Post by Humberside on Nov 1, 2011 17:35:59 GMT
Very long, so I will just pick out some interesting bits
On Flybe:
On ADF
NWI has five pillars
On route network growth
www.airportsinternational.com/2011/09/nurturing-norwich-2/
On Flybe:
The development work gave the airport a new lease of life and surely the most exciting time in the airfield’s commercial history came with Flybe’s rapid expansion that began in 2005.
Over the next two years, the airline launched services to Alicante, Amsterdam (in competition with KLM), Belfast City, Bordeaux, Dublin, Edinburgh, Exeter, Faro, Guernsey, Jersey, Liverpool, Malaga, Manchester, Paris and Southampton.
However, things looked better from the outside than from within. Mr Bell explained: “Unsurprisingly, the local market loved it, but load factors and yields did not meet expectations in the timeframe required.”
As airport and airline struggled to make many of the routes profitable, perhaps the lowest point came in 2008. When faced with the prospect of losing a six-figure rebate for narrowly failing to achieve the agreed figure of 15,000 passengers on its Norwich – Dublin route in the 2007/8 financial year, Flybe unsuccessfully tried to agree a compromise deal with the airport. With the March 31 deadline approaching, the airline offered ‘free flights to Dublin this weekend’ on its website and advertised on an actors’ website for ‘extras’ to fly the route as part of an effort to top-up the total passenger figures so it could avoid losing the rebate. In the end the actors were not used but the situation did lead to an angry exchange of words between the two organisations. The then airport manager, Richard Jenner, said that Flybe’s actions didn’t “seem to be in the spirit of the agreement” and went on to criticise the airline for needlessly damaging the environment. The airline hit back by saying that although it regretted its “unusual” move, the “ridiculous, intransigent and downright greedy attitude” of Norwich Airport left it with no option. The carrier subsequently said it would offset its additional carbon emissions.
Later, with yields still not at the required levels, Flybe withdrew the majority of its Norwich routes though it still operates services to Edinburgh, Guernsey, Jersey and Manchester.
Looking back, Mr Bell compared the withdrawal of such a large number of services to: “falling off a cliff,” but added that “it wasn’t Flybe’s fault; we were just as eager to embrace the rapid expansion as they were to do it.
“Although things may have been a little fractious at the time, I get on very well with them. They still operate from here and still actively consider introducing new services.
“We have learnt from that experience though. If you want to run a business with a three to five-year lifecycle then that [expansion] method is fine, but trying to run an infrastructure asset in Norwich
Over the next two years, the airline launched services to Alicante, Amsterdam (in competition with KLM), Belfast City, Bordeaux, Dublin, Edinburgh, Exeter, Faro, Guernsey, Jersey, Liverpool, Malaga, Manchester, Paris and Southampton.
However, things looked better from the outside than from within. Mr Bell explained: “Unsurprisingly, the local market loved it, but load factors and yields did not meet expectations in the timeframe required.”
As airport and airline struggled to make many of the routes profitable, perhaps the lowest point came in 2008. When faced with the prospect of losing a six-figure rebate for narrowly failing to achieve the agreed figure of 15,000 passengers on its Norwich – Dublin route in the 2007/8 financial year, Flybe unsuccessfully tried to agree a compromise deal with the airport. With the March 31 deadline approaching, the airline offered ‘free flights to Dublin this weekend’ on its website and advertised on an actors’ website for ‘extras’ to fly the route as part of an effort to top-up the total passenger figures so it could avoid losing the rebate. In the end the actors were not used but the situation did lead to an angry exchange of words between the two organisations. The then airport manager, Richard Jenner, said that Flybe’s actions didn’t “seem to be in the spirit of the agreement” and went on to criticise the airline for needlessly damaging the environment. The airline hit back by saying that although it regretted its “unusual” move, the “ridiculous, intransigent and downright greedy attitude” of Norwich Airport left it with no option. The carrier subsequently said it would offset its additional carbon emissions.
Later, with yields still not at the required levels, Flybe withdrew the majority of its Norwich routes though it still operates services to Edinburgh, Guernsey, Jersey and Manchester.
Looking back, Mr Bell compared the withdrawal of such a large number of services to: “falling off a cliff,” but added that “it wasn’t Flybe’s fault; we were just as eager to embrace the rapid expansion as they were to do it.
“Although things may have been a little fractious at the time, I get on very well with them. They still operate from here and still actively consider introducing new services.
