Loganair

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Its the old story, people in south Wales will look at the cost of flying to say Belfast from CWL and then compare the easyJet fare from BRS. The LOCO will win every time. The likes of FlyBe have had to pitch their fares to try and compete with the LOCO,s. The cost of flying a 78 seater versus a 180 seater and trying to obtain the same yield must be a nightmare.
Many years ago, I lived in Abergavenny and my neighbour was a frequent business flyer. He never considered CWL, always using BRS or Birmingham. I know that many people living in Newport or Monmouthshire consider BRS to be their local airport not CWL citing cost of fares, frequency of flights and ease of access as the reason for using BRS. How CWL gets over that hurdle I dont know.
 

Jerry

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ts the old story, people in south Wales will look at the cost of flying to say Belfast from CWL and then compare the easyJet fare from BRS. The LOCO will win every time. The likes of FlyBe have had to pitch their fares to try and compete with the LOCO,s. The cost of flying a 78 seater versus a 180 seater and trying to obtain the same yield must be a nightmare.
But the demand for the route is there for both airports the CAA stats have shown that. An airline like Flybe shouldn't be struggling on yield on a route like BHD with a 78 seater. The demand is there to fill that aircraft on a daily basis so why are they getting into a price war with the Easyjet? Maybe if they were trying to fill 4 daily flights but not 1. They shouldn't need to, they should be focused on maximising the yield of that route as it's not always about price for many people.
 

Starflyer

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They shouldn't need to, they should be focused on maximising the yield of that route as it's not always about price for many people.

If I could give you £1 for every time I've heard that argument, you'd be far richer than me. Unfortunately, there are simply too few people to whom that philosophy applies. Try to squeeze up the yield to a sustainable level and you lose passenger volume very quickly indeed. The theory just does not translate into a reality.
 

TheLocalYokel

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I know that many people living in Newport or Monmouthshire consider BRS to be their local airport not CWL citing cost of fares, frequency of flights and ease of access as the reason for using BRS. How CWL gets over that hurdle I dont know.

PSO designation (no APD payable) would help the domestic routes that use smaller aircraft, although we don't know how this type of route will function from the end of this year. If APD was devolved and abolished then someone like Ryanair would undoubtedly be interested. They told a government committee last year that APD is preventing them from having a larger CWL presence although that might have been part of their campaign to see aviation taxes reduced everywhere.

Nevertheless, it's likely that an absence of APD would be attractive to Ryanair to build some sort of network, however modest.

Looking further ahead to when the industry recovers from the effects of the pandemic, BRS's current planning cap of 10 mppa could be a help to the likes of CWL and EXT. If BRS does not appeal the local authority's decision to refuse a planning application for a rise in the cap to 12 mppa with attendant infrastructure expansion, or does appeal but loses, then airlines seeking to expand in South West Britain would have to look somewhere other than BRS. BRS was over 9mppa for the rolling 12-months before the pandemic struck and was expected to reach 10 mppa at the end of 2021. That will now take somewhat longer.
 

Jerry

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If I could give you £1 for every time I've heard that argument, you'd be far richer than me. Unfortunately, there are simply too few people to whom that philosophy applies. Try to squeeze up the yield to a sustainable level and you lose passenger volume very quickly indeed. The theory just does not translate into a reality.
I'm curious though how you know the yield information for Flybe?
 

Jerry

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Nevertheless, it's likely that an absence of APD would be attractive to Ryanair to build some sort of network, however modest.
I think as long as Wales is part of the UK APD won't be devolved. Too many passengers head into England boosting the English economy and the airlines based there. And if the info from Starflyer is correct then even taking APD away may not even make the routes profitable enough to attract airlines to operate from Cardiff.
 

TheLocalYokel

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I think as long as Wales is part of the UK APD won't be devolved. Too many passengers head into England boosting the English economy and the airlines based there.

