Cardiff Airport - General Thread

[Foxlimayankee]

The WG are CWLs owners. So the comparison needs to be looked at in a different way to make business sense.
English Airports have received funding from the UK government but its unlikely this is the only money those Airports are receiving.
The correct comparison is how much money are private Airport owners in England ploughing into their Airports to survive added to the money received from UK Gov?

CWL is still a business that requires the same level of investment and safety nets that other airports are receiving from their owners.

That being said, the £80m+ still seems very excessive. I sense the WG have taken the opportunity to wipe out original loans using covid as an excuse to cut down the backlash. We won't know how that will help CWL, depending on the loan agreement and interest payments it could position CWL in good light, where other Airports will be facing borrowing and monies to be repaid with interest.

 

[Jerry]

In contray to what the Welsh Assembly thinks, Why should the tax payers pay for this airport that’s become a black hole? Especially North wales tax payers who have no use of it whatsoever.

So shut it down? Firesale? Let it go bankrupt? As for the north why should southern taxpayers pay for their transport infrastructure? And it's the Welsh government making the decision not the senedd and whatever they do will get criticism.

 

[aviatorconcorde]

So shut it down? Firesale? Let it go bankrupt? As for the north why should southern taxpayers pay for their transport infrastructure? And it's the Welsh government making the decision not the senedd and whatever they do will get criticism.

I’m sorry Jerry but the airport is becoming a black hole and is being added to the list of failed Welsh Assembly vanity projects - it is so difficult to justify using that amount of tax payers money when they are far more deserving causes at present, child poverty and health inequality for starters.
There is no proper scrutiny of the welsh assembly government. I continue to be a support of the airport but it is now being severely mis managed.

 

[Jerry]

There is no proper scrutiny of the welsh assembly government. I continue to be a support of the airport but it is now being severely mis managed.

It's lost probably at least 80% of its income. If you look at the wording it sounds like it may have been going close to bankruptcy.
Ken Skates has stated that there is a 5 year plan so I'd expect that will be presented to the Senedd at some time.
As stated in a previous post having the debt written off essentially helps wipes the airports slate clean so it should be in a good place to recover from the pandemic especially with an airline like Wizz onboard.

 

[KARFA]

It's lost probably at least 80% of its income.

Were they profitable before covid?

 

[Foxlimayankee]

Were they profitable before covid?

It was on course to be before TCX and Flybe went bust. There was already a decent restructure done before that but looks like more is needed again.
The question is how long it can continue post covid until recovery works.
Wizz is a great starting point to get passengers back through the door, hopefully further expansion from them will come in time. Big question marks still remain over QR and domestic routes though.
CWL continues to suffer bad luck, whether through recession, unstable Airlines or now a pandemic. I fear its chances are running out if anything more happens. Whether that means shutting it or selling it privately for £1 like Prestwick. The WG will need to offload it eventually.

 

[Jerry]

The WG will need to offload it eventually.

I generally don't see them selling it or closing it. I believe they see it as part of Wales public transport infrastructure like the trains are.

 

[KARFA]

It was on course to be before TCX and Flybe went bust. There was already a decent restructure done before that but looks like more is needed again.

I had a look at the accounts out of curiosity.

Loss before tax
Year up to 31 March 2019 - loss £18.5m
Year up to 31 March 2018 - loss £6.63m
Year up to 31 March 2017 - loss £5.97m
Year up to 31 March 2016 - loss £4.88m
Year up to 31 March 2015 - loss £2.95m
15 months up to 31 March 2014 -loss £4.32m
Year up to 31 December 2012 - loss of £3.13m

 

[Foxlimayankee]

I had a look at the accounts out of curiosity.

Loss before tax
Year up to 31 March 2019 - loss £18.5m
Year up to 31 March 2018 - loss £6.63m
Year up to 31 March 2017 - loss £5.97m
Year up to 31 March 2016 - loss £4.88m
Year up to 31 March 2015 - loss £2.95m
15 months up to 31 March 2014 -loss £4.32m
Year up to 31 December 2012 - loss of £3.13m

That doesn't make good reading but if the accounts are delved into deeper, 2019 saw a great deal of needed investment through WG loans and various 'accounts adjustements'.
If you take a positive review of the potential then things could've been turned around. For example if TCX and Flybe were still around, TOM expansion, FR footfall and QR growth.

We won't know if Wizz wouldve started if TCX were still around, but if they did, on top on continued growth and retaining all Airlines from 2019 period, then it would be on a better path.
There is however a lot of what-ifs that will now remain.
Personally I think Wizz were the last opportunity for a low cost carrier base, which has been achieved. Jet2 were always a what if, which now is very unlikely to happen so the charter market is pretty much left to TUI.
Focus should now be on a domestic carrier, but again, options there are running slim. Aer Lingus are rumoured to be restarting as they have CWL as an option but that's still very much unconfirmed as to why.
Wizz are supposedly running on a commercial basis, so no funding as such but likely a good deal on fees. But with any low cost carrier that results in increased passenger numbers and the revenue that brings in itself.
It will be interesting to see the 5 year plan Ken Skates talks of, and no doubt a new post covid masterplan needs to be drawn up.