“We have learnt from that experience though. If you want to run a business with a three to five-year lifecycle then that [expansion] method is fine, but trying to run an infrastructure asset in Norwich
On ADF
As the airport was still struggling to make a profit – even through its rapid rise in volume during the height of the Flybe development era – Norwich’s management team was forced to look for an extra revenue stream. As a result an Airport Development Fee (ADF) was introduced by the management team in April 2007.
It applies to all terminal-based departures, so GA and offshore helicopter passengers don’t pay as they fly from the opposite side of the airfield. The initial levy was £3 (US$4.8) for adults and £1 (US$1.6) for children aged between two and 16. Passengers pay at a machine similar to one you would expect to find in a car park. Cash or credit cards are accepted and the customer receives a ticket upon which is a barcode that is read automatically at the security barrier – this then grants access through to the central search area.
Of course, like every other kind of charge or tax, it was immediately unpopular with airlines and passengers alike. In September 2008 the adult fee was raised to £5 (US$8.1), and in September 2011 Bell announced that the adult fee would rise again to £10 in January 2012, though the child fee would be abolished.
Norwich wasn’t the first British regional to have such a charge; it followed Newquay Cornwall’s example. Bell explained that the ADF was introduced to help fund some of the company’s £14million (US$22.7m) development. He added that he had thought that more regional airports would promptly follow suit but: “for whatever reason that hasn’t happened to the extent that we thought it would.” However, Blackpool and Durham Tees Valley now levy similar charges.
As well as helping meet the airport’s major infrastructure needs, for the time being, Bell explains that the ADF is also vital for the maintenance and development of scheduled and charter flights from the Airport, and he is trying to change peoples’ perception in this regard. “I’m trying to move people away from seeing it solely as a capital development fee and show them that it is much more fundamental than that. It is a revenue stream that allows the airport to continue operating as it is. Without it we wouldn’t have the money to offer things like start-up deals to airlines and meet carriers’ demands for more competitive fees if the deal is right. The recently announced increase reflects this and will put the Airport in a sustainable position for the future, maximising its chance to grow routes. With this in mind, I can’t see the fee ever being dropped.
“In an ideal world we would avoid it, but it a strategic decision to finance the Airport in this way which we believe makes us as or more competitive than other regionals. But the bottom line is that without the ADF at the level it will increase to in January 2012, there is unlikely to bethe Norwich Airport that the region demands.”
It applies to all terminal-based departures, so GA and offshore helicopter passengers don’t pay as they fly from the opposite side of the airfield. The initial levy was £3 (US$4.8) for adults and £1 (US$1.6) for children aged between two and 16. Passengers pay at a machine similar to one you would expect to find in a car park. Cash or credit cards are accepted and the customer receives a ticket upon which is a barcode that is read automatically at the security barrier – this then grants access through to the central search area.
Of course, like every other kind of charge or tax, it was immediately unpopular with airlines and passengers alike. In September 2008 the adult fee was raised to £5 (US$8.1), and in September 2011 Bell announced that the adult fee would rise again to £10 in January 2012, though the child fee would be abolished.
Norwich wasn’t the first British regional to have such a charge; it followed Newquay Cornwall’s example. Bell explained that the ADF was introduced to help fund some of the company’s £14million (US$22.7m) development. He added that he had thought that more regional airports would promptly follow suit but: “for whatever reason that hasn’t happened to the extent that we thought it would.” However, Blackpool and Durham Tees Valley now levy similar charges.
As well as helping meet the airport’s major infrastructure needs, for the time being, Bell explains that the ADF is also vital for the maintenance and development of scheduled and charter flights from the Airport, and he is trying to change peoples’ perception in this regard. “I’m trying to move people away from seeing it solely as a capital development fee and show them that it is much more fundamental than that. It is a revenue stream that allows the airport to continue operating as it is. Without it we wouldn’t have the money to offer things like start-up deals to airlines and meet carriers’ demands for more competitive fees if the deal is right. The recently announced increase reflects this and will put the Airport in a sustainable position for the future, maximising its chance to grow routes. With this in mind, I can’t see the fee ever being dropped.
“In an ideal world we would avoid it, but it a strategic decision to finance the Airport in this way which we believe makes us as or more competitive than other regionals. But the bottom line is that without the ADF at the level it will increase to in January 2012, there is unlikely to bethe Norwich Airport that the region demands.”
NWI has five pillars
Bell says that looking forward, Norwich’s future is built upon four of the “five pillars” – passengers, freight, property, MRO (maintenance, repair and overhaul) and General Aviation (GA).