Playing devil's advocate, if APD was devolved and abolished then some passengers might head into Wales from England to boost the Welsh economy and the airlines using CWL. Part of the Qatar Airlines CEO's publicly-explained rationale for commencing a CWL service was that he believed he could attract passengers from England. He said that CWL's catchment is six million which is nearly twice the size of the population of the whole of Wales.

I know there is a specific thread for discussing APD devolution but I believe that a Westminster Labour government would be more receptive to APD devolution, especially if there was a Labour administration in Wales. That said, with the pandemic fallout and the unknown future after Brexit anything is possible with the current Westminster government.

Clearly Starflyer is well versed in the economics of airlines, but I still find it strange that the Exeter city region economy is able to support Loganair flights to Scotland but not the Cardiff city region. Devon's economy has been growing in recent years and the Exeter region is an important driver, but the economy of Cardiff/Vale of Glamorgan is also strong, and contributes disproportionately to Wales as a whole. Furthermore, an EDI route would be linking two of the Home Nations' capital cities. EXT was handling just over 1 mppa when the pandemic struck compared with CWL's near 1.7 mppa.

I'm assuming that Starflyer works or worked in the industry in which case his/her knowledge of the subject is considerably better than mine. I'm not an economist or accountant or anything else in that general field but I've followed the ups and downs of the South West's economy for many decades. In fact, the economic effects and influences on civil aviation is my main interest in the subject.
 

TOM100

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If the deal really was on an 18% of total income with BE then the CWL management team must surely have a breakdown by route and fares at least. They can share (or choose not) to share this with other operators ?
 

TOM100

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Concerning EXT if the catchment is slightly more affluent perhaps they were less price sensitive to U2 at BRS, hence higher yields......
 

Nigel B

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Nearly all the conversation is about the relative wealth of the South Wales region compared to the South West,that may well be a driver for the amount
of passengers travelling from the both regions (mostly on low cost airlines!),but what about the attracting of incoming passengers to South Wales. I suspect a good propotion of BRS incoming passengers are going on to Cardiff and Sth Wales due to the lack of European flights into CWL.
So its the chicken and egg conundrum again,how to attract airlines to CWL.Does anyone know what average percentage of BRS passengers
travel from/to Cardiff and Sth Wales area?
 

Foxlimayankee

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I've looked back at CAA stats each year until 2002 and listed the annual passenger totals on the CWL and EXT routes to both EDI and GLA. The figures are presented thus:

Year: CWL to EDI/GLA: EXT to EDI/GLA

2002 29,000/19,000 : nil/nil
2003 132,000/90,000* : nil/nil
2004 152,000/51,000* : 36,000/34,000
2005 160,000/33,000* : 71,000/42,000
2006 156,000/87,000* : 83,000/53,000
2007 158,000/77,000 : 68,000/56,000
2008 163,000/84,000 : 68,000/39,000
2009 161,000/56,000 : 61,000/33,000
2010 111,000/52,000 : 54,000/26,000
2011 84,000/47,000 : 51,000/24,000
2012 78,000/40,000 : 40,000/26,000
2013 77,000/48,000 : 37,000/24,000
2014 58,000/28,000 : 38,000/21,000
2015 69,000/18,000 : 45,000/3,000
2016 94,000/38,000 : 45,000/33,000
2017 99,000/29,000 : 48,000/39,000
2018 102,000/33,000 : 48,000/40,000
2019 111,000/25,000 : 58,000/34,000

* part way through 2003 bmibaby switched their GLA route to PIK (Prestwick) and of the 90,000 passengers flown on the 'Glasgow' service that year, 36,000 were to PIK. In 2004 bmibaby contracted Air Wales to operate the CWL-PIK route for them and this remained until April 2006 when Air Wales went out of business.The route was switched back to GLA and of the 87,000 passengers carried on the 'Glasgow' service that year 5,000 were to PIK by Air Wales on behalf of bmibaby

In terms of proven market in numbers on the EDI route CWL been well ahead of EXT for the entire period under review. The numbers in bmibaby days suggest that there is a big enough market for a 2 x daily Ryanair.

