Wednesday, 3 April 2013

The deal's done - so what next for Cardiff Airport?

I could've commented on this when Carwyn Jones made the original announcement back in December. I doubt he would've made that announcement unless an agreement was inevitable at the time, but it was worth waiting until the deal to buy Cardiff Airport was announced properly, which happened last week.

First thing's first, Cardiff Airport is important to Cardiff and its environs alone. As our capital, we should expect it to have decent air links – especially to be taken seriously for business. But this isn't economically essential for "Wales". North Wales has Liverpool and Manchester, mid Wales has Birmingham, while the far south east of Wales is probably within Bristol's catchment area anyway. Cardiff's catchment area should be everything west of Monmouthshire and south of Builth Wells – probably around 1.5-2million people.

I've touched on some of the issues surrounding Cardiff Airport and its future before, but let's be clear, once passenger figures start to reach 700,000-800,000 levels – which is entirely possible in the next 5 years based on the trends – there's a real possibility the whole thing could become so commercially unviable that closure could be an option. Something has to be done.

As far as I'm concerned this was the right decision. I'm pleased that the Welsh Government have taken some concerted and decisive action for once.

I can understand why the Tories are getting their knickers in a twist over this, as they're ideologically opposed to public ownership of anything, even if the airport will be "run commercially".

I'm also opposed to public ownership of things like airports, but I'm not opposed to public-private partnerships, not-for-profits or co-operative models of ownership and management. Sometimes that can be done completely within the private sector, sometimes – especially in the case of Wales - the state needs to help things along.

My biggest concern surrounds the Welsh Government hiding behind that old "commercial sensitivity/confidentiality" chestnut when questions were asked about this deal in the Senedd. When they finally revealed the numbers involved last week, my enthusiasm for this started to ebb.

I'm not a property expert or surveyor, but £52million seems a steep price tag for an airport that's barely keeping its annual passenger figures above the 1million mark. If I had to guess, I would've put the valuation at perhaps a half to two-thirds that.

Sion Barry also had a rather....optimistic....take on this in the Western Mail. I doubt Severnside airport is a goer now, and he seems to have ignored the presence of British Airways Maintenance, which is probably more important to the south Wales economy than the airport is.

Like it or not, it's done now. So what are the Welsh Government and the holding company put in charge of the airport going to do next?

Opportunities and threats

Cardiff's major trump card over Bristol is the length of its runway, which can accommodate larger aircraft, especially those used on long-haul flights. Air passenger duty for long haul flights could be devolved to Wales in the next million years, so there's a clear opportunity there to attract long haul flights to Cardiff.

That could take pressure off the London airports, with Cardiff Airport effectively acting as a mini "Heathrow West". That could expand Cardiff's catchment area, as well as save fuel for aircraft travelling from North, Central and South America, perhaps Australasia too (via Los Angeles).

Bristol might end up taking more "bucket and spade" short haul European flights as a result, but Cardiff should try and retain/attract some economically important air links to major European capitals. That might require a greater mix of airlines using the airport, and that was one of the first things the new chair pointed towards. I presume that's what Carwyn Jones and Edwina Hart have in mind too.

I think worries around transport - especially road transport - are overblown. People drive from the valleys to Bristol Airport because Bristol offers more choice in terms of flights and destinations. It certainly isn't easier to get to than Cardiff, and I think it's a lazy excuse so people can get around coming out and saying "Cardiff Airport is rubbish" to avoid appearing unpatriotic. That's no reason to ignore transport issues though.

Cardiff Airport - or should that be Rhoose village - already has a railway station, but it's about 2km from the terminal itself. There have been mooted proposals for a direct rail link to the airport terminal, but it's meeting opposition.

If that did happen, then I think there would need to be significant improvements from the west – that means train services to/from Swansea and west Wales being able to use the airport station. That would require significant junction/capacity improvements at Bridgend though, which aren't part of any Network Rail or Welsh Government plans.

The Welsh Government and civil service are very good at underpinning their plans with extensive - perhaps over the top - strategies and frameworks. Delivery is a whole other matter.

I'm starting to get worried, as there was – as the new chair has strongly hinted – no concrete business plan for the airport in place when the Welsh Government bought it. They're working on that now.

The Tories and Bristol Airport are going to whinge about this forever and a day. I'm actually surprised at the Conservative's stance on this, as it seems they'd be quite happy to let Cardiff Airport fall by the wayside and let Bristol take as much potential business traffic as possible. They're right to criticise the price tag, but at least the Welsh Government are doing something.

As for Bristol Airport, it's rather arrogant of them to assume south Wales should always remain within their domain. One leading reason they took off ahead of Cardiff was that they secured several low-cost carriers - like EasyJet - at the right time. The roles could very easily have been reversed.

When you weigh up all the variables, in many respects Cardiff should be the predominant airport in south west Britain. The reasons it isn't include persistent mismanagement and things like the Severn Bridge tolls. Fingers crossed that's about to change.

