Cardiff Airport - General Thread

[TheLocalYokel]

Re: Cardiff Airport - Main Thread

Hello again E m.

Opinions seem diametrically opposed amongst those in Wales with an interest in all this.

There are those who think that public ownership is bound to fail: "What do governments (or councils) know about running airports?" is their cry.

Others believe that anything is better than the past few years at the airport.

Time of course will tell.

The First Minister's intention is to find an experienced airport operator partner to run it for the WG. The FM believes the WG can share any profits with the partner but any losses will be entirely the responsibility of the partner. I'd love to find a business partner like that, if I wasn't retired.

Others have mentioned the days of local authority ownership as you have. It was surely a different environment then and not the cut-throat highly competitive industry we see now at regional airports.

Local authorities, certainly the smaller ones, who owned airports main problem was usually the inability to borrow large sums of money. Bristol Airport, for example, could never have afforded to build its terminal in the late 1990s and all the subsequent improvements had it remained in local authority ownership (Bristol City Council in that case).

Government ownership might be a different matter but a lot of public money is at stake. After all, CWL will still remain an airport serving a relatively small and not particularly affluent segment of the UK which has been especially hard hit by the recession. The owners will still have the continuing problem of getting a lot of customers from outside South Wales to use CWL. That's the only real way of increasing passenger throughput significantly.

Airline and airport economics interest me. I'm looking forward to watching all this pan out.

 

[Em0866]

Re: Cardiff Airport - Main Thread

At the end of the day, if WG do go ahead and purchase then they will have to work really hard in not just attracting people to use the airport, but also to attract new routes/airlines and keep them. Not an easy thing to do in the current climate.

I would imagine that if WG were to purchase CWL, then it won't be forever. I suspect that after a few years and if success follows, they would sell it off.

 

[TheLocalYokel]

Re: Cardiff Airport - Main Thread

If the airport goes from strength to strength and increases its value significantly a sale back into private ownership may well result.

Assuming the sale to the WG does go ahead - still lots of due diligence and negotiations to be done by the sound of it - the vital thing will be finding the right partner to run the airport.

 

[TheLocalYokel]

Re: Cardiff Airport - Main Thread

Plan for Wales Government to Purchase CWL

Further to the above, Carwyn Jones, Wales's First Minister, has been speaking again to the local press.

See link: http://www.walesonline.co.uk/news/welsh ... -32508281/

In a wide-ranging discourse on the various problems he sees Wales having face in the future the plan to purchase CWL featured.

The FM said that the immediate priority was to revamp the terminal building and increase footfall, routes and passenger numbers.

He went on to say, “I think we have to aim at Bristol,”

Now this is nothing new as earlier in the year he was talking about catching up BRS's passenger numbers and then getting ahead. He's now modified this target, or so it seems.

He feels that, “It’s going to take a few years, it’s going to take a decade at least for that to happen. Bristol has been very successful, it’s been a very successful airport. It has had investment in a new terminal. I’m not going to begrudge Bristol that – it’s a successful model. But not that long ago, the two airports were pretty much on a par."

More or less the same rhetoric as before then, or is it?

Because he then said, “We have to aim at building ourselves up to the same kind of passenger level as Bristol. I think that’s realistic. It’s not going to be Manchester or Birmingham, but it certainly can aim to be like Bristol or Southampton.”

Well, which is it? BRS with a current throughout of 5.91 mppa or SOU with 1.69 mppa?
The latter would be much more in reach of CWL's current 1.01 mppa.

The trouble for the FM is that if CWL does substantially increase its passenger numbers over the next decade it will be because economic conditions generally have improved, in which case other airports will also have seen more passengers passing through and his target could well be nearer 8 mppa than 6 mppa, assuming he's made up his mind by then whether he's chasing BRS or SOU.

Politicians, with very few exceptions, should be kept away from any involvement with airports.

I won't comment on the latest pronouncement from the FM's spin doctor, Sion Barry, aka the business editor for a Wales group of newspapers.

Anyone interested can read it here:
http://www.walesonline.co.uk/business-i ... -32517315/

 

[Aviador]

Re: Cardiff Airport - Main Thread

It sounds like wishful thinking and as much as it would be nice to see Cardiff airport expand I can't see it happening in the short term, maybe not even in the medium term. Cardiff has a relatively small catchment area whereas Bristol's catchment area stretches in every direction.

