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Business Analysis & Features

Simon Calder's Q&A: Manchester airport buys Stansted


Why does Manchester want another airport – surely it’s already got one?

Manchester Airports Group (MAG) actually owns three airports already: Manchester, East Midlands and Bournemouth. MAG is a fascinating organisation, because it’s local-authority owned: the majority by Manchester City Council, the remaining 45 per cent by the other nine boroughs of Greater Manchester. Yet MAG has much bigger ambitions: it tried to buy Gatwick in 2009, and has now gained control of Stansted. In airports, scale is everything, and London is the world hub of aviation – so Manchester wanted to be part of it. The deal involves an Australian fund, Industry Funds Management, taking just over one-third of the expanded company, and getting half the voting rights.

Put the deal into perspective

Manchester Airports Group has paid roughly the same for Stansted as Gatwick’s new owners paid for an airport which is arguably, from an investment point of view, probably 50 per cent more attractive. A year ago Stansted lost its number three position to Manchester, in terms of passenger numbers, so this is an ironic turn of events; if Manchester aims to restore Stansted to the days when it was the fastest growing airport in Europe, it can do so only at its own expense.

There’s one really huge airport in the UK, Heathrow, which has as many passengers than the next biggest three put together – Gatwick, Manchester and Stansted. Stansted occupies a beautiful building, but one with awkward rail links – the journey by train from central London has actually significantly slowed down in the 20 years since the rail line opened.

Of the big four London airports – the other three being Heathrow, Gatwick and Luton – Stansted is the furthest from the centre, and also furthest from the key road and rail arteries. It’s only a little bit unfair to describe it as an airport people use because they have to. Manchester Airports Group will be seeking to change all that.

What will passengers notice?

In the short term, nothing. Stansted is a well-run airport operating at about half its capacity, which means that it is usually uncrowded and tranquil. Longer term, it will have to get much busier if Manchester Airports Group is to realise a reasonable return on investment. The new owners will try to grab traffic initially on short-haul routes from Gatwick and Luton, partly through enticing financial deals - but also by promising excellent customer service. There should be more flights to more interesting places – and a wider range of airlines. At present three out of four flights at Stansted are on Ryanair.

Experience suggests it is unhealthy for any airport to be so dependent on a single airline. The new owners are likely to be talking to easyJet to try to persuade Britain’s biggest low-cost carrier to move more planes to Stansted, and trying to entice every other large European airline. Looking further afield: until now, there hasn’t been any mileage in Stansted aggressively seeking long-haul routes and business travellers, because it would be doing so against the interests of Heathrow – the dominant partner in the business formerly known as BAA. A few long-haul airlines have come and gone, including the business-class only airlines, MaxJet and Eos, as well as Air Asia X to Malaysia. But if Stansted can find the right airline that needs a fast track to the London market, Heathrow and Gatwick will take notice.

Will we see a new route from Manchester to Stansted?

No. British Airways, Eastern Airways and Air Berlin all tried to fly profitably between Stansted and Manchester and abandoned the idea.

And does this influence where another runway will be built in the London area?

The possibility of a second runway at Stansted will certainly be in the plans of MAG, but the airport can basically double in the number of passengers handled before it reachest capacity.