City Airport hopes it can get business travellers back, in their droves, in 2022
Like every airport in the UK, London City airport had few passengers in 2021 and 2020, compared to the number before 2019. The number in 2021 was just 15% of the 2019 level. In 2020 it was just 19%. Now its chief executive, Robert Sinclair, is talking up its prospects for 2022. The airport had to have financial help from its investors, to survive the decline in travellers. But Sinclair is hopeful that business travellers will return, in high numbers – though it is widely believed that there will be less business air travel after Covid, as so many companies have adapted to internet meetings and videoconferencing, and changed their working patterns. London City airport had been increasing its proportion of leisure air travellers, though they are less lucrative than business travellers. But with the problems in getting bums back on plane seats, the airport will be hoping to tempt more leisure passengers. They intend to add purely holiday routes to Thessaloniki and Barcelona. But there may be a higher level of awareness of the climate impacts of aviation, meaning a proportion of people choose to fly less for leisure than they did in the past.
City Airport boss banks on revival of business travel to pre-pandemic levels
Sinclair resists shift away from corporate to leisure customers as investors offer financial backing to help navigate crisis
London City Airport chief executive Robert Sinclair secured new funding to help it survive the collapse in passenger numbers
By Philip Georgiadis, (FT Transport Correspondent)
London City Airport’s boss is banking on the revival of corporate travel to help it recover after turning to lenders and shareholders to raise hundreds of millions of pounds to navigate disruption from the pandemic.
Robert Sinclair said he is “very optimistic” the travel industry will recover rapidly from the impact of the Omicron variant, and predicted a “step change” in demand for flying from this summer.
“Two years into this pandemic, I think hopefully we are starting to see the end of it . . . the government’s messaging around living with Covid is hopefully resonating with people,” Sinclair told the Financial Times.
Significantly, he has resisted shifting the airport’s model away from lucrative corporate customers, despite fears business travel could struggle to recover to pre-pandemic levels in an era of videoconferencing, changing work patterns and climate awareness.
In the autumn, when passenger numbers hit their highest levels of the crisis, business travel returned to 35 to 40 per cent of normal levels, he said.
London City has the highest proportion of business flights of all UK airports, a status Sinclair guards “jealously” because it attracts airlines looking to generate more money per passenger through higher fares.
Shareholders are also backing the airport through new funding with £200m in loans and a £190m private placement to help it survive the collapse in passenger numbers.
The “strong support” from shareholders and lenders underlined the long-term resilience of airports as attractive investments, said Sinclair.
“It has been very good for us to see the response from the financial markets, that I think do not see this as being an existential event,” he added.
His optimism follows two torrid years for an airport that has built up a loyal following from business executives who value its proximity to London’s financial districts and emphasis on quick, hassle-free travel.
Just 714,000 passengers travelled through the airport in 2021, less than 15 % of 2019 levels and lower even than the 905,000 travellers in 2020, [19%] when there was a normal start to the year.
The collapse mirrors the trend at larger rival Heathrow, which carried fewer passengers in 2021 than in the first year of the pandemic.
But while Heathrow boss John Holland-Kaye was notably downbeat about the pace of the travel industry’s recovery as he urged the UK aviation regulator to allow him to raise landing fees, Sinclair said he expected to return to close to pre-pandemic levels of flying at London City this year.
“We do think it will return to pre-pandemic levels, but it will take longer [than leisure travel],” he said.
City Airport had spent the years before the pandemic diversifying to attract leisure customers to complement its regular stream of corporate travellers, providing a welcome buffer during the pandemic.
It is a strategy the airport intends to maintain, with the announcement of new leisure-focused routes for this summer, including Thessaloniki, the Greek port city, and Barcelona on British Airways.
“It is a large market which we are increasingly tapping into. But equally, it doesn’t come at the detraction of our core market, the bread and butter for London City, which is business travel,” Sinclair said.
London City expects to operate more than three quarters of 2019 routes this year
17 Jan 2022
by Mark Caswell (Business Traveller)
London City airport says that it “expects pent up passenger demand to fuel a surge in growth in 2022”, with more than three quarters of its 2019 routes operating this year.
LCY welcomed just 714,000 passengers in 2021, down 21 per cent on 2020, and 86 per cent down on the 5.1 million travellers which flew into and out of the airport in 2019.
But London City said that of the 2021 figure, 638,785 of those passengers travelled through the airport in the last six months, with business travel accounting for 46 per cent of all journeys in October and November, before demand fell again in December due additional testing and self-isolation requirements as a result of the Omicron variant.
Amsterdam was the airport’s strongest route in 2021, with Edinburgh the best performing domestic destination.
The predictions for this year follow BA’s recent announcement of new routes from LCY to Barcelona, Luxembourg, Milan Malpensa (replacing the previous route to Milan Linate) and Thessaloniki for summer 2022.
London City pointed to the fact that British Airways will be moving “the majority of its Luxembourg traffic to LCY”, alongside Luxair’s soon-to-launch five daily flights to the country, as evidence that business traffic will be further strengthened in 2022.
In August 2022 the airport announced that it would pause its £500 million development programme at the end of that year, with a planned terminal extension being put on hold.
Commenting on the 2021 traffic figures and predictions for the year ahead, London City’s CEO Robert Sinclair said:
“At the start of the pandemic we made a conscious decision to work with and support our airlines, as we recognised they were facing the same challenges as we were. Investing in these relationships in the hard times has facilitated what we believe will be a strong bounce back starting with a really exciting summer schedule from London City.
“2021 was certainly tough for everyone. However, despite predictions from some to the contrary, we did see the emergence of positive business travel trends, which we believe will continue in 2022 and will be so critical for the economic recovery of London and the UK more widely.
“While we are not out the woods yet, the signs from governments in the UK and across Europe are that we are learning to live with Covid. I am optimistic that the restrictions that remain today, particularly for vaccinated passengers, will be eased and in time, removed altogether so we can return to the simple and affordable ways of flying before the pandemic.
“London City will be a huge asset for London in the years ahead and we look forward to welcoming more passengers and building relationships with new airlines so we can connect the capital to more destinations and opportunities across the world.”
CE Delft study shows alleged economic benefits of London City airport greatly exaggerated
In December 2020, London City Airport published its Master Plan, after various consultations. This claims: “Taking all benefits into consideration, the proposed growth could add £586 million [annual benefit in 2035] to the UK economy. Adding this impact to the £1.5bn impact that LCY is currently expected to reach under CADP, the airport could reach a £2bn annual contribution to the UK economy by 2035.” This was based on figures produced by a report for the airport by Ove Arup in April 2019. All that was in the heady days before the impact of Covid on air travel … A report by the consultancy, CE Delft, looked carefully at the figures of supposed future economic impact, and found name exaggerations and errors. CE Delft consider that the £586 million in economic impact in 2035 is an overestimate. Our study suggests the economic impact is likely to be smaller than £ 353 million + PM (plus or minus things that is impossible to calculate). This disparity in estimates is partly as local impacts are not additional at the national level, according to the UK’s transport analysis guidance WebTAG. Also that trade impacts should not be taken into account, according to WebTAG.
London City Airport shelves plans to extend operating hours – has to focus on post-Covid recovery
London City Airport has published its long-term vision for the future today, after a consultation with residents, passengers and stakeholders. Local community campaign group HACAN East had been concerned by suggestions the airport might seek to increase flights at the weekend, as well as earlier and later each day. But due to a huge fall in passenger numbers, the airport’s CEO Robert Sinclair says the focus “has to be on recovering” for the foreseeable future. But it still has the longer term ambition of 151,000 flights per year, up from around 82,000 before Covid, which campaigners fear will have a serious impact on residents and the environment – due to noise and air pollution (as well as carbon). Mr Sinclair said the airport will keep the expansion plans “under review” as the airport recovers from the impact the pandemic. Changes in future would need to go through the necessary consultation and planning processes. HACAN East chairman John Stewart said the news was a welcome development and the result of a “huge campaign” by both residents and local councils – and “Our concern remains that they would like to lift the annual cap on the number of flights to 151,000.”
London City Airport to put terminal expansion plan on ice, due to Covid recession
London City Airport has put its plan to quadruple the size of its terminal on ice, as the Covid pandemic has decimated demand for air travel. City Airport is shelving £170 million of expansion work, which will mean loss of jobs. But it plans to continue with around £330 million of improvements this year, including eight new aircraft stands and a new parallel taxiway that will allow more arrivals and departures. The airport had been intending to finish the work on the terminal by 2023, and it could then cater for 6.5 million annual passengers. By contrast, in 2019 it had 5.1 million passengers. The airport said the recovery in air travel demand had been slower than expected, and its recovery (if it ever returns to 2019 levels) will take more years than thought earlier. The airport is owned by a consortium of investors including AIMCo, OMERS, Ontario Teachers’ Pension Plan and Wren House Infrastructure Management. secured approval for its £500 million development programme in 2016. It is aimed at providing new infrastructure to serve more customers.