 

[TheLocalYokel]

Re: Cardiff Airport - Main Thread

[textarea]First Minister says Cardiff Airport approached Welsh Government over sale

The owners of Cardiff Airport did not take “a great deal of notice” of the airport and first approached the Welsh Government about selling it, the First Minister has revealed.

Carwyn Jones told Assembly Members in a committee yesterday that it was possible that the government could look to sell off a stake in the airport after it completed the deal.

He again defended the move to step in to buy the airport – saying there was a threat it would close altogether.

He also conceded that any commercial body brought in to manage the airport after it was bought out would need to bring its own money to the deal, after he was challenged on how he would comply with EU state aid rules, saying that they could become “joint owners” of the hub.[/textarea]
Full report at: http://www.walesonline.co.uk/news/wales ... -32713588/

It's a job to sort out the reality from the political manoeuvring in the First Minister's remarks.

Did Abertis really approach the Wales Government about a sale? If so, was this because no private sector operator would be interested at the price the current owners would want?

Was the airport really in danger of closure as the FM has hinted giving Carwyn the chance to ride over the hill on a white charger to save the doomed facility?

If the answer to all these questions is yes then it's difficult for those who don't like state intervention in such matters (and I'm one of this number) to take serious issue if the alternative really was no airport worth the name in Wales.

The trouble is that the FM so often goes off into flights of fancy.

For example he has spoken of the need to catch up and overtake Bristol Airport and says he's confident of this being achieved. Then in the next breath he says that CWL is capable of catching Bristol or Southampton airports. Which is it because these two airports are not similar at all in size?

This week he told his fellow Assembly Members that CWL's runway could take a 'fully loaded' A380. Really? The runway is less than 2,400 metres in length. And if this is the case where does he suppose a A 380 could fly to?

He's now talking about a possible joint ownership of the airport with a third party after originally saying the government would purchase the airport and employ an experienced airport company or group to run it. This apparent change of plan appears to be because he now realises that EU state aid rules might cause significant difficulties.

This then is the problem I have. The FM has taken the question of state ownership as a personal crusade and seems determined to push it through by one means or another as a sign of his political virility. But so far there is every indication that he decided, 'Let's buy the airport', then scrabbled around to see if or how it might make sense, hence his turning this way and that.

He's also as good as admitted what many believed all along - that the purchase is little more than a vanity project - when he conceded that the image of Wales is an important reason to have an airport.

It is important for Wales to have an airport but one that is commercially viable and not reliant on the tax payer to keep bailing it out if it's found wanting.

 

[TheLocalYokel]

Re: Cardiff Airport - Main Thread

A CAA survey suggests that 1.1 million people whose journey began or ended in Wales used Bristol Airport in 2012, more than used CWL in total.

This link fills in the details: http://www.bbc.co.uk/news/uk-wales-21473968

 

[Em0866]

Re: Cardiff Airport - Main Thread

I am thinking that those at Bristol are being a bit hypocritical. I know both BRS and CWL as all other airports are businesses, but I do not understand that they almost gloat about serving pax from South Wales and are happy to accommodate pax from this side of the bridge, but as soon as they got word of the possible buy out by the Welsh Government and the chance that CWL may win back some of the pax they lost......had CWL not had a run of bad luck with airlines going bust of withdrawing their services, they would not have had the increase of nearly 6m pax at BRS in the first place. Am I making sense in what I am saying?

 

[TheLocalYokel]

Re: Cardiff Airport - Main Thread

Hello mate, how are you? Good to hear from you again.

I don't entirely agree with your figures.

In 2007-2008 BRS was handling over six million passengers a year at a time when CWL was at its highest passenger numbers in its history at two million per annum.

What's happened in the meantime is that the recession has affected the less well-off areas more severely than the regions that are more economically vibrant and this is reflected in regional airports.

BRS, apart from a 9% drop in passenger numbers in 2009 when the recession really began to bite, has seen small percentage growth in the three subsequent years with 2012 being its second best ever after 2008. It's also the only top 20 UK airport to have seen growth in 2010, 2011 and 2012.

So CWL has had the ill luck to be serving an area that is struggling economically compounded by being cheek by jowl to one of the UK's most successful regional airports serving a prosperous chunk of the country.

CWL has always struggled with business routes apart from those to the hubs such as Amsterdam. This is particularly noticeable in the current straitened times whereas the stronger Bristol region economy has been less affected hence, for example, the new bmi regional setting up several routes from BRS to European cities that are important for business. No doubt some South Wales business people will use them but the economy of scale means that BRS was chosen over CWL.

I don't think that the BRS management is concerned so much about nationalisation of CWL per se. What they fear is some backdoor illegal subsidy from the public purse that would unfairly distort competition. They are also wary of air passenger duty being devolved to Wales because it would effectively mean a state-owned CWL could set its own APD rates.

Having spoken to a senior member of the BRS management team in the recent past I gained the impression that they actually welcome competition so long as it's fair and on a level playing field.

The positive thing is that CWL has almost certainly reached its nadir and will start to grow from now on. The only question is how quickly?

 

[Em0866]

Re: Cardiff Airport - Main Thread

Good thanks, hope you are well too.

My figures may be a bit out and I may not have worded what I wanted to say properly either.....a sign of old age on my part, perhaps hehe. I agree with what you say though. I can't remember what the point I was trying to make now.

As for the article, and your point on backdoor illegal subsidy, if WG does purchase CWL then they will be under close scrutiny (I would imagine) as public money is being used to purchase it. All monies used by WG for anything it does is closely scrutinised.

Of course, if APD is devolved how much of an advantage would that be in real terms? Look at the access to CWL by road and rail..... it's not that great, and also there's the issues of the bridge too to a lesser extent. I really can't see that airlines would jump at a chance of switching from BRS to CWL based on APD alone....but that is just my opinion. Mr Ferguson's suggestion on both airports working together is a nice idea, but in reality it would not work.

Let us all hope that CWL has reached the bottom and will start to increase its pax numbers. If purchase goes ahead before the end of this summer, I don't think there will be any significant increases to pax this year, but hopefully it will starting next year. It'll be interesting to see how this one plays out.

 

[TheLocalYokel]

Re: Cardiff Airport - Main Thread

I anticipate some growth at CWL this year. The positive aspect of passenger numbers falling so low is that a relatively small increase in passengers can show a significant percentage increase.

Vueling has a substantial number of extra seats in the summer and there is also some additional capacity elsewhere though nothing startling. Against that is the loss of Monarch to Florida and Helvetic.

As for the Mayor of Bristol's idea of CWL and BRS co-operating or even combining, it would be an intriguing proposition. Mayor Ferguson is an Independent, an architect and businessman with varied interests though he is certainly an environmentalist with Green credentials and is not a supporter of Bristol Airport. He has previously expressed his opposition to its expansion. He's now making political noises aimed at his electorate, appearing to be concerned about BRS and possible public sector assistance to CWL.

He knows as little about aviation as the First Minister, which isn't much.

CWL and BRS in common ownership would be interesting but it's not likely to happen because of competition issues alone, and a brand new airport serving both sides of Severnside has no political legs at all.

Six or seven years ago the local authority-owned Exeter Airport was put up for sale and the owners of Bristol Airport became preferred bidders. This led to protests from local business interests and local politicians in Devon as they feared EXT would be sidelined and run down. In the end the EC and the OFT became involved and the BRS owners withdrew their purchase plans.

In fact, far from running down EXT, many believed the plan would have been to use EXT as complementary to BRS - in effect two terminals and two runways but 60 miles apart. This might have been instead of expanding BRS the plans for which have taken years to be finally approved and will mean finding £150 million for the work.

In the past five years EXT has suffered nearly as badly as CWL in seeing passenger numbers drop - a fall of over 30% from over 1 mppa to currently just under 700,000 pa.

One wonders how it would have fared had the BRS owners been allowed to buy it. I suspect better than it has done.

 

[TheLocalYokel]

Re: Cardiff Airport - Main Thread

[textarea]£50m cash deal for airport expected by end of March


The Welsh Government is expected to complete its acquisition of Cardiff Airport next month in a deal understood to be around £50m with current owner Abertis.

A due diligence process is being undertaken by a team of advisers on behalf of the Welsh Government that includes law firm Eversheds and professional advisory firm KPMG – using personnel at the firms’ respective Cardiff offices.

It is understood that it will be a straight cash deal, with no earn-outs for listed Spanish infrastructure group Abertis.

Earn out clauses could have seen Abertis being entitled, for example, to payments based on the future performance of the airport – such as reaching an annual passenger number of three million a year (it is currently languishing at around one million).