My personal view on how things could pan out over the next few years....

- QR to return, dependant on international travel demand
- Domestic routes - DUB - EI, GLA & EDI - Eastern, New Flybe, Stobart (new owners) ?
- Wizz increase routes or even 2nd based aircraft if unable to operate from other bases
- FR have some slight increases on current routes and return MLA.

 

[Nuffsaid]

Any chance of the airport being designated a Freeport? At least that could help with cargo.

 

[TheLocalYokel]

I know that CWL suffered more than most UK airports in terms of passenger loss brought about by the 'noughties' recession. It also had to contend with an owner that had clearly lost interest in it. CWL saw its annual passenger numbers plummet from 2.1 million in 2007 to 1.013 million in 2012. That prompted the Welsh Government to buy the airport which they did in 2013 for £52 million.

At the end of 2019, prior to the pandemic, the annual passenger figure was 1.655 million which means that a third of the lost passenger numbers had still to be regained.

A comparable airport is Exeter. For most of this century its annual passenger numbers have ranged between 50% and 70% of those at at CWL. The recession referred to above saw its annual passenger numbers drop from 1.012 million in 2007 to 695,000 in 2012 (it was another of the worst-affected recession-hit airports), yet by 2019 it had managed to regain all its lost passenger numbers. It's situated in the south-west corner of Britain as is CWL and, again like CWL, sees over a million passengers from its catchment use Bristol Airport each year.

Yet EXT is privately owned and has been in private sector ownership since 2007. CWL serves a capital city, unlike EXT or BRS, but seems unable to attract serious interest from the private sector. I well remember when the news broke that the WG was in advanced negotiations to buy CWL. It was just before Christmas 2012 and I listened to the then first minister being interviewed on BBC Radio Wales about the plans.

He said that the aim would be to find a private sector partner. That seemed to be the aim for a year or two after that but it never came about. In fact, the idea still hasn't been discounted but the WG would retain a controlling interest. It's now over eight years since the then first minister's comment about a private sector partner and the obvious question is why does the private sector show no serious interest?

Is it the fact that they would be partnering a government, and as a junior partner, or simply that CWL is too great a commercial risk? It's hard to believe that an airport serving a country's capital city in an area that has the strongest economy and is the most populous region in that country is not an attractive proposition to the private sector.

 

[Jerry]

Is it the fact that they would be partnering a government, and as a junior partner, or simply that CWL is too great a commercial risk?

Or that the government now doesn't want a private sector partner onboard. I'm sure Roger Lewis stated to a Senedd committee that the airport had lined up private commercial partners but that the decision would be down to the shareholder to engage with them.

 

[TheLocalYokel]

Or that the government now doesn't want a private sector partner onboard. I'm sure Roger Lewis stated to a Senedd committee that the airport had lined up private commercial partners but that the decision would be down to the shareholder to engage with them.

A year ago last month Northpoint Aviation Consultants produced a review of CWL's performance and prospects in the context of current UK regional airport economics. The review was commissioned by the owners of CWL.

It has to be pointed out that the conclusions reached could not have addressed the virus effects as the review would have been carried out before the pandemic began and before its severe effects on aviation were known or even contemplated. The report is lengthy but I will summarise relevant parts that concern ownership.

The review approves the airport's plan for phasing and targeting future investment and encouraging collaborative ventures with external partners. It could find no evidence that private airports outperform equivalent publicly-owned airports, especially those airports under 3 mppa. Therefore, when the report was produced Northpoint saw 'no sound operational, commercial or financial reason for seeking to return the airport to private ownership, in whole or in part, in the near future'.

The report does go on to say that provided the airport owner can continue to 'increase CWL's throughput and profitability' (I found the profitability comment strange because there has been no profit under government-ownership yet so how can it continue to be increased?) there is a realistic chance that the WG could sell the airport in a way that would allow its loan finance to be recouped and a surplus made on its purchase price. This is likely to be at least 3 years away but more realistically 5-10 years away.

In the meantime the WG would need to continue to offer loan support as it would be difficult for CWL to raise such funding in the capital markets.

Undoubtedly the pandemic effects have dramatically altered timescales and other detailed judgements made in the report.

However, the underlying message seems to be that Northpoint believes that external investment is a valid part of the airport's future plans, but not immediately when it comes to part ownership, and it is not in favour of an outright disposal of the airport until it became a saleable asset on beneficial terms to the WG, something unlikely for up to a decade in the future.

 

[geoff]

It would be nice to see the amounts put in place by some of the private owners of airports, such as The Ontario Teachers Pension Fund, and McQuairie Investments Fund, just to see how much is really needed to keep some of the airports in business. I believe that some of the airports have been given business rate relief also.

 

[TheLocalYokel]

It would be nice to see the amounts put in place by some of the private owners of airports, such as The Ontario Teachers Pension Fund, and McQuairie Investments Fund, just to see how much is really needed to keep some of the airports in business. I believe that some of the airports have been given business rate relief also.

