital airport, in terms of passenger numbers. Cardiff Airport has indicated recently that it believes it can attract both North American and Middle East routes, possibly in 2016. Bristol has had a North American route in the past but it is constrained more than Cardiff by its runway length. Bristol also covets the return of service to the US in 2016, and Middle East routes.

There could be quite a struggle between the two airports to win these routes.

The map below shows Bristol's location in relation to the peer cities, i.e. all the above minus Manchester.

Location map of Bristol (centre of map) in relation to Cardiff, Birmingham, Exeter and London

Source: Google maps

Bristol Airport Network Summary (at 07-Dec-2015)

Total Airlines	12
Domestic only	0
International	12
Total non-stop passenger destinations	62
Domestic	7
Africa	2
Asia Pacific	0
Europe	53
Latin America	0
Middle East	0
North America	0
Total non-stop freight destinations	0
Domestic	0
Africa	0
Asia Pacific	0
Europe	0
Latin America	0
Middle East	0
North America	0

Source: CAPA - Centre for Aviation and OAG

As the table of scheduled flights above indicates, there are 12 airlines operating at Bristol Airport at the time this report is written (week of 7-Dec-2015). That figure compares with 28 at Birmingham and seven at Cardiff. All but nine of the non-stop passenger destinations are in Europe; seven are domestic and two are in North Africa.

The route map below shows all destinations that can be reached by direct or connecting flights.

Direct and indirect (connecting) routes from Bristol Airport

Source: CAPA - Centre for Aviation and OAG
(n.b. Direct flight cities are in red, connecting flights [e.g. code shares] in blue).

The 'heat' map below identifies the regions with the greatest density of seats from Bristol.

Bristol Airport international capacity, seats by region heat map, 07-Dec-2015 to 13-Dec-2015

Source: CAPA - Centre for Aviation and OAG

Bristol Airport rates highly on non-stop connectivity

Demonstrating comparative connectivity, the chart below shows that Bristol rates highly in comparison with peer airports. While connectivity to Africa, Asia Pacific, North America, Latin America and the Middle East is low, Bristol slightly outstrips Birmingham in Europe, though the reverse is true for the total result.

Non-stop connectivity values (passenger destinations). Comparison of Bristol Airport with its peers - Exeter, Bournemouth, Southampton, Birmingham and Cardiff airports

Source: CAPA - Centre for Aviation and OAG

But Bristol has a high charge regime

Naturally, a key determinant of airport selection by airlines is charges. The chart below gives an indication of landing charges at Bristol Airport in 2014 versus four peer airports that represent large UK city regions, which might be described as 'redbrick' ones, similarly named to 'redbrick universities' (civic universities founded in the major industrial cities).

In this particular example Bristol is higher in each category for landing charges.

Landing Charges (USD) for Bristol Airport (BRS), Manchester Airport (MAN Peak), Birmingham Airport (BHX), Edinburgh Airport (EDI) for 2014

Source: CAPA - Centre for Aviation & Air Transport Research Society
Notes: view Air Transport Research Society Airport Charges Data Methodology

80% of Bristol's seats are on low cost airlines

Almost 80% of seats at Bristol Airport are on low cost carriers, the remaining 20% being fairly evenly shared between full service, regional and charter flights.

Bristol Airport capacity, seat share by carrier type, 07-Dec-2015 to 13-Dec-2015

Source: CAPA - Centre for Aviation and OAG

This compares with low cost seats of 55% at Birmingham; 46% at Manchester; and 84% at each of Southampton, Exeter and Cardiff.

This seat statistic brackets Bristol more with airports where a greater degree of low cost presence would be evident, (Exeter, for example is the home base of Flybe), and less with primary level airports such as Manchester and Birmingham.

A glance at the chart below confirms that at Bristol easyJet is by far the largest carrier (60%), followed by Ryanair (18%), which collectively represent most of the low cost capacity. Smaller airlines such as Germania play a less significant role.

Bristol Airport capacity (seats per week), by all carriers, 07-Dec-2015 to 13-Dec-2015

Source: CAPA - Centre for Aviation and OAG

Charter airlines hold their own

The influence of the charter carriers at Bristol (5.6% of seat capacity) should not be underestimated, since there is some evidence of a revival in the charter segment. Both Thomas Cook and Thomson have large programmes there, though both are mainly seasonal.

The presence of both LCCs and charter carriers to this extent inevitably influences the most popular destinations, which are mainly those in Spain and the Canary Islands (almost one quarter of the capacity).

There is also significant capacity to and from the Netherlands. In addition to easyJet's services, KLM (through KLM Cityhopper) also flies between Bristol and Amsterdam, offering onwards connections there. In the absence of Air France services to Paris and Lufthansa service to Frankfurt, Amsterdam is seemingly the preferred international transfer point for those passengers who do not wish to make the road journey to London Heathrow.

Bristol Airport international capacity, seats by country, 07-Dec-2015 to 13-Dec-2015

Source: CAPA - Centre for Aviation and OAG

This is confirmed by recently issued statistics that show Amsterdam to be the second most popular destination from Bristol, supporting the capacity figures.

The most popular destination, again confirming the seat capacity statistic, is Dublin. While there is a sizeable Irish population in just about every major British city, this suggests that the large increase in North American services offered by Aer Lingus, with connecting flights from a broad array of UK cities via Dublin (where there is no tax comparable to the British Air Passenger Duty), may be paying off.

The top 10 international routes are represented in the chart below.

Bristol Airport top 10 international routes by seats: 7-Dec-2015 to 13-Dec-2015

Source: CAPA - Centre for Aviation and OAG

Alliance penetration is low

While LCCs and charter flights have a strong presence, the absence of FSCs such as Lufthansa and Air France, let alone British Airways, means that alliance penetration at Bristol Airport is very low, evident in this chart.

Bristol Airport capacity, seat share by alliance/unaligned: 07-Dec-2015 to 13-Dec-2015

Source: CAPA - Centre for Aviation and OAG

This figure (94.2%) is higher than Cardiff (84.4%), Birmingham (76.5%) and Manchester (72.3%), with Southampton and Exeter both registering 100% and suggests that in terms of global connectivity more full service carrier routes from alliance members would be welcome.

Traffic growth is steady

Traffic growth during the last four years has been solid if not spectacular, varying from 0.6% (2010-2011) to 3.6% (2012-2013).

Bristol Airport annual passenger numbers

Source: CAPA - Centre for Aviation and UK Civil Aviation Authority

Average passenger growth in the first 10 months of 2015 was better, at 6.3%, which would give an annual passenger total for 2015, if achieved for the full year, of 6.7 million. The airport has thus achieved two successive record years and has trebled the number of incoming foreign visitors in a decade.

Average stage lengths are short

With no long haul services at this time, Bristol Airport's typical seat allocation by flight length is in the category 0-2 hours (65%), with only 4% in the 4-6 hour category.

Bristol Airport, seats by length of flight, 07-Dec-2015 to 13-Dec-2015

Note: the times stated are the total of the two hours preceding that time.
Source: CAPA - Centre for Aviation and OAG

Accordingly, the predominance on short inter-European services by LCCs and by legacy airlines offering connections via established hubs over direct mid and long haul services, is emphasised by the chart below. '

The data show that the greatest number of weekly frequencies consists of flights with stage lengths of 1-3 hours. There are very few with stage lengths between four and six hours, and none beyond six hours.

Bristol Airport frequencies: 7-Dec-2015 to 13-Dec-2015

Source: CAPA - Centre for Aviation and OAG

Operationally, no seats are available out or inbound between midnight and 0600. There is a minor morning, lunchtime, and 2100 hours peak, but most seats are available on flights landing and departing between 1700 and 1900.

Bristol Airport, seats per hour, typical day, Wednesday 09-Dec-2015

Source: CAPA - Centre for Aviation and OAG

All cargo is carried on passenger services - KLM is the largest

Turning to cargo, there are no designated air freight services; all cargo is carried in the passenger aircraft belly. The largest airlines, as measured by weekly cargo capacity, are those in the chart below.

Bristol Airport cargo capacity per week by carrier

Source: CAPA - Centre for Aviation and OAG

Construction activities cater for 10 million ppa

Construction activities arising from a 2011 local government authorisation were mentioned earlier in this report.

Bristol Airport's long term vision for development was set out in a Master Plan published in 2006. This plan was in response to the 2003 Government White Paper, the 'Future of Air Transport' (the same report that was the forerunner to the current, and stalled again, national airport capacity report). The principles behind the Master Plan remain as guidance for current development plans, and are valid through to 2030.

Planning permission is in place for 30 different projects, to develop facilities to handle 10 million passengers a year.

Work began in 2013 on a GBP6.5 million project for a new central walkway that includes four new pre-boarding zones, serving up to six departure gates. All gates are within 105 metres or less of the main terminal. The walkway opened in 2014 and the design of the new facility takes into account the latest generation of twin engine, widebody jets, with provision made for the addition of an aerobridge for passengers boarding long haul flights, potentially to come in the future. A western walkway was completed in 2010, which reduced the need to bus passengers to and from aircraft.

Subsequently, in Dec-2015, the first of two major extensions to the airport's passenger terminal opened following a 12 month build programme and GBP8.6 million (USD13.3 million) investment. At the heart of the east terminal extension is a significantly enlarged departure lounge.

At the same time the airport signed off the next major phase of its expansion programme with a GBP24 million (USD37.6 million) west terminal extension, which will transform the security search process for passengers. This is the biggest construction project at the airport since the current terminal building opened in 2000. The 9000 sqm structure is approximately two and a half times larger than the east terminal extension, and is scheduled to open in summer 2016.

All information above from the CAPA Airport Construction Database.

There is stable ownership but the 100% shareholder also part-owns a rival

Bristol Airport has undergone several changes of ownership in the private sector during the last 18 years. In the late 1990s, a majority equity share was sold to First Group, essentially a bus and rail operator, during a period when surface road transport companies frequently entered the airport sector; almost all have since left it.

Four years later First Group's equity was sold to a joint venture of the Macquarie Group and Ferrovial. Subsequently Ontario Teachers Pension Plan (OTPP) acquired a holding, and later went on to become virtually a 50:50 shareholder with Macquarie's European Infrastructure Fund, apart from a 1% holding by Sydney Airport (previously Macquarie Airports). In Sep-2014 OTPP bought out Macquarie to become the sole owner. OTPP is also a shareholder in Birmingham Airport.

There are several ways in which ownership changes like this can be interpreted. The involvement of First Group was an example of the zeitgeist, and probably would not be repeated today if the airport was being privatised now. Surface transport companies now tend to stick to what they are good at. They have been largely replaced as investors by global funds, such as Macquarie's and OTPP's.

Within those funds buying and selling takes place according to whatever rationale is appropriate to management at any given time (compare, for example, GIP's very sudden decision in summer 2015 to sell London City Airport). Indeed, Macquarie's exit from Bristol coincided to a degree with its decision to invest in Southampton, Aberdeen and Glasgow airports with Ferrovial, once its partner at Bristol. Ferrovial sold its stake to Macquarie in 2006.

With OTPP now the sole owner (not a lessee), Bristol Airport is controlled by an organisation that has considerable experience of the airport sector but is not known to exercise a deal of management control of its own; i.e. it tends to let the people who know the business do the day-to-day work and to involve itself directly only when critical investment decisions are made. On the other hand, the fact that OTPP also owns 48% of the rival Birmingham Airport (49% of the ownership there remains with municipalities), there will inevitably be questions about where its priorities lie.

Summary and conclusions

• Bristol Airport competes with five main local rivals, between 30 miles and 100 miles distant;
• It lies within the geographically largest English region, but population density is not high;
• Bristol is a relatively wealthy city, with a diverse but modern economic base;
• There is a broad carrier mix by type. While most carrier activity is British there are no locally based airlines;
• Bristol rates quite highly across a number of metrics in comparison with its competitors;
• While there are fewer airlines operating than at (e.g.) Birmingham, connectivity is high;
• Landing charges are high in comparison with some peer airports;
• There is a greater reliance on the low cost segment than one might expect at an airport of this size in a region of this economic significance;
• There is a strong charter carrier base that could grow in line with resurgence in this segment;
• The greatest amount of capacity is to Ireland and the Netherlands, where respectively west and eastbound connections offer an attractive alternative to the London airports;
• The absence of FSCs means that alliance penetration is low;
• Passenger traffic growth has been solid in the last two years, and in the first 10 months of 2015 is double that of 2013-2014;
• Flights with stage lengths of 1-3 hours are in the majority;
• Typically the main operational peak is between 1700 and 1900;
• There are no designated cargo services and KLM is the main belly hold freight carrier;
• Bristol has a vision of becoming a "world leading regional airport with ten million passengers passing through it each year," and construction is under way to meet that goal;
• The airport has a single owner following numerous changes - which has benefits, but its partial ownership of a nearby and larger rival raises some questions about its ultimate intentions.