GLA is not as clearcut. Although CWL has generally carried more passenger than EXT on the route, recent years are much closer, although for much of 2015 EXT had no GLA route at all.

easyJet was operating at BRS during the bmibaby years and there were also BA franchise flights to both EDI and GLA alongside easyJet until May 2007 when Flybe bought BAConnect and closed the 5-aircraft BRS base.

All this of course is written in the knowledge that yields are unknown to most of us, although with EDI in particular the market size ought to provide sufficient flexibility for a reasonable yield.

I think this in itself speaks volumes (Thanks to TLY for the stats). With the exception of 2006, 2011, 2012, 2014, 2015 and 2019 CWL has carried over DOUBLE the amount of passengers than EXT to EDI. Every year CWL has exceeded the numbers over EXT. In 2019 CWL carried over 4 times as many passengers as EXT.

Just for clarity, a singe daily Dash8 would result in 56,940 seats a year or double daily 113,880 a year. A double daily E195 is 172,280 a year.
I appreciate that not every day saw double daily flights from CWL and i'm not sure what the exact frequency from EXT was.
On the basis of single daily from EXT, Flybe never came close to filling their aircraft since 2014, yet since 2016 CWL's figures were growing well since 2016. Granted the flights then were on a the E195 but had they been on the Dash8 then it should have worked. It does beg the question why CWL-EDI was 3x daily at some points when 2x daily would've been sufficient and would've helped yields.
I wonder if it was the deal from blackbird that required minimum 2x daily and maybe 3x daily which actually shot yields. Either it was bad yield management on Flybe's part, or an unrealistic deal in Blackbird.

Back to Loganair, a single daily (well timed) route would provide 35770 seats, or 71,750 for double daily. Since 2003 CWL has only on two years carried less than that annually. For a single daily route they only need to carry about a third of the passengers carried in 2019 to fill a Loganair E145. If Loganair can't get the yield right on that, serious questions need to be asked.
 

TheLocalYokel

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Back to Loganair, a single daily (well timed) route would provide 35770 seats, or 71,750 for double daily. Since 2003 CWL has only on two years carried less than that annually. For a single daily route they only need to carry about a third of the passengers carried in 2019 to fill a Loganair E145. If Loganair can't get the yield right on that, serious questions need to be asked.

I suspect that you might be or have been in the industry. I haven't so have to rely on those who are or have been when it comes to the detailed operation of airlines and airports. From the contents of his/her posts I also think that Starflyer has industry experience. My interest in aviation lies primarily in the economic aspects of running airlines and airports, although I'm not an economist or accountant, or anything like it. Over the years I have become acquainted with a number of people in the industry, some at fairly senior level, who have shown endless patience and kindness in answering my what must sometimes appear to them to be fatuous questions.

Despite that the industry often still appears to me to be on a par with running a football club in terms of trying to make money or at least remain solvent.

Nearly all the conversation is about the relative wealth of the South Wales region compared to the South West,that may well be a driver for the amount
of passengers travelling from the both regions (mostly on low cost airlines!),but what about the attracting of incoming passengers to South Wales. I suspect a good propotion of BRS incoming passengers are going on to Cardiff and Sth Wales due to the lack of European flights into CWL.
So its the chicken and egg conundrum again,how to attract airlines to CWL.Does anyone know what average percentage of BRS passengers
travel from/to Cardiff and Sth Wales area?

The percentage of passengers using BRS who have an origin or final destination in Wales varies with the survey that one is reading. BRS and CWL only feature in CAA passenger surveys infrequently, the last one being in 2015. It seems to vary between 10% and 20% of BRS's passenger numbers, depending on the year in question and the survey itself.

In the attendant documentation that BRS published in connection with its new masterplan consultation (the plan is still to be published) it gave the following breakdown of passenger origin/destination.

