18-Sep-2024 11:15 AM

The varying fortunes of three UK regional airports post COVID; part two: Leeds Bradford

Analysis

As the COVID-19 pandemic fades in the memory (it is still very active though), and the post-pandemic 'revenge travel' boom peaks with warnings that it can't be sustained, this report looks at three regional UK airports and the diverse circumstances in which they are currently working.

Leeds Bradford Airport, in the north of England, serves a city that is big in the financial sector but which, living in the shadow of Manchester Airport and with competition on all side, hasn't been able to secure bread and butter European business routes. It has had to rely on the home-based LCC Jet2.com to deliver the goods.

It has just published its 'Vision 2030' document of infrastructure development and big route ambitions, but growth is probably more likely to come from incumbent airlines.

Part one of this three-part report set the scene and explored London City Airport. Here, in part two, we consider Leeds Bradford Airport.

Summary

The UK’s regional airports have experienced multiple setbacks, and while the going is good right now, there are more to come.
Leeds Bradford Airport has limitless ambition, but a reality check is called for.
Like Liverpool, LBA has struggled to attract or retain full service carrier European routes.
The LCC Jet2 has propelled LBA forward.
‘Vision 2030’ foresees more routes to European hubs and long haul flights.
But the former would probably cannibalise established Manchester flights, while the latter would in many cases be impractical.

Multiple hits on the UK airport sector, and while the going is good right now, there are more to come

The UK was particularly badly hit by the COVID-19 pandemic, in the form of an often-confusing response by the government to the need to control the spread of the disease by air travel.

That took the form of a tightening of already severe regulations, followed by an immediate and dramatic relaxation in the early months of 2022, which caused long lines at airports as there were insufficient numbers of employees to handle the sudden swell of passengers.

Then the effect of the war in Ukraine kicked in, causing inflation at levels not seen for decades and limits on disposable incomes. Surprisingly, and initially buoyed by the capacity supplied by low cost carriers, that influx of passengers was sustained and multiplied. Most airports have returned to the levels of utilisation experienced up until 2019, and can expect the same until the end of 2024.

Beyond that, the picture is cloudier, as warnings about a decrease in demand grow throughout Europe and beyond its shores.

In the UK the election of a new government has not done much to bolster confidence, as it embarks on austerity measures not too dissimilar to those experienced during the financial crisis from 2008 onwards, as well as tax increases that will hit the middle class and higher-earning working class, and probably their propensity to travel, apart from the one-way flight out of the country.

And there is always the fear with a Labour government in place, one that historically has supported environmentally targeted policies, that it will introduce new taxes or increase existing ones that will badly hurt the air transport sector.

Three examples of recovery or otherwise are considered in this analysis report: UK airports that do not handle more than five million passengers annually.

They are London City Airport - which CAPA - Centre for Aviation has frequently commented on in recent years - and, in the North of England, Leeds Bradford and Teesside airports. The first two are under private sector control, while the third has gone back into public ownership, but with the private sector still interested in making a deal.

READ PART ONE: The varying fortunes of three UK regional airports post COVID; part one: Intro + London City

Leeds Bradford Airport - limitless ambition, but a reality check is called for

In the north of England, Leeds Bradford Airport (LBA) has just unveiled its own variety of 'Grand Plan', similar to that of London City several years ago. But LBA is only hampered by adverse weather, particularly fog, not so much by local environmental concerns, which are growing, but not to the same degree as in east London.

Leeds is the UK's third most populated city, situated within the West Yorkshire metropolitan county of approximately 2.5 million people.

LBA has been in 100% private sector ownership since 2007 - originally Bridgepoint Capital, then AMP Capital (2017), after which AMP was acquired by Infrabridge, a subsidiary of Digitalbridge. Infrabridge also has equity in Newcastle International Airport, around 100 miles (160 km) to the north of LBA, and London Luton Airport.

Like Liverpool, LBA has struggled to attract or retain full service carrier European routes

Leeds is one of the primary financial centres in the UK, but its airport has suffered from a failure to retain short haul air connections with London and other major European cities, in a similar fashion to that of Liverpool Airport.

Both of them are situated within the catchment area of Manchester Airport, which is over six times larger, and legacy airlines often find they do little more than cannibalise their routes out of Manchester if they start new routes to either of those cities.

Long haul services are occasionally tried, but have been and gone. Currently there are none.

Moreover, LBA has had other airports to contend with in its locality, such as Doncaster Sheffield (currently closed, but will probably reopen); East Midlands; Humberside; the aforementioned Newcastle, and Teesside, which follows later in part three of this report.

