After the Olympics, a new challenge

UKinbound, an association of tourism operators in Britain, has issued the government a warning that “immediate action” is needed following the Olympics to boost inbound visitors to the UK for the

After the Olympics, a new challenge

UKinbound, an association of tourism operators in Britain, has issued the government a warning that “immediate action” is needed following the Olympics to boost inbound visitors to the UK for the balance of the year, in order to offset declines experienced during the games. A survey of its members showed that 88% recorded declines for the period – 66% saying they were significant. This decline extends into the post-Olympic period and is perhaps one of the reasons that the number of signatures on an anti-APD petition continues to grow.

All agree that the London games were a resounding success and that the dire warnings about massive lines and slow airport processing were absent. However, that does not alter the fact that UK aviation policy is likely to continue to negatively affect tourism – and perhaps business travel as well.

Is the policy pennywise and £ foolish?

And that is a poor place for a hit to be taken. According to Visit Britain, nearly 9% of the UK Gross Domestic product is generated by the sector, and 73% of the UK’s visitors arrive by air – making sound aviation policy a keystone for continued growth.

Statistics gathered from the British Airports Authority (BAA) confirm that Heathrow’s once premier position is eroding. The first chart compares total passenger throughput for July since 2008 – minus those in transit. While some drop-off in origin and destination passengers is attributable to the Olympics, the peak season numbers are hardly showing robust growth – the aggregate increase between the 2008 numbers and 2012 is but 2%. Nonetheless, year-on-year figures, except for this year, remain positive.

July Heathrow Traffic

2008: 6,417,660 – +/-
2009: 6,477,476 – 101%
2010: 6,705,882 – 104%
2011: 6,872,514 – 102 %
2012: 6,569,647 – 96%
Source: BAA

Diminishing hub status

However, there is a far more daunting number that speaks to the nub of the matter and that is transit traffic. For decades, London was the premier connecting airport for many travelers – especially those flying the North Atlantic. The UK has traditionally generated about 40% of all transatlantic seats, and many of those passengers were enroute to onwards destinations.

No more. BAA numbers, as displayed in the second chart, show a massive decline in transfer passengers, down by over 50% in just 4 years. Certainly there are numerous reasons for this change. US carriers especially, have added service to many of the secondary cities that used to require a transfer in Europe. All those 757s, which provide direct service are doubtless part of the drop.

There is also the fact that other European hubs have seen significant service increases. In 2000, there was no nonstop from Frankfurt to Seattle, passengers headed for Istanbul had only one Turkish flight from New York on offer as opposed to the current 3, and the Gulf carriers were not yet flying to the US. But the reasons for the decline may transcend simple market changes.

Transfer passengers at Heathrow by month

January: 2008 – 17,251; 2009 – 22,257; 2010 – 16,628; 2011 – 2,605; 2012 – 5,301
February: 2008 – 9,401; 2009 – 16,169; 2010 – 14,244; 2011 – 1,689; 2012 – 3,615
March: 2008 – 10,185; 2009 – 14,575; 2010: 14,665; 2011 – 2,200; 2012 – 3,740
April: 2008 – 7,874; 2009 – 6,106; 2010 – 8,375; 2011 – 2,882; 2012 – 4,325
May: 2008 – 10,115; 2009: 6,585; 2010: 12,736; 2011: 4,197; 2012: 5,179
June: 2008 – 11,752; 2009 – 6,032; 2010 – 12,693; 2011 – 4,340; 2012 – 5,812
July: 2008 – 12,824; 2009 – 7,979; 2010: 14,430; 2011 – 4,870; 2012 – 5,331
Total – January – July: 2008 – 79,401; 2009 – 79,704; 2010 – 93,771; 2011 – 22,783; 2012 – 33,303
Source: BAA

Contrast the 2011 figures with those of Frankfurt, an airport with fewer total passengers and for which transit traffic also declined in 2011. Yet the number of transit passengers using FRA was nearly 4 times greater in the first 7 months of 2011.

FRA transit 2011
January: 12,211
February: 9,348
March: 10,552
April: 9,891
May: 12,845
June: 14,591
July: 15,460
Total: 84,898
Source: Fraport

And Zurich, a compact airport with a good reputation for connections among travelers, reports that transit traffic in 2011 accounted for 34% of its total throughput (no monthly breakout available).

A rethink in order?

It appears that London’s reputation for complexity and delay is diminishing its role as a European hub and that lack of expansion potential, coupled with the erosive effects of the APD, add credence to the argument that Heathrow’s long-term outlook, absent policy changes, is imperiled.

The effort to pressure the UK government to change course continues to mount, but it as yet has not shown much progress. The final outcome of this face-off remains unclear, but the stakes are high and perhaps irreversible.

Author: editor

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