The deal will not see the Welsh Government taking on any debt at the airport – which posted pre-tax losses of just over £300,000 in 2011.

The Welsh Government is keen to conclude a deal before the end of its current financial year at the ends of March.

In the short to medium term the Welsh Government would need to inject about £6m a year in capital expenditure and airline route development support – including agreeing to underwrite any losses in the first few years accrued by airlines establishing new routes out of Cardiff.[/textarea]
Full report at: http://www.walesonline.co.uk/business-i ... -32841310/

So now we have the First Minister (assuming this press report is correct) using public money to underwrite any losses airlines might make if they establish new routes from the airport, having earlier said there would be no public subsidies.

Clearly such a course of action would challenge EU regulations on the subject to the limit and it's not far fetched to suggest that there may well be legal challenges from those who consider they may be adversely affected.

The report states that the Wales Government is in continuing talks with Ryanair to operate from CWL (presumably moving from BRS) though so far the airline's demands have been too high for the WG's liking.

 

[Em0866]

Re: Cardiff Airport - Main Thread

Hello

This is very interesting, but the due diligence process is still ongoing and no final price has yet to be agreed. I would imagine that as the process has not yet complete, this is all speculation by the Western Mail. It was interesting reading the minutes of the Welsh Government BETS committee meeting of the 30th of January, which I read from a link on another forum which explained a lot and made the whole thing a lot clearer. Did you see that?

 

[TheLocalYokel]

Re: Cardiff Airport - Main Thread

Sion Barry, the author and business editor for the newspaper group, seems very close to the First Minister and his team.

In the past he has been spot on with his pronouncements re the purchase of CWL which he appears to support, and this has led me to believe for a while that his sources are close to the principal (in newspaper jargon) and at times the FM and his team get certain things into the public domain via the said Mr Barry. This has the advantage of deniability if subsequently deemed politically awkward.

Nothing wrong with that from a journalist's perspective and of course politicians of all shapes and sizes and political hues do this sort of thing regularly.

I suspect strongly therefore that the report is pretty accurate in terms of the FM's intentions.

Yes, I did read the minutes of the Assembly Enterprise and Business Committee meeting of 30 January this year. Lots of political points scored of course and the FM weighed in with various points, some of which are questionable in my view and certainly arguable.

I don't think many have doubted that the purchase of the airport by the state will go ahead. The FM has placed too much of his political credibility on the line backing the proposal for him to allow it to fail.

If he's right in most of his assertions, though there are many experienced industry doubters, and CWL becomes a commercially sustainable and profitable airport without the need for public subsidies then no-one can have any real objections.

The problem is that indirect questionable (and possibly illegal) subsidies might be required and at a disproportionate scale to what can be achieved.

The next few months will be fascinating for those interested in Wales's aviation, and to some further afield who might be affected.

 

[Em0866]

Re: Cardiff Airport - Main Thread

We shall wait and see if Mr Barry's writings are anything near the truth in good time.

On a personal level I hope the airport does well, and as long there are no dodgy dealings or anything illicit or illegal I do not see a problem in winning some of the pax lost to BRS from this side of the bridge. As I said in an earlier post, any spend by WG on the airport and closely scrutinised, so I very much doubt that any "indirect subsidies" would get past as it would be picked up by auditors.

 

[TheLocalYokel]

Re: Cardiff Airport - Main Thread

Absolutely right about trying to get back some of the passengers that have leaked to BRS, and to other airports for that matter. I'm sure the management at BRS has no problems with level playing field commercial competition and that can only be good for the customer in the end.

I take your point about auditors but things can be made to look what they might not be on balance sheets.

A look at the latter part of today's newspaper report takes us along a labyrinthine path of state airport ownership that might involve creating a special purpose vehicle to own the airport on behalf of the WG, or possibly give it over to Finance Wales, the WG's banking arm. The idea would be to engineer a situation where the airport would appear to be an asset on an otherwise negative balance sheet, giving the impression on paper that the purchase paid for itself.

In whatever way the airport is shown to be owned 'in the books' £50 million of real smackeroonies - or the paper or electronic equivalent - will still be handed to the current Spanish owners.

Many thanks for your input on this E'm. It's valued. It's good to have as many views as possible on this extremely important subject. It would be fascinating to read the opinions of some other posters.