Jet2 has propelled LBA forward

Hence, the only realistic way of developing the airport has been by way of low cost flights aimed predominantly at holidaymakers and their peculiarly British propensity to fly from the 'local' airport if they can.

LBA has been successful in that respect, as the route network map below suggests.

Leeds Bradford Airport: network map, for the week commencing 16-Sep-2024

Primarily, the driving force behind that expansion has been Jet2.com, which is headquartered at LBA and is most probably the most active airline advertiser in the British visual media (TV) and online. Moreover, and still unusually for a British LCC, it operates an extensive package vacation programme, and continues to support what had become a depleted High Street travel agency network.

Jet2.com does the reverse of the consensual 'accepted practices' in marketing, and profitably.

Consequently, Jet2.com, which has 53% of LBA's seat capacity (over 20 ppts in excess of Ryanair, which is unusual), has helped drive passenger numbers from 2.6 million in 2009 to a 2017 high of 4.1 million, after which it remained stable until the COVID-19 pandemic.

Since the pandemic, traffic climbed back to almost four million in 2023, and with 7.5% growth in 1H2024 LBA should record an all-time high in 2024.

Leeds Bradford Airport: annual traffic, passenger numbers/growth, from 2009 to 1H2024

'Vision 2030' foresees more routes to European hubs and long haul flights

Flushed with this success, LBA has unveiled its 'Vision 2030' strategy, which will be backed by GBP200 million in private investments.

The plan aims to create up to 5,500 new jobs and contribute a total GBP1 billion to the local economy, as the airport reaches an anticipated seven million passengers per annum by 2030. The plan aims to:

Progress the airport's net zero carbon 2030 strategy;
Reaffirm its commitment to support West Yorkshire Combined Authority's proposals for a mass transit system connected to the airport;
Increase terminal floor space by 38%, as well as make investments in the existing airfield to create up to 10 new aircraft stands;
Secure more routes to European hub airports with onward connectivity, as well as new destinations in the North Atlantic and Middle East.

The first two of the bullet points make sense. No airport management is going to win public support presently without some form of net zero commitment. The question is more of what will become of the public's perception of net zero now the enormous cost of implementing it is beginning to be appreciated, and which many politicians fail to understand.

As for surface transport, LBA is not at all well served now, and the provision of a rail service at least to a nearby station (if not actually into the airport itself) is a minimum requirement. But much of the intent seems to be directed towards improving cycling and walking access.

Although that is fine for employees - no one walks or cycles to an airport with baggage and children.

The desire to secure more European routes is fully understandable.

Right now there are no services to London, Madrid, Lisbon, and anywhere in Switzerland, Austria and the entirety of the Nordic countries. The majority of routes are to 'sunshine holiday' coastal resorts, or cities that are turning against the concept of mass tourism.

Don't try to be Hannibal Lecter

Some of these routes have been tried without success.

SAS, for example, did fly Copenhagen-LBA for a short time. But the fact of the matter is that any legacy/full service carrier thinking of opening a route, with the attendant onward connection possibilities, must weigh up the cannibalisation of its routes at Manchester, where it might have built up a relationship that lasted 30, 40, or even 50 years.

LCCs diversifying their network and product offer might be a better bet, but they would not typically offer the onward connections.

As for long haul aspirations, some pragmatism is called for.

LBA is less than 60 miles by road from Manchester Airport, which has secured about as many long haul routes as it might reasonably expect to. With the exception, that is, of North America, where the current total of seven routes (which will become six when Singapore Airlines cancels its Houston route) is well down on what it is was pre-pandemic.

Niche operations like Liverpool-New York have been tried in the past, but without an onward network at one end, at least, there is hardly prospect of success at a secondary level airport.

Meanwhile, the Middle East is replete with routes from Manchester: Dubai, Abu Dhabi, Doha, Kuwait, Bahrain, Jeddah, Amman and Cairo, with possibly Oman Air resuming a Muscat service as it gets back into expansion mode. Most of these offer a plethora of onward connecting points across Asia.

With Emirates Airline, the most likely suspect, operating into both Manchester and Newcastle airports already, covering most of LBA's catchment area, it would be left to a comparative minnow to take the risk of an LBA operation, and it is hard to see who would take on the challenge.

And Manchester is not likely to run out of space with the modernisation and extension of Terminal 2 nearing completion and the actual closure of the (often maligned) Terminal 1.

The Leeds Bradford management clearly has faith in the airport's long term future, and ambition should be encouraged, but that future is more likely to be determined by incumbent airlines like Jet2.com than by fanciful dreams about long haul flights.