The UK government has made £100 million available to support 24 English airports.

It will be used to address fixed costs and be the equivalent of the business rate liabilities of each airport in 2020/21, capped at £8million per site and subject to certain conditions. The WG believes that non-English airports should also have been included. Had CWL been eligible it would have received no more than £8 million (I don't know its business rate liability) which is just 10% of the financial package being made available to it by the WG.

OTPP, the owner of Bristol Airport, owns 48.25% of Birmingham Airport. The remaining shares are owned by seven West Midlands Councils (49%) and employees (2.75%).

Four of the local authority shareholders are making loans available to the airport in the face of the pandemic traffic decimation effects: Birmingham City Council up to £18.5 million; Solihull Council up to £3.7 million; Walsall Council up to £4.9 million. Of the other four local authority shareholders two said they would not be providing loans, one declined to comment and the other is considering the matter.

I found a press report stating that OTPP will be providing financial assistance to BHX but no detail was given. I'm not aware what assistance OTPP is providing its airport at BRS in the light of the pandemic.

OTPP has over $200 billion worth of net assets according to its website. Its combined holdings in BRS and BHX would only amount to a tiny fraction of that.

 

[Jerry]

If the Welsh government had let Cardiff Airport go bankrupt what do people think would've been the consequences of that? Would both Cardiff and St Athan airfields still be able to operate? I know NATS and the firefighters work for the airport and I'd expect that the CAA would withdraw any licences so possibly potentially there would be no ATC and fire cover?
Obviously there would be loss of jobs but I was just wondering what the effects will be.

 

[Foxlimayankee]

ATC at CWL and St Athan are controlled by NATS but they are not employed by the Airport. They are contracted by the Airport.
You'd hope that St Athan would still be a going concern under WG ownership because of the activity going on there.
Either way I really can't see CWL closing.

This has also been published this afternoon. I'm guessing the maintenance facility is St Athan, as there isn't one at CWL for Wizz to use.
Hopefully something comes of it, whichever airport its at will add to the financial boost needed.

 

[Jerry]

This must be incredibly frustrating for the WG and Cardiff Airport after lobbying so hard for devolution of APD and for certain UK routes to become PSOs the government is finally willing to do something about domestic APD after Cardiffs domestic network was wiped out by the loss of Flybe and the pandemic.

UK set to cut air passenger duty on domestic flights

Green groups say move ‘beggars belief’ but cut will offer some relief to troubled aviation industry

www.google.com

 

[jfy1999]

This must be incredibly frustrating for the WG and Cardiff Airport after lobbying so hard for devolution of APD and for certain UK routes to become PSOs the government is finally willing to do something about domestic APD after Cardiffs domestic network was wiped out by the loss of Flybe and the pandemic.

UK set to cut air passenger duty on domestic flights

Green groups say move ‘beggars belief’ but cut will offer some relief to troubled aviation industry

www.google.com

In regard to the aviation industry it seems the government has always been reactionary. Changes to airline bankruptcy laws were mooted only after the collapse of monarch and Thomas cook.

 

[TheLocalYokel]

This must be incredibly frustrating for the WG and Cardiff Airport after lobbying so hard for devolution of APD and for certain UK routes to become PSOs the government is finally willing to do something about domestic APD after Cardiffs domestic network was wiped out by the loss of Flybe and the pandemic.

UK set to cut air passenger duty on domestic flights

Green groups say move ‘beggars belief’ but cut will offer some relief to troubled aviation industry

www.google.com

It's still good news for CWL and its owners because it will increase the likelihood of the 'lost' domestic routes being reinstated and perhaps more begun.

Had the WG been given the power and had reduced or axed APD it would only have applied to outbound flights from CWL. Those coming into CWL from UK airports outside Wales would still have been subject to the APD regime in force at the other airport. Under the UK government proposals the inbound flights would also see reduced APD levels thanks to the new outbound rate from the departure airport. If the tax is abolished on return legs of domestic journeys that would be even better news for passengers, airlines and airports.

The argument that APD is a tax that should be the responsibility of all the devolved governments is a valid one to put forward, but I don't think it should negate what the UK government might do about APD levels across the entire UK. If the tax were to be devolved to it the WG could still reduce or axe it on routes not subject to any general UK government reduction.

Actually, APD Band A rates (journeys under 2,000 miles) have been held at £13 for the lowest class of travel and £26 for higher classes since 2012, so in that sense they have been falling anyway when inflation is taken into account.

The WG had also wanted PSO status to be applied to CWL routes between Leeds-Bradford, Glasgow, Humberside, Aberdeen, Newquay, Inverness, Norwich and Manchester which would have removed APD entirely. That always seemed an unlikely aspiration because the UK government had to support it to enable the European Commission's consideration. Had the UK government done so that would have led to demands from airports around the UK for similar treatment on thin routes not commercially viable.

The new UK government initiative might make some unserved thin routes more attractive to airlines (including perhaps some in the list in the previous paragraph), but more widely around the UK and not just to/from CWL.