The little airport with big ambitions

The first time Marc Lorenceau flew into London City Airport, the tiny outpost in London's Docklands reminded the Swiss executive of a second world war airfield. Sitting on a dock facing a 19th-century sugar factory, the airport, built on what used to be a cargo loading area for freighters, still has that Biggin Hill feel.

Since City opened 10 years ago, Mr Lorenceau (the president of Addax Petroleum) and others say they have witnessed a radical transformation from the days when just three airlines served it, flying nothing bigger than 30-passenger turboprops.

Travellers these days have access to 18 European destinations offered by 10 airlines flying jets as well as turboprops. Traffic is booming: up 76 per cent in the first seven months, against a rise of less than 10 per cent for European airports on average.

"They've done a tremendous job in expanding," says Chris Tarry, an analyst with Dresdner Kleinwort Benson.

Dermot Desmond, an Irish financier whose investments include Glasgow Celtic football club, bought the airport from Mowlem for pounds 23.5m in 1995.

Mr Desmond's first move was to hire Richard Gooding, Luton Airport's director, with the brief of making City Airport the number one choice for people from the City of London, six miles away.

"I saw the airport as underexploited," says Mr Gooding, 49, managing director since last August. "We had a marvellous location and facility, but not enough people knew about it - neither airlines, nor the travelling public."

In Mr Gooding's 12-month tenure, he has persuaded airlines to add services to six new cities: Edinburgh, Milan, Rome, Turin, Stockholm and Malmo, and he aims to bring on Glasgow and Manchester soon. Among the airlines using City are Air UK, Air France, Lufthansa, Sabena and Crossair.

After logging 727,601 passengers last year, the airport hit the 1 million passenger mark for 1997 this month, with a projected total of 1.2 million passengers for the year.

It is the City crowd he wants to keep coming. Some 73 per cent of the airport's users are business travellers, who can cover the six miles from the City in 15 minutes by taxi, and 20 by shuttle from Liverpool Street.

"Our proportion of business travellers is higher than for any airport in Britain by far," says Mr Gooding, "and that means good yield [revenue per passenger] for airlines. That's the secret of London City."

The problem is that business passengers who pay higher fares also make higher demands, particularly with flight frequencies. And that is one area where London City is already running into difficulties.

Peak-hour slots are already filled, meaning airlines offering new services must settle for landing or take-off times slightly later or earlier than peak hours.

More seriously, the airport is close to running out of expansion capacity. While authorities have set no limits on numbers of passengers allowed, rules on air transport movements (ATMs), the number of planes that may fly in and out, limit capacity to around 1.5 million to 1.8 million passengers.

The airport recently applied to double permitted ATMs to 73,000 from 36,500, without changing the airport's daytime-only hours or allowing noisier or bigger aircraft. The airport should have an answer by October .

Mr Gooding is also working with carriers to market flights as feeders to international flights out of European hubs. Air UK, now fully owned by KLM, flies four times daily to Amsterdam and is about to add a fifth flight.

"We see [flights from London City] as supporting our Amsterdam position and assisting us as feeder and supplier of capacity from the UK," says John Grant, director of Air UK's City business unit.

Aviation experts say that London City could well serve as a model for similar airports.

"I think there is an inevitability about it as major airports become overcrowded and [landing and take-off] slots ever harder to get," says Mr Grant.

In Sheffield, an airport modelled on London City opened recently. There is also Stockholm's Bromma, Florence's Peretola, Belfast City Airport and Tempelhof in Berlin - though the latter is set to be shut in 2002.

Mr Gooding has assumed leadership of a group representing these city- centre airports, to lobby jointly in political and industrial arenas.

"We want to demonstrate that it's not a one-off thing. A group of airports with common characteristics should be taken seriously by politicians and planners" he says.

City centre airports have shorter runways than larger airports, which means aircraft flying into them must descend and ascend at steeper slopes. Noise and emission levels are also a critical concern.

So Mr Gooding is talking to manufacturers as they develop planes to ensure that such aircraft meet the criteria.

"We're interested in talking to manufacturers of 70 to 100-seat aircraft," he says. "If I were talking to them as director of London City I wouldn't have enough clout, but talking to them representing a dozen airports it starts to make a lot more sense."

Mr Gooding will continue to work on adding destinations for travellers. Among those in his sights: Barcelona, Madrid, Berlin and Copenhagen.

"We feel that with around 25 destinations, we would attain critical mass maturity" and that would make European travellers to eastern London see London City as the airport of choice.

"I don't want people to think: 'Can I go there from London City?' I want to them to think: 'I am going there from London City'," he says.

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