London Stansted Airport
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- London Biggin Hill Airport
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- 3048m x 46m
- Airlines currently operating to this airport with scheduled services
- Air Moldova
Aurigny Air Services
Cargolux Airlines International
Heli Air Monaco
Thomas Cook Airlines
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- Austrian Airlines
Owned and operated by Manchester Airports Group, it having been sold by Heathrow Airport Holdings Ltd (BAA) on 28-Feb-2013, London Stansted Airport is the third largest airport serving Greater London and is located in the District of Uttlesford in Essex. Hosting regional and international passenger and cargo services for over 20 airlines, London Stansted is a major hub for low-cost and charter airlines including Easyjet, Ryanair, Thomas Cook Airlines and Thomson Airways.
Location of London Stansted Airport, United Kingdom
Ground Handlers and Cargo Handlers servicing London Stansted Airport
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Fuel & Oil Suppliers servicing London Stansted Airport
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Recent reports suggest that Ryanair is on the verge of two further new developments in its strategic evolution, taking it ever-closer to the network airline business model. Firstly, the CEO Michael O'Leary has said that the airline plans to introduce trial passenger transfer services at London Stansted and Barcelona airports (Irish Independent, 14-Apr-2016). Secondly, Ryanair is reported to be close to agreement on feeding Norwegian's long haul routes from London Gatwick (Irish Independent, 20/4/16).
These developments follow several other changes to Ryanair's business model over the past couple of years - changes that have been well received in the market. Until now Ryanair has not engaged in intralining with itself or interlining with others.
It would not be the first European LCC to do either of these things, but it would be the only airline to combine them with an ultra-low cost base and leadership of the intra-European market by passenger numbers.
On 9-Feb-2016, British Airways announced the addition of London Stansted to its airport network from May-2016. It will be BA's fourth London airport after Heathrow, Gatwick and City. At first glance, this move does not appear significant. BA's four leisure routes from Stansted will make it the airline's 196th biggest airport, taking just 0.03% of its 2016 summer peak seats (week of 1-Aug-2016, source: OAG).
However, BA's decision is noteworthy for one simple reason. More than any other airport, Stansted has been synonymous with the rise of LCCs in Europe. The scourge of legacy airlines across the continent, LCCs contributed to BA's near-death experience in the years after 9/11, when it fell into loss. The most successful LCC incarnation, Ryanair, has more than 80% of seats at Stansted.
Just a few years ago, during the global financial crisis, BA was again loss-making and would not have had the temerity to enter Ryanair's stronghold. Now, emboldened on the strength of its highest ever operating margin in 2015, BA seems prepared to take on all comers. It is taking only a very small step into Stansted, but every journey starts with a step.
In 2013, Stansted and its biggest customer Ryanair signed a 10 year agreement over lower airport charges and increased traffic targets that led to a resumption of growth at the airport. This followed a multi-year traffic slump caused by strong airport charge increases. The effect of the new agreement has been dramatic. After losing more than 6 million annual passengers from 2007 to 2012 (a fall of 26%), the airport had recovered 5 million annual passengers by the end of Nov-2015 (an increase of 29%), bringing the total close to 23 million.
As Ryanair's biggest base, London Stansted airport claims the title of Europe's largest airport for low cost airline seats in the current northern winter schedule (based on data from OAG for the week of 4-Jan-2016), although it slips to third behind the more seasonal Barcelona and Gatwick in the northern summer schedule.
Nevertheless, the dominance of Ryanair makes for an unequal relationship and the airport is keen to attract a legacy airline. As the UK continues to delay a decision over new airport capacity, no wonder Stansted's owner Manchester Airport Group is keen for its planning cap of 35 million passengers to be lifted in order to facilitate more airline competition at the airport.
Now that the industry’s two previously near-autonomous airline categories, LCCs and FSCs, are increasingly feeling the need to connect, the repercussions are being felt at every level, by airports, IT providers, government regulators and more.
Even the global alliances are looking at ways of integrating the new models into their systems. Code sharing, partnering, interlining and simply co-operating are all taking on new levels of significance.
Today, definitions of airports’ roles are being stretched, as self-connection between point to point operations becomes commonplace. Airlines have different needs and airports are responding differently, some more effectively than others. As the role of national airlines is redefined, is there a need to reassess the nature of national connectivity?
This report is based on an article published in May-2015, in CAPA's Airline Leader journal for industry CEOs.
Both Ryanair and easyJet recently reported strong progress during the quarter ended Dec-2014. Both demonstrated that losses in the traditionally weak winter period are narrowing. Ryanair even looks set to report a profit for its winter half year and raised its guidance for FY2015 (March year end).
Ryanair cautioned that high levels of fuel hedging would limit profit growth in FY2016, especially as it expects lower fuel costs to add to downward pressure on fares. easyJet too has fairly high levels of fuel hedging. Nevertheless, both look well positioned to take further market share from higher priced legacy carriers, building on initiatives around product and service quality and targeting business travellers (although they are at different stages in these areas).
Where there is a marked contrast between Ryanair and easyJet is in average revenue per passenger. Ryanair's lower costs allow it to sustain lower fares profitably. For many years, the two have mainly attacked different markets, but head to head competition between them is on the increase. In this report, we analyse the extent of their overlap.
Ryanair CEO Michael O'Leary's latest musings about a possible low cost transatlantic project indicate that he believes any such operation would need average fares below EUR100. This raises the question of just what is a sustainable fare in this market? Until recently the exclusive preserve of legacy full service carriers, the North Atlantic has witnessed the entry of LCC Norwegian over the past year.
However, it was always possible to find relatively low fares and Norwegian's pricing, while lower than that of premium airlines such as British Airways, does not appear to be substantially lower than the average all-inclusive economy fare of AEA member airlines between Europe and North America.
Mr O'Leary's thoughts suggest he would aim for a discount of 60% or more to legacy airline fares. This would undoubtedly drive volume. It would also be greater than the equivalent average discount offered by Ryanair in short haul. However, it may be difficult to find and sustain the cost savings necessary to make this profitable on long haul routes, even with a high fare premium cabin as part of the model.