On route network growth
Was it, I suggested, because introducing a low-cost carrier can sometimes mean that the airport has to subsidise it? “Well, passenger growth has to generate a return,” he said.
“At the moment we have a route network that is pretty limited in terms of its schedule connectivity, but we have the chance to fill up some gaping ‘holes’ in that network.There are many opportunities to add targeted connectivity for the business and leisure traveller alike. I don’t want to dilute those possibilities by just opening everything up to a low cost carrier without exploring all the options for targeted growth first because it won’t earn us any money.”
Mr Bell said that another likely downside that might result from the introduction of a low-cost operation is that it “will kill off the charter market almost overnight; we saw that with Flybe’s expansion.
“If the low-cost carrier starts a large number of services and then withdraws, you are then left with no diversity and, in fact, [by introducing an LCC] you are potentially undermining your diversified business model.
“I’m not saying that this will never, ever happen, but we have learnt from direct experience and through the experience of other regionalsthat if you have ‘everyone’ flying with one carrier, then of course you can leave yourself exposed [if it leaves].
“I know it is pretty idealistic to say that, because many regional airports rely on one carrier to provide them with significant volume. And, having said all that about the potential pitfalls, if a low-cost carrier came here tomorrow and wanted to launch a large series of routes it would be hard for us to resist the volume one could bring.
“However, I don’t think that the catchment area we have here is big enough to support a massive [budget] operationand whether it would generate enough yield to make it worthwhile to an airline and the airport, I don’t know.
“At the moment we have a route network that is pretty limited in terms of its schedule connectivity, but we have the chance to fill up some gaping ‘holes’ in that network.There are many opportunities to add targeted connectivity for the business and leisure traveller alike. I don’t want to dilute those possibilities by just opening everything up to a low cost carrier without exploring all the options for targeted growth first because it won’t earn us any money.”
Mr Bell said that another likely downside that might result from the introduction of a low-cost operation is that it “will kill off the charter market almost overnight; we saw that with Flybe’s expansion.
“If the low-cost carrier starts a large number of services and then withdraws, you are then left with no diversity and, in fact, [by introducing an LCC] you are potentially undermining your diversified business model.
“I’m not saying that this will never, ever happen, but we have learnt from direct experience and through the experience of other regionalsthat if you have ‘everyone’ flying with one carrier, then of course you can leave yourself exposed [if it leaves].
“I know it is pretty idealistic to say that, because many regional airports rely on one carrier to provide them with significant volume. And, having said all that about the potential pitfalls, if a low-cost carrier came here tomorrow and wanted to launch a large series of routes it would be hard for us to resist the volume one could bring.
“However, I don’t think that the catchment area we have here is big enough to support a massive [budget] operationand whether it would generate enough yield to make it worthwhile to an airline and the airport, I don’t know.
Currently KLM generates the bulk of the Norfolk airport’s passengers. About 120,000 people fly to Amsterdam each year with a very significant propotion connecting onwards via the Dutch carrier’s worldwide network. This represents about a quarter of Norwich’s passengers and makes the airline the airport’s biggest revenue generator. The Amsterdam flights operate three times daily all year round, though the volumes indicate a fourth rotation is within easy reach
Bell says that the ideal objective, from a passenger point of view, is to match the business demand from East Anglia. The likes of Newcastle, Glasgow, Düsseldorf (because of its motor industry connections) and Dublin are key destinations that Bell said “we keep getting asked about. We also want to serve a leisure market, almost in harmony with what Stansted, Luton and further afield offer. We know we are good at holiday charters; we need to maximise that because that has a good yield. If we then get into a position where we can’t offer a particular destination because no tour operator will look at it, you then say, ‘OK, who will come and fly that route?’. It’s a pretty step-by-step approach.”
Bell says that the ideal objective, from a passenger point of view, is to match the business demand from East Anglia. The likes of Newcastle, Glasgow, Düsseldorf (because of its motor industry connections) and Dublin are key destinations that Bell said “we keep getting asked about. We also want to serve a leisure market, almost in harmony with what Stansted, Luton and further afield offer. We know we are good at holiday charters; we need to maximise that because that has a good yield. If we then get into a position where we can’t offer a particular destination because no tour operator will look at it, you then say, ‘OK, who will come and fly that route?’. It’s a pretty step-by-step approach.”
www.airportsinternational.com/2011/09/nurturing-norwich-2/