Skift Take

The business traveler's favorite, and formerly Europe's conduit to doing business (and lunch) with the capital’s bankers, London City Airport remains quiet and is preparing to lay off staff.

Most people dislike airports, but London City Airport tends to be the exception. It’s built a reputation for speed and convenience, with a terminal that actually delivers passengers to the gate in 20 minutes. During the middle of March this year, it even rebranded with a heart motif to reinforce how it’s an airport “many passengers love to use.”

But pandemics don’t care for such pleasantries, and after closing for almost three months and reopening to diminished traffic, the airport is now preparing for layoffs. On Monday under UK law protocols, it began consultation with staff as part of a new restructuring plan that could see up to 239 roles being lost, or 35 percent of its workforce.

The news follows last month’s announcement it will pause its $644 million development program, including a terminal extension.

The Damage Done

London City Airport suspended commercial and private flights on March 25, although did keep its aerodrome open to government agencies and the military.

“That decision was a very significant and unprecedented step which was agonized over, but was ultimately the right decision to protect staff, our passengers and our community,” said Richard Hill, the airport’s chief commercial officer, speaking to Skift a few days prior to the restructuring announcement.

Join Us For Our Skift Global Forum Online Conference September 21-23

The airport reopened on June 21, reinstating routes to the Isle of Man, Dundee and Teeside. British Airways tickets went on sale to tourist hotspots like Ibiza, Florence, Malaga and Palma, as well as Glasgow, Edinburgh, and Dublin. Currently, the airport is operating at about 30 percent compared to the same period last year, but airlines are slowly returning.

“KLM reