Southend airport up for sale

28.1.2008     (Financial Times)

The owners of London Southend airport put the business up for sale on Monday
in the search for investors to finance its £35m development as a sixth airport
for the UK capital.

Regional Airports (RAL), which owns both Southend and Biggin Hill airports, is
developing plans for a railway station to open at the airport in 2009 and for
the runway to be extended from 1,600m to 1,800m by 2011.   A new terminal would
also be built in time for the London Olympics in 2012.

The local authorities of Southend and Rochford are promoting the development
of the airport as part of the Thames Gateway urban regeneration scheme to develop
the region to the east of London.

Several UK regional airports –   including Leeds-Bradford, Exeter, Bristol and
Coventry   – have been bought by infrastructure and private equity funds and the
ownership of all 5 London airports has also changed in recent years.

London City airport was sold in late 2006 to a consortium comprising American
International Group, the US insurance and financial services group, and Global
Infrasructure Partners (GIP), a joint venture between Credit Suisse and General
Electric’s GE Infrastructure fund.

London Southend once operated as London’s third airport, reaching passenger volumes
of close to 700,000 a year in 1967, but its use declined with the development
of larger aircraft and restrictions on the use of its runway.

The prospects for the rejuvenation of the airport were also hampered for several
years by the possible development of a new hub airport for London beside the Thames
estuary at Cliffe on the north Kent coast, but that project was rejected by the
government in the December 2003 air transport white paper.

That report called for the full use of existing airport assets as well as the
development of additional runways at Stansted and Heathrow airports.   It suggested
that Southend airport could provide capacity for 2m passengers by 2030.

The airport is pursuing a much more ambitious timetable, however, with the aim
for passenger volumes to reach 2m a year by 2017.

In recent years the airport has chiefly become a centre for aircraft maintenance,
repair and overhaul, although there are early signs of some passenger services

Flybe, the leading European regional airline, is operating a twice weekly summer
schedule between Southend and Jersey, but it put on hold plans to build a much
bigger presence – with both a UK domestic and continental European network – until
the runway was extended to allow its Embraer 195 jets to operate with full passenger

Ford, the US automotive group, has also moved its twice daily corporate shuttle
service between Essex and Cologne from Stansted to Southend to take advantage
of the absence of airspace and landing slot congestion.

London Southend airport was bought in 1994 from Southend Borough Council by RAL,
a private company owned by Andrew Walters.

RAL lacks the resources to fund the airport development plan, however, and has
decided to seek an investor experienced in developing infrastructure projects
to take over a majority stake or full ownership of the airport, which it is valuing
at around £50m.

Prospects for an early redevelopment of the airport have been enhanced by advanced
plans to provide a direct rail link.   A station is due to be opened on the main
line between Southend Victoria and London Liverpool Street, which runs beside
the airport, in August 2009.

The service would provide a direct link both to the City of London at Liverpool
Street and to the Canary Wharf financial district in London’s docklands at Stratford.  
The journey times from London Liverpool Street to Southend and Stansted airports
would be similar at around 45 minutes.

Copyright The Financial Times Limited 2008