Airline network planning being impacted by Brexit uncertainty

posted on 8th April 2019 by Justin Burns
Airline network planning being impacted by Brexit uncertainty

The UK is moving ever closer to a no-deal Brexit and UK airport chiefs say they have already been negatively impacted by the continued uncertainty and it is affecting the industry as airlines’ network planning is being harmed and changed.

Article 50 runs until 12 April, and the UK will leave the European Union (EU) that day with a no deal unless it can strike a deal with the EU. A Withdrawal Agreement has been rejected three times by MPs in the UK Parliament.

PM Theresa May has been in talks with Labour leader Jeremy Corbyn for the last few days as they seek to form a on a plan that they believe could be voted through Parliament. Many now see the only option being a long extension to Article 50.

Speaking at Routes Europe in Hannover today, London Stansted Airport chief commercial officer, Aboudy Nasser said the uncertainty is affecting the network planning of airlines and their bottom-lines, as many like Ryanair and easyJet have posted losses while Jet2 is also set to post lower figures.

He said airlines have been impacted from a revenue perspective due to poor future UK GDP forecasts; a fall in real wages; falling income of UK households; and the decline of the pound against the US dollar – which has increased major costs like fuel and aircraft leasing – and all this has impacted the network planning of airlines.

Nasser said the airport has been shielded from a bigger impact as it is in the London catchment area and capacity is in short-supply into London and  it is located in a a fast-growing region of the UK but the Essex-based gateway is still affected by Brexit.

Cornwall Airport Newquay managing director, Al Titterington said that two or three routes were set to start this summer but have been pushed back due to the uncertainty and a change of plan by airlines due to Brexit, whose costs bases are under increasing pressures.

“Airline are also asking for a better deal from us,” he said. “Airlines have been asking for lower fees due to Brexit and want to renegotiate, but this is very difficult for a small airport like ourselves.”

Titterington said Cornwall is dependent on tourism and the numbers have fallen since the UK voted to leave, citing the Germany market as an example, which it said is shrinking.

He added that despite the challenges Cornwall has been steadily growing traffic and SAS will start a route to Copenhagen this year, but the five per cent growth would be 10-15 per cent if it wasn’t for Brexit.

AGS chief commercial officer, Francois Bourienne said at Glasgow Airport, which is one of the airports AGS owns and runs said the Scottish gateway has been affected. AGS operates the airports of Aberdeen, Glasgow and Southampton.

“It (Brexit) has been there from 2018,” he said. “We have lost a number of routes. Airlines tell us that the (intra) EU routes are far more interesting than the UK now as they can make more money there.”

One airline that has reduced routes at Glasgow Airport is Ryanair which has closed its base, and only now operates a few routes.

Norwegian head of international government and industry relations, John Hanlon was more “bullish” and optimistic about the future. “I am sure whatever the outcome that the self-interest will lead to a common sense outcome.”

However, he urged action. “We need a comprehensive air transport agreement (between the UK and EU). The problem needs to be resolved quickly ahead of the new planning cycle,” he said. “It should not be part of a trade deal; aviation has always been separate.”

He added that connectivity is so strong and important to UK and European citizens so must remain.

Airlines UK chief executive officer, Tim Aldersdale also struck an optimistic tone and thinks there will be a substantial extension of Article 50 and believes it will give the UK and EU time to thrash out a comprehensive air transport agreement.