I don't think Carwyn Jones or Edwina Hart need be hung out to dry on this – yet – as they need a chance to see this though. They deserve friendly criticism on this and be given a two to three year window to be judged upon. If it fails, they'll need to take the can for it, but I'll give them credit for trying and being bold for once.

Plaid and the Lib Dems are right to ask for details of the Welsh Government's (and assorted partners) plans for the airport. They're being a sensible opposition about this, perhaps seeing the dire situation at Cardiff Airport for what it is. The Tories aren't, and come across as throwing a wobbler over very little.

But the wider issue remains. The Welsh Government wouldn't have spent £52million on an airport without some sort of "plan" or "strategy" underpinning that rather ballsy decision....would they?


  1. The £52m is "all in" though- no debts or liabilities. So not too high. They should aim for 1.5m passenger movements per annum. Achievable and would make it profitable for the Welsh coffers. Good move by the Welsh Govt. Tories whinging as usual with nothing to offer. We now need to hold the Welsh Govt to account for developing the airport. Under private ownership nobody was accountable at all. Many airports are publicly owned. Including Manchester.

  2. Agreed, Anon. I think this has been handled well. My only concerns - as I said - are the pricetag (which is still steep without debts or liabilities) and the seeming lack of a proper business plan. If it works out though, I don't think there'll be that much of a problem.

    I did wonder whether the Welsh Government would go for a Manchester-style arrangement where the airport is owned by several local authorities. It'll be interesting to see if the Assembly will be able to hold the holding company to account if it's - technically - a state-backed body.

  3. I suspect the price is so high because the deal was announced several before it was signed off. Once the sellers knew that the Welsh government coundn't back out without losing face they could name their own price.

    As for travel to and from the airport, there is a direct coach service from Swansea, Cardiff and Newport city centres to Bristol airport for abotu £10; alternatively you can buy a through rail ticket and get a coach connection from Bristol Temple meads. parking is also cheaper at bristol and closer to the airport with regular transfers.

    By contrast if you want to get to cardiff airport from

    Swansea - its a train to Bridgend, a wait ant then a train to Rhoose then a bus to the airport

    Cardiff - its either a train to rhoose and a bus, or you get the bus to Llantwti major (if its running)

    Newport or the Valleys - train or bus to Cardiff centre then see above.

    There is no through ticketing and none of the connections will wait if you're delayed, and if you arrive 'late' your onlu option is a taxi into Cardiff.

    Compalining about getting to Cardiff airport is not just looking for reasons, it is a major problem.

    If the new management can arrange direct coach services from all the major centres it would be a start.

  4. If Cardiff can get you a cheaper flight, and you're from south Wales, you'll choose it over Bristol. I fly mostly from Bristol but it's a nightmare to get to. I would rather fly from Cardiff but I can't go anywhere from there really. It's not about transport links at all and as a regular flyer (for my sins) I can say Owen is completely right on that. The idea that people *choose* not to fly from CWL because of transport is an utter falsehood. The choice is based on price of ticket, and destination.

    We need alot more maturity on the issue of ownership. I heard Tories saying things like "they can't run health or education, so what makes you think they can run an airport?" As if the Government is suddenly going to replace the airport staff with civil servants. Wales is sadly a dramatically underdeveloped country, largely because of our history of reliance on heavy industry and no diversification, and the attendant legacies of those British policy choices. Transport development in Wales will need consistent Government direction and ownership, because the markets don't naturally exist here. There's no market reason for a thriving airport in Cardiff. But there are national and symbolic reasons, and while it doesn't have to outperform Bristol, it can and should be more useful to south Wales than it is now. It looks like the "Welsh Conservatives" are just as determined to undermine Wales as any of the other London based parties.

  5. Nobody seems to have mentioned that this is actually Plaid Cymru policy. Leanne Wood called for public ownership (through a stake, rather than full buy out) months before Carwyn Jones' announcement.

  6. Vaughan Roderick has tweeted a link to a good story which has the chief exec of Birmingham Airport (48% owned by local government and 52% by private sector) worried that "nationalising" Cardiff airport is wrong, and the nub of his argument is that the UK has too many smaller airports. What is missing from this argument (and from Bristol airport's argument) is that Wales is a nation. The UK could probably shed a load of its smallest airports, but Wales should have one facility, for credibility reasons. We in Wales own hardly any of our own transport infrastructure. A business plan and strategy needs to happen, but I feel appointing the former WDA chief is not a bad move in that direction.

  7. Thanks for all the comments.

    Anon 20:12 - I suspect the price would've been decided when the original announcement took place in December. I think the delay was for all the legal/technical stuff.

    I think the bus service situation with regard Cardiff Airport is ridiculous, but still think transport in general isn't that much of an issue. It looks like we could be waiting until 2015 for an express bus from Cardiff, let alone Swansea and other major towns.

    Anon 09:25 - Exactly. However, I would suggest that there does need to be some sort of market justification for the airport to continue to operate. That could easily come down to attracting more passengers by improving the choice of destinations. Sadly, as we've seen with the Swiss airline recently, it appears as though there's plenty of demand from incoming passengers, but little demand outgoing. Maybe we have to frame Cardiff Airport in terms of attracting foreign tourists as much as taking business out - another thing the Tories seem to have missed here.