 

[TheLocalYokel]

Re: Cardiff Airport - Main Thread

Purchase of CWL by the Wales Government

It appears that the deal will be formally announced before the end of the financial year, possibly this week. It will be fascinating to see how much detail the WG puts into the public arena, particularly in terms of money, and any firming up of their reported plans to find a partner operator.

Websites dedicated to aviation in Wales are this evening discussing what appears to be a credible rumour about some 'big good news' to be announced for CWL around the 25 April.

 

[TheLocalYokel]

Re: Cardiff Airport - Main Thread

[textarea]Welsh Government confirms purchase of Cardiff Airport for £52m

The Welsh Government has announced it has acquired Cardiff Airport for £52m.
First Minister Carwyn Jones said the purchase was a "good example of value for money" and that his immediate priority was to increase the number of people coming through the airport.

The airport has suffered from years of falling footfall and a former major shareholder applauded the Welsh Government’s takeover, saying the recent decline was “unforgivable”.

Mr Jones also insisted there would be "no question" of a revenue subsidy for the ailing airport and it would be expected to demonstrate a return for the taxpayer.

The deal means a holding company has been set up to run the hub, and a board will be headed up by cross-bench peer Lord Rowe-Beddoe.[/textarea]
Full report at: http://www.walesonline.co.uk/news/wales ... -33071606/

No mention of a private sector operator to partner the Wales Government and plough in some money as has been said would be the case by the First Minister.

Perhaps that will be announced later but it does seem the WG will set up an 'arm's length' company to run it on the government's behalf.

 

[TheLocalYokel]

Re: Cardiff Airport - Main Thread

[textarea]New chief executive Jon Horne warns there is no 'silver bullet' for Cardiff Airport

Jon Horne has returned to try and steer Cardiff Airport onto the right path

The new chief executive of Cardiff Airport has said the Welsh Government’s £52m acquisition of the terminal will return value for money for the people of Wales – but warned there is “no silver bullet” to improve its fortunes.

Jon Horne was Cardiff Airport’s managing director between 2001 and 2007, then part of listed company TBI, when the terminal’s passenger numbers grew to a high of 2.1 million.

His appointment yesterday was the first major announcement since the Welsh Government bought the airport last week from Spanish firm Abertis, who oversaw a fall in passenger numbers to 1.01 million last year.

Mr Horne, who advised the Welsh Government during the due diligence process and negotiations, told the Western Mail it felt “good to be back” and believes “whole-heartedly there is an opportunity to return and improve the performance of the airport”.

Aviation experts have suggested the airport’s performance is unlikely to deteriorate further, having seen its passenger numbers fall to its lowest level since 1997 and posting a £319,000 loss in its most recent set of accounts.[/textarea]
Full report at: http://www.walesonline.co.uk/cardiffonl ... -33124452/

Jon Horne is well regarded in Welsh aviation circles and his appointment as CEO of the arms-length company set by the Wales Government to run the airport has been widely rumoured for a number of weeks.

He was managing director of the airport in its best ever period culminating with 2.1 million passengers in 2007, since when it's been downhill all the way at a very rapid pace.

The airport is set for some improvement in passenger numbers this year with Vueling increasing its presence and extra rotations on some routes by Flybe, Aer Lingus Regional and Air Malta, together with some tourist flights from Germany and Austria aimed at inbound tourists to Wales, with Lufthansa (Eurowings) operating a weekly flight from Dusseldorf right through the summer.

This will easily outweigh the loss of Helvetic to Zurich and Monarch to Sanford, Florida, both of which operated in 2012, albeit the Sanford route for a limited summer season only.

2014 is likely to see momentum pick up as CWL begins to get back towards where it should be and where it was before the recession.

The one plus about losing so many passengers (one million fewer in 2012 than in 2007) is that relatively small gains in actual numbers will be reflected more impressively in percentage terms.

 

[TheLocalYokel]

Re: Cardiff Airport - Main Thread

Some rumours are circulatng on some Wales aviation networks that some 'big news' concerning CWL will be announced around 25 April. The news is said to be positive for the airport.

Various ideas have been speculated such as Ryanair or Jet2 setting up a presence, Vueling announcing a base, Thomson adding a third based aircraft for summer 2014, Thomson long haul moving from Bristol to Cardiff, the BAMC will be expanded to include A 380 work.