Derry’s airport – is it really for sale?: Derry Journal

Posted on December 29, 2008 · Posted in Derry Journal

 

Valerie Watts has hit the city council like a hurricane. The incoming chief executive has caused a stir, for the most part, by saying little more than the obvious. In particular, it was already well-known that the city council wants to off-load the ownership and/or the management of the City of Derry Airport.

 

But intentions are one thing. Achieving them is quite another. Finding a buyer for the airport is likely to prove very difficult.

 

This is a very bad time for the airline industry. Europe’s most profitable airline, Ryanair, expects to make a loss in the second half of this year. That follows a 77% fall in profits in the first half of 2008.

 

Ryanair is not just a bellweather for the health of Europe’s airline sector. It is also very important to the future of the City of Derry Airport. It is, effectively, the only commercial scheduled airline operating from the airport.

 

Loganair/British Airways has ceased to operate its flights to Glasgow. And the peformance of the Aer Arann flights to Dublin is woeful. A year ago, more than half of the seats on the daily Derry to Dublin flights were sold. Now, despite heavy discounting, less than a third of seats are paid for. The route survives thanks only to a heavy subsidy from the Republic’s hard-pressed exchequer.

 

According to the Sunday Tribune, each single journey between Derry and Dublin costs the Irish taxpayer €95 in subsidy. As single flights can be bought for as little as €10 (including taxes), €1 paid by a passenger may be matched by €9.50 from the Irish taxpayer. The direct flight to Dublin is a pleasant luxury, but on these figures looks unlikely to survive. It is certainly will not if the Tribune is successful in its campaign to end the subsidy. In any case, the route can be regarded as a public service – of questioned legitimacy – rather than a commercial operation.

 

Consequently, the Dublin route may go the same way as BA’s Glasgow service and Ryanair’s East Midlands and Bristol services, which were recently chopped. Ryanair has now launched other services to Birmingham and London Luton, for which it is too early to assess performance.

 

Other Ryanair routes remain a worry. In August, Ryanair’s average loading across all its operations was 81% (down from 90% the previous year). Even taking into account that Ryanair could not sell all seats into and out of Derry until this month because of restrictions related to the short runway, none of its Derry routes matched the airline’s average performance.

 

The best local services last month were London Stansted and Liverpool, on which three quarters of available seats were sold (though this was less than 60% of the actual seats on the planes). Passenger loadings on the Bristol flights were a mere 46% of saleable seats, or 36% of total seats. No wonder Ryanair axed the service.

 

But Ryanair’s service to Glasgow Prestwick was running with average passenger numbers below those of its now ended East Midlands route. It seems that Ryanair’s Prestwick route is sustainable only if it can pick up significant additional passengers as a result of BA/Loganair ending their Glasgow service.

 

The point needs to be stressed, though, that all of Ryanair’s Derry routes perform less well than the airline’s average performance. And that average performance, we must remember, is now a loss-making one. Despite Ryanair’s continued statement of intent to continue using Derry airport, on these figures it may yet change its mind.

 

Let us hope it does not come to this – travel from a Belfast airport is much less convenient. But any potential buyer of the City of Derry Airport would certainly consider the passenger loadings and dependence on a single airline in making a decision on whether to purchase.

 

The reality is that for the airport to be a viable proposition for a commercial operator, it needs to have more than a single core airline operating from it. For several years, the council has attempted to attract scheduled services to continental destinations from Derry. All attempts have so far been unsuccessful, though I am told that people within the council remain optimistic. But given that routes from Belfast to Barcelona, Warsaw, Paris and Rome have all been closed down because of the current economic climate, the chances in the short-term of a continental destination from Derry opening up and proving profitable do not look good.

 

I am not privy to the commercial discussions taking place between Derry City Council and airline operators. But logically the future of our airport is as a regional airport, flying smaller, more fuel-efficient, planes to other cities in the UK and, possibly, Ireland. This is exactly the type of operation that is run by FlyBE and on which, contrary to past Ryanair’s predictions, it is making a profit.

 

The future of the City of Derry Airport, whether sold-off or not, could depend on the city council’s success in attracting FlyBE to operate from here.