    Anon 09:28 - Well, they do say imitation is the best form of flattery. :)

    Anon 14:50 - Here's a link to the article you mentioned. I don't think he specifically mentions Cardiff Airport though, perhaps only hinting. We also need to remember that Cardiff Airport was owned, as I understand it, by local authorities until the 2000s - similarly to Manchester. It's a major infrastructure asset to Wales regardless of its commercial performance.

  8. The Swiss deal seemed strange to me. I know a marketing campaign was funded, and plenty of Swiss were happy to use Wales as their gateway to the UK, but how would it ever have worked commercially? What is more realistic is that we could get North American routes, and possibly Caribbean tourist routes (flights to Cuba anyone?). CWL has had service to Florida and other places over the years. Many (southern) Welsh travellers fly to the states and the Caribbean from the London airports.

  9. I think Cardiff Airport's future is more secure now, as all commercial imperatives to make a profit are out of the window. The Assembly will be judged in the short/medium term on passenger numbers and will spend whatever it takes to achieve this 'success'. If any passenger growth can be sustained then the Airport may 'become' profitable in an operational sense, although I seriously doubty any metrics based on return on original capital and further invested sums would be profitable in any commercial sense.

    Ultimately, whats done is done and I hope for Wales' sake it works. As long as the Assembly focuses on service and not bi-lingual signage on everthing and public transport and bike access, which frankly are irrelevant to nearly all users, they may get somewhere. They could start on removing the horrendous up-and-down walkway which wraps around the terminal, blocking all the old nice views of the planes for departing passengers and p-ing off all the arriving passengers who don't care (in Welsh or English) if a staircase they have to lug their cases up is 100 smaller than the height of Snowdon and just want to get to their car asap. Why not park the plane by the door? Also, forget any delusions of 'Heathrow west' and intercontinental flights just because the runway is longer than average. Get real and serve actual demand like Bristol, lots of cheap flights to nice European cities and holiday resorts - only WAG members need daily flights to North Wales and Brussels and frankly it would be more cost effective for the Assembly to have a private jet....

  10. "The Assembly will be judged in the short/medium term on passenger numbers and will spend whatever it takes to achieve this 'success'."

    Well, not quite. The Welsh Government will be judged. But there are limits as to what it will be allowed to spend, or to waive in passenger taxes (depending on further devolution). There are also state aid rules. What I think is being under-rated is the simple improvement of Welsh ownership over foreign, private ownership. People like Rowe-Beddoe have a genuine commitment to Wales (whatever we might think of his record or motives) and to Welsh business.

    "As long as the Assembly focuses on service and not bi-lingual signage on everthing and public transport and bike access, which frankly are irrelevant to nearly all users, they may get somewhere."

    Airport already has largely bilingual signage under the previous private owners. Not an issue for airlines.

    "They could start on removing the horrendous up-and-down walkway which wraps around the terminal, blocking all the old nice views of the planes for departing passengers and p-ing off all the arriving passengers"

    Irrelevant to the carriers. Also barely relevant to passengers. Price of ticket overrules every single factor you can think of about the Welsh language, the terminal, the amount of stairs etc.

    "Also, forget any delusions of 'Heathrow west' and intercontinental flights just because the runway is longer than average"

    Why? Surelt we need to take advantage of the airport's strengths? Can't out-compete Bristol on bucket and spade resorts. Can probably only out-compete them on long haul, especially given Silk would only devolve long haul APD to Wales. Best bet is to get one LoCo airline in, then hope that the long haul stuff attracts short haulers based purely on the airport being busy and useful again. But strategically, if Cardiff has any real role in the aviation market in the British Isles, it's probably going to have to be long haul flights and 'Heathrow West' stuff.

  11. This has clearly generated more response than I had anticipated. Thanks once again.

    Anon 10:56 - I'm not sure of the exact details. I think the Welsh Government spent money on tourist advertising in Switzerland and the deal with the airline may have been part of that, I'm not sure.

    Flights to the Americas and the Caribbean would make sense. I think Cardiff used to/does operate flights to Barbados and Mexico occasionally. I would be embarrassed to have flights to and from Cuba though....more for the state of Cardiff Airport for incoming passengers!

    Anon 12:51 - They'll still need to make sure it breaks even, or attempts to break even, as Anon 14:18 hints towards. I don't think anyone would tolerate a loss-making airport on the Welsh Government's books - especially the Welsh Government!

    I think though that Cardiff needs a USP over Britsol, and that USP is the ability to accommodate larger aircraft. The flights to the Costas will stay anyway because that's what the bulk of people using Cardiff Airport are flying to.

    As Anon 14:18 says, get in another low cost carrier with more destinations and use the (hopefully) upturn in fortunes to try and fund uncommercial but potentially lucrative longer-haul flights. Cardiff had a successful service to and from Canada until the airline went bust (Zoom, I think). I'm sure there are plenty of ex-pats who would use services like that from US and further afield like Australia or New Zealand. Argentina, even.