Former boss of Cardiff airport says its expansion plans are massively unrealistic, without public subsidy
Keith Brooks, the former chief executive of airports group TBI, said Cardiff Airport’s passenger forecast is “massively unrealistic” and that it needs to be more realistic in its expectations. Last week, in an unexpected move, it was announced that the airport’s chief executive Jon Horne will stand down next week after only 18 months in the role. The airport’s director of operations will be interim managing director. While Cardiff airport has not published any specific short to long-term passenger growth targets, since being taken over by the Welsh Government for £52m last year it has arrested year-on-year decline. Annual passenger numbers now stand marginally up at just over one million. Keith Brooks said: “They have had massively unrealistic expectations of what they can do in this period [since acquisition]…..Aviation is a very slow moving industry and negotiations with airlines take a long time.” Getting a significant low-cost carrier, like Ryanair, to expand routes from very low levels would require “significant subsidy” inducements. That means government subsidy, and tax payers’ money. The Welsh government “will not just be able to turn things around in a short period of time.”
Cardiff Airport’s passenger expectations ‘massively unrealistic’ says former boss Keith Brooks
The airport’s director of operations Debra Barber will take up the role as interim managing director.
The airport’s board has yet to draw up a recruitment timetable to find a new permanent chief executive.
Mr Brooks worked closely with Mr Horne during his time at TBI – with Mr Horne being chief executive of one of the listed company’s portfolio of airports in Cardiff.
While the airport has not published any specific short to long-term passenger growth targets, since being taken over by the Welsh Government for £52m last year it has arrested year-on-year decline. Annual passenger numbers now stand marginally up at just over one million.
Mr Brooks said: “They have had massively unrealistic expectations of what they can do in this period [since acquisition].
“It is not like a widget factory where you can go in and see what had been produced at the end of the day and improve things.
“Aviation is a very slow moving industry and negotiations with airlines take a long time.”
The former TBI chief executive said that convincing a low-cost carrier, whether that be Ryanair to increase its presence from one flight from Cardiff – with a service after an eight year gap to Tenerife from this autumn – or Veuling to expand on its existing routes would require “significant subsidy” inducements.
The airport’s board is chaired by former chairman of the Welsh Development Agency Lord Rowe-Beddoe.
Mr Brooks said: “If you look at the board they all have great CVs in business, but there isn’t a great deal of aviation expertise there.
“They have to focus on the macro picture and really understand the economics from a customer perspective (airlines).
“The Welsh Government paid a lot of money for what was a loss-making airport. However, despite the expectations you just cannot turn things around in a short period of time.
“Cardiff needs a low cost carrier, whether that is Ryanair or a major expansion by Vueling which is already at Cardiff. However, that is going to require a major subsidy.”
Mr Brooks said he believes that Mr Horne achieved success for the airport, despite only being in the role for 18 months.
During Mr Horne’s first tenure as chief executive of the airport, when owned by TBI, it achieved a high point of 2.2 million passengers in 2007.
Mr Brooks said: “I think Jon did a great job in rebuilding the credibility of the airport with the airlines and also starting the process of rebuilding relationships with the tour operators.
“When he was chief executive back with TBI Jon has profit and loss responsibilities and did a superb job in building strong relationships with all the stakeholders, including the airlines. He knows the industry very well.”
Cardiff Airport declined to comment.
In a statement last week confirming Mr Horne’s departure Lord Rowe-Beddoe said: “Jon has very successfully steered the airport through the first phase of our path to re-establishing its fortunes.
“This includes halting the decline in passenger numbers, establishing good and improving customer service and overseeing the physical transformation of the terminal as well as securing CityJet and the return of Ryanair to the airport.
“The board is grateful to Jon for all that he has done in laying the foundations for our future, we have agreed that whilst he will not continue his executive role, he will be available to the board as an advisor.”
Welsh Economy Minister says Cardiff Airport likely to return to profit only in ‘long-term’
March 21, 2014 The Welsh Economy Minister, Edwina Hart, has said that Cardiff Airport – now in public ownership – is likely to return to profit eventually, but not in the short term. She said its downward spiral is no longer continuing. The airport finally becoming profitable is a “long-term” strategy. She was giving evidence to the National Assembly’s Enterprise and Business Committee on the airport, which was bought by the Welsh Government for £52m at the end of 2012. Ms Hart suggested there wouldn’t be a quick sale of the airport back into the private sector, which the Scottish Government is seeking for the newly-nationalised Prestwick Airport in Ayrshire. Pressed by the Plaid Cymru economy spokesman on when the government expected the taxpayer to recoup its investment. She said the Budget announcement for support for regional airports to set up new routes would apply to Wales and that they would “wait for the detail of it”, but confirmed the Welsh Government is likely to bid in for funding. Chancellor George Osborne announced a £20m annual fund will be used to encourage new routes from regional hubs like Cardiff.
Cardiff Airport is bought by the Welsh government for £52m (over-priced?)
March 27, 2013
The current owner of Cardiff Airport, Abertis, which bought the airport from local councils in 2005, has now managed to sell it to the Welsh Government for £52 million. That price is well above market value when compared to recent transactions involving UK airports. The airport was valued at about £34 million in 2010. It has been making large losses and losing passengers for many years. The Government is desperate that it gets more passengers and gets back to making a profit. Welsh First Minister Carwyn Jones said it would not be operated by the government and would be managed “at arm’s length” and “on a commercial basis”. Cardiff’s passengers have declined from around 2 million in 2007 to just over 1 million in 2012, as many have chosen Bristol airport instead. Bristol airport is now concerned that Cardiff would now unfairly benefit from state support. Cardiff was hit by the loss of bmibaby in 2011. The airport’s board will try and get in a commercial operator and hopes to attract long haul and transatlantic flights. Only recently there was news that Swiss airline Helvetic will pull out of Cardiff, 2 years after the Welsh government spent £500,000 marketing Wales in Switzerland.
Welsh government buying Cardiff airport from Abertis in £50m cash deal by the end of March
February 21, 2013
The Welsh Government is expected to complete its acquisition of Cardiff Airport by the end of March in a straight cash deal understood to be around £50m with current owner Abertis. A due diligence process is being undertaken on behalf of the Welsh Government. The deal will not see the Welsh Government taking on any debt at the airport – which posted pre-tax losses of just over £300,000 in 2011. In the short to medium term the Welsh Government would need to inject about £6m a year in capital expenditure and airline route development support – including agreeing to underwrite any losses in the first few years accrued by airlines establishing new routes out of Cardiff. ie public subsidy. It is understood that representatives of the Welsh Government have already sounded out a number of low cost airlines over setting up operations, including Ryanair – which was asking too much. Discussions are continuing. It is unlikely that the airport, post deal, would be directly owned by the Welsh Government but by some special purpose vehicle instead.