West of England (analogous to the former county of Avon, or Greater Bristol as it's sometimes now called) 35%
South Wales 20%
Devon 14%
Somerset 10%
Gloucestershire 7%
Wiltshire 7%
Cornwall 5%
Dorset 2%

Clearly this can be only an approximation as CAA surveys also show some traffic from further afield but relatively little.

Based on BRS's 12-month running total of just over 9 million passengers prior to the pandemic that would amount in raw numbers to:

West of England 3.15 million
Somerset, Glos, Wilts, Dorset 2.34 million
South Wales 1.8 million
Devon and Cornwall 1.71 million

From these figures over a third of BRS passengers originate or terminate in South Wales, Devon or Cornwall, areas that have their own airports.
In fact, these stats suggest that more 'Welsh people' use BRS than use CWL and more 'Devon and Cornwall people' use BRS than use EXT and NQY combined.

Over the years I've often raised with aviation professionals what appears to be an irrational spread of passengers across Severnside. The obvious question is why don't the 1.8 million use CWL and why don't the 1.71 million use EXT or NQY?

The answer appears to be split into parts.

1. If the CWL/EXT/NQY catchment passengers were using just a few of the 100-plus BRS routes then there would be a sound reason for giving them a service from their local airport on a number of them. They don't and are spread across many routes that in themsleves would be unlikely to be viable at CWL/EXT/NQY.

2. The reason they would not be viable is that BRS has a larger core catchment and is in reach of both the EXT and CWL catchments into which it can tap, whereas CWL or EXT are only realistically in reach of the BRS core catchment. The larger BRS core catchment (than those at CWL and EXT) also means that thinner routes need less 'topping up' from outside than if they operated from CWL, EXT or NQY.

3. Another point is that CWL 'traditionally' performs poorly in winter compared with summer. Whilst accepting that all regional airports are less busy in winter than in summer the gap at some is much less pronounced. For example, in 2019 the worst month of January at the three airports saw 520,427 passengers at BRS, 73,100 at CWL and 54,388 at EXT. The best month at these airports was August which respectively saw 1,009,498, 216,530 and 119,990 passengers. This means that BRS's worst month carried 51.55% of its best month's passenger traffic whereas CWL's percentage was 33.76%. EXT was in the middle at 45.33%.

Now I'm not suggesting that any of this means that CWL should not be seeing more services and more passengers - it should - but (as with EXT) it has to find a way of weaning airlines away from BRS. The current CWL master plan (published nearly 15 years ago) recognised the situation but nothing has happened in the intervening years to address it effectively, I am certain not for the want of trying.

It might be, as I suggested in a recent post, that CWL's best bet is to hope that BRS is stuck permanently with its 10 mppa planning cap. Both the WG and its airport company made formal representations to North Somerset Council when it was considering BRS's planning application to expand further that it wasn't necessary as CWL could take the extra passengers that BRS was seeking permission to carry.

It might be that to an extent the CWL Scottish routes are a microcosm of the wider situation.
 

geoff

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TLY thanks for the very good summing up of the problems faced by CWL and EXT, they are the same problems now, as they have been for many years, perhaps they should hope that BRS's application to go above 10 million passengers is refused. What is the depth of feeling in the Bristol area regarding the application?
 

TheLocalYokel

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What is the depth of feeling in the Bristol area regarding the application?
I think it's fair to say that there is a significant majority in favour of the expansion. The snag for BRS is that it’s largely a silent majority when it comes to the general public.

For many years whenever airport expansion has been in the news local press straw polls find around 70% in support which was also the case with a YouGov poll prior to the planning application this time.

Business groups and trade unions are certainly in favour and gave evidence at the planning committee hearing, as are authorities such as the Labour-led Bristol City Council with its Labour elected mayor, the Conservative-led South Gloucestershire Council, the West of England Combined Authority with its Conservative elected mayor and others, all of which made formal support submissions.

