Published on April 24th, 2015 | by Jim Lee0
Waterford Airport manages to maintain UK connections but how certain is its future?
Last December when Flybe announced its 2015 summer schedule from Birmingham, it was clear that the were winners and losers. Birmingham itself remained a winner, retaining 25 routes with up to 336 flights a week, but it was Ireland that was the loser with services to Ireland West Airport (Knock) and Waterford being chopped. Flybe had operated a Birmingham-Waterford route since March 2012 and had also provided Manchester-Waterford services from May 2013. At the time of Flybe’s announcement, Waterford Airport said it was “dismayed by the decision.” Flybe had earlier decided to cease services from Manchester and had also dropped its Manchester-Knock route.
Putting a brave face on it, Desmond O’Flynn, CEO, Waterford Airport, pointed out while they were obviously “very very disappointed at the discontinuation of the scheduled passenger service linking Waterford with Birmingham and onward destinations in the UK and Europe”, it was important to underline that it was in the context of Flybe ceasing a number of Birmingham routes. It had “nothing to do with the performance of the route per se” he added, noting that passenger numbers were actually up 17% year to date on the previous year. “This result makes their decision all the more incomprehensible” he said.
Showing the spirit that has so far ensured the airports survival, Mr. O’Flynn went on; “As the Irish economy has begun to recover in 2014, there has been a 15% increase in passenger numbers flying through Waterford compared to 2013. This provides a very solid platform on which to build, as we now work with other airlines to put in place alternatives to Flybe in 2015 and beyond.”
“While this work continues, we look forward to a busy Christmas period at the Airport as people use the current services at Waterford Airport to travel to and from the UK to reunite with their families for the holidays. The continued support of our passengers and all other stakeholders is something that we very much value.”
Quick action secures replacement carrier
With the deadline for the loss of its scheduled services fast approaching, it was with some relief that on 9th March, Waterford Airport was able to announce a replacement four times a week service from the Birmingham service plus a new service to London Luton. Both of the services are to be operated by Belgian-based VLM Airlines flying 12 times a week in each direction, twice-daily Monday-Friday flights, as well as a Saturday and a Sunday service. The new operation is scheduled to begin on 27th April using a Fokker 50 aircraft with capacity for up to 50 passengers.
While VLM Airlines has flown in Europe since 1993, with its first service on the Antwerp-London City route, it was previously operated under the CityJet brand having been acquired in December 2007 by the Air France-KLM group. In October 2014, Intro Aviation the new owners of CityJet sold the airline on to the VLM management, with CEO Arthur White being the majority shareholder. Following the management buy-out, VLM, which had been providing aircraft and crews on ACMI basis, expanded its passenger services and currently operates a range from Antwerp, Rotterdam and Liege to Avignon, Bologna, Geneva, Hamburg, Nice and Venice.
Commenting on the new services Mr. White, said that the airline was very much looking forward to taking on the Waterford routes. “We’re very confident that there is a sustainable demand for reliable and convenient direct air services between the southeast of Ireland and London and Birmingham. Various Waterford-London services have operated since 1985, and we are excited to now be in a position to operate it as well as the Waterford-Birmingham route”.
Waterford Airport’s CEO Desmond O’Flynn added: “The load factors on our UK services have always been healthy and there’s every reason for optimism that VLM’s Waterford-London Luton service will be a great success for the airline and for the airport. Air connectivity is hugely important to Waterford and the surrounding southeast region. This has been underlined time and again by inward investment and economic development agencies. We have always enjoyed tremendous support from business and leisure passengers in our catchment area and we look forward to that continuing when the new London service commences in late April.”
Final Flybe service
The last Flybe service, the BE756, from Waterford to Birmingham was operated by Dash 8-400 G-JEDR flown by Captain Carson and First Officer Holmes. The aircraft departed Waterford at 12:43 and arrived Birmingham at 13:30.
Background and history services at the airport
The development of the Airport arose from the desire to improve the attractiveness of the region for both tourism and development and the project was initiated by Waterford Corporation with support from the Irish Government, the chamber of commerce and private interests between 1977–1981. The new £1.5 million (€1.9 million) airport was finally granted its licence for international flights the following year and Avair Ltd announced a twice-weekly service to Dublin which commenced on 29th March 1982. The airport’s first international scheduled air service was to Gatwick, which was operated by the newly established Ryanair, and commenced on 8th July 1985. It subsequently upgraded its services from its initial 15-seater Bandeirante aircraft and switched its service to London Luton. In February 1990 Waterford Regional Airport plc was set up to secure finance for improved facilities, but at the same time, Aer Lingus announced the suspension of their services linking Waterford to Dublin. The route had been operated by the airline for less than a year.
In 1992, Ryanair finally ended its association with the airport and withdrew its services from Waterford in August, blaming recessions in the US and in the aviation industry. Other operators also came and went. During 1993 Orient Air operated services to Gloucestershire, London Luton and Jersey. From 1993 to 2000 Manx Airlines flew to London Stansted and Manchester, using a 29-seater Jetstream aircraft. Manx Airlines later became British Regional Airlines and traded under franchise as British Airways Express to Waterford until January 2001. Between 1994 and 2000, Suckling Airways operated to London Luton, and during 1996 Emerald Airways operated services to Liverpool. From 2001 to 2003 Euroceltic Airways flew to London Luton, Liverpool and Dublin using a 44-seater Fokker F27 aircraft.
Aer Arann succeeded Euroceltic on the Waterford-London Luton and successfully grew their operation from Waterford from 2003, adding services to Manchester, London Southend and a seasonal service to Lorient. Summer sun flights were added to European destinations including Bordeaux, Faro and Malaga in 2007 – 2008. These were hugely successful and allowed the Airport to achieve its highest ever passenger numbers in 2008. However, traffic began to decline although 2012 saw the announcement of new services by Flybe to Birmingham and would later add a Manchester service. Effective 25th March 2012, the Aer Arann routes came under the Aer Lingus Regional brand, however after going through a tough receivership process, Aer Arann announced their departure from Waterford Airport effective from 6th January 2013. This left just the Flybe services to Birmingham and Manchester.
Issues affecting the future and sustainability of the airport
Some of the difficulties in trying to operate a Regional Airport were outlined by Graham Doyle, the Airport’s former Chief Executive in an address to the Irish Aviation Authority & Department of Transport Conference on National Aviation Policy held on the National Convention Centre, Dublin on 3rd December 2012. In a paper entitled ‘Efficiency’ he noted that “Transport infrastructure comes with fixed costs, within particular activity ranges, regardless of the level of throughput – although a large element of the ‘efficiency’ of that infrastructure is often designed or planned-in at inception…costs are largely fixed”. Nevertheless, Waterford operates to staffing minimums to land the particular aircraft types being used for its passenger business, general aviation and to serve the Irish Coast Guard Base at the airport. This he said “means in practice that the guy who helps you through security… can be the same guy that handles and screens your baggage… can be the same guy that cleans, fuels and marshals the aircraft… and maintains the airport… and the same guy who helps man the emergency vehicles if, God forbid, an incident occurs”. The objective is to facilitate business and inbound tourist traffic on key routes. While the airport needs to be inexpensive, ‘efficiency’ shouldn’t be confused with excessive cost cutting. Clearly they have gone as far as they can go.
Mr. Doyle, now Assistant Secretary General at Department of Transport, Tourism & Sport, outlined his belief that, however efficient some Regional Airports are, they can’t exist in a vacuum. It’s no secret that small airports find it very hard to break even and frequently rely on subventions, whether direct – in the form of an OPEX (operational expenditure) support, or hidden in the form of a PSO (Public Service Obligation). Waterford has never had a PSO even though its routes and business certainly performed a public service. Regional airports including Waterford have been subsidised – but almost all aviation infrastructure developed over time in Ireland has been directly or indirectly financed at least initially by the Irish State. State owned airports for example also have an ongoing subsidy for air traffic control services. Of the money spent on regional airports over the first decade of this century, Waterford, and by extension the Southeast Region, have accounted for only approximately 4%. Nevertheless they have an obligation to deliver value-for-money to the State, and in Waterford they believe that they have had a significant, positive economic impact on the region. Further support will be needed as the airport board is committed to providing an additional 150 m of runway. The Department has confirmed to the airport its commitment to assist with funding this piece of work and the associated purchase of land, up to a limit of €400,000 and the airport is working on raising the balance of the necessary funds from local sources. Land acquisition issues have delayed this work. Between 2013 and 2014 more than €900,000 in Exchequer funding has already been allocated to the airport for safety and security related projects.
That is why regional airports have to be seen in the context of the added value they bring to regional development and tourism. According to Doyle, traditionally 55% of Waterford’s passenger business was inbound into the Southeast… and with 33% business travel; many of the outbound passengers are exporting goods and services. He believes that if we want people to come to visit an Irish region, we have to have connectivity and that means two way traffic. This allows frequency and capacity is provided to fly the tourist in. For example, when Waterford developed its Manchester route a few years ago, it was essentially to fly people to football matches… but within a short number of years they had moved to 55/60% inbound traffic while the Birmingham service was reporting 70% plus inbound.
However the airport remains vulnerable not only to the market, but in some cases to the interests of its air operators. For example Waterford believes that the services previously operated by Stobart Air (as Aer Arann) were damaged, not due to falling demand but due to the overnight switch of the London Luton service to Southend, driven more by their business to serve their franchise partner and principal shareholder rather than the needs of the people of the region. For that reason and to secure security of service as part of a regional airport’s policy, consideration should be given to operating routes from Waterford to the UK on a PSO basis.
Across the EU and the EEA there are approximately 270 current, potential and historic PSO air services in existence. These span a broad range of services including services to islands with large populations such as Sicily and Corsica, distant islands such as the Canary Islands and the Azores, flights connecting major cities and flights connecting regional capitals and remote regions. Regulation 1008/2008/EC does not define ‘peripheral’ or ‘development’ regions, ‘thin routes’ or set out an objective test to establish if a route can be considered “vital for the economic and social development of the region” allowing Member States considerable leeway of interpretation. Traditionally all Irish PSO routes have been Intra Island, perhaps a wider interpretation of the needs of Regional Airports such as Waterford is needed. The Government is committed to the development of a framework for approval by the EU Commission for State support for regional airports for implementation at the end of the current programme (i.e. from 2015) but such a framework needs to be imaginative. Regional airports are viewed as being important because of a level of international connectivity that they bring to a region for tourism and business but this objective seems to be lost when connectivity is seen in an intra island context only. The value of airport’s such as Waterford needs to be recognised in any sensible regional policy, particularly as we have already invested significantly in their development. Leaving the last word to Graham Doyle, we can only agree with his comments that “the regions can be engines of growth for our economy, not just seen as recipients of funding… after all, more than half the country lives outside of the greater Dublin area”, therefore balanced development is needed.