Over 11,000 formal submissions were made to North Somerset Council of which only around 2,400 were in support. Most of the rest were objectors although there were some statutory consultees. The objectors were bolstered to a tremendous degree by the well-organised environmental industry. Objections came from all around the country and beyond.

BRS’s real problem was the local elections of 2019 when the huge Conservative majority on the North Somerset unitary authority was replaced by a so-called ‘RainbowCouncil’ that consists largely of many Independents, Lib-Dems and Greens, a lot of whom campaigned for election on a no airport expansion ‘ticket’. A lot of these newly-elected councillors formed the planning committee membership that rejected the application - against the advice of their own professional planning officers.

In 2011 the then Conservative majority on the council approved the previous major expansion planning application that allowed growth to 10 mppa, and even then the formal objectors outnumbered the formal support comments by 3/4 to 1. Subsequent Judicial Review applications by opponents failed.

It’s highly likely that had the Conservatives remained in control in North Somerset the latest planning application would have been approved, despite the local Tory MP Liam Fox submitting a letter of objection, although he says he is not against the airport per se and uses it. He doesn’t want it to get any busier because he sees no benefit to the regional economy which is the exact opposite of what he was saying four years ago when he came out against APD devolution to Wales.

The airport now has until September to decide whether to lodge an appeal with the national Planning Inspectorate which would lead to a public enquiry. Perversely, the pandemic effects have taken the urgency out of the situation as it will now take BRS longer to reach its 10 mppa cap.

The WG and CWL management will doubtless be following events closely given the potential effect on them.
 

Starflyer

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Jun 10, 2014
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To answer Jerry's question, I do have the Flybe yield and volume data by route. I'll need to leave you to your own conclusions on who I might be or how I might have that, I'm afraid. Cardiff Airport also has it for the routes that were covered by Project Red Kite, but I'd be very surprised if they have the comparators for the routes like those at Exeter or Birmingham to show whether the Cardiff performance was better, worse or in line with the average.

As I've said - the Exeter Flybe yields were quite a bit higher than Cardiff on pretty much every route apart from Belfast. There were quite a lot of routes where efforts to squeeze up yields simply resulted in a big drop in passenger volumes and Cardiff was amongst that group (DSA routes were generally much the same). The argument of "fly a small aircraft and you can push the fares up" doesn't work in these markets given the price sensitivity and easy interchangeability for customers of using alternatives at the likes of BRS (for CWL) and EMA (for DSA).

You perhaps go from carrying 40,000 passengers at £60 average fare (so £2.4m revenue per year) to 18,000 passengers at £80 average fare (so £1.44m). £2.4m isn't enough to sustain a daily Q400 service and £1.44m isn't enough to sustain a daily Embraer 145 service, and the 33% increase in average fare leads to a 55% drop in passenger numbers. If the relationship between the increase in fares and the drop in passenger volumes was linear, you'd stand a chance - but it is not. I'm struggling to explain this any better, but that's the problem here.
 

Starflyer

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Jun 10, 2014
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Just to add a further example. If average fares and passenger volumes moved in direct relationship, a 30% movement from 40,000 passengers at £60 average fare would translate to 28,000 passengers at £78. The revenue would move from £2.4m to £2.184m and that almost certainly would be sustainable on something like an ER4 or AT4. It's that broken link between passenger numbers and average fares which creates the issue being discussed for most of the last two pages here.
 

Jerry

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SF - so do you think CWL can work for someone ? LM ? FR ?
By the sound of it with the exception of bucket and spade routes, no one can make a profit or enough profit on non bucket and spade routes at CWL that Flybe were operating.
 

Starflyer

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Jun 10, 2014
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There are more than a few routes which are difficult, and CWL is not the only airport in this situation. DSA is another. You also need to look at the number of ex-Flybe routes still sitting vacant from SOU, EXT, NQY, BHX etc to see that airlines aren't exactly rushing to start new routes. MME is only happening because the local authority are allegedly throwing vast amounts of cash at it. The market really isn't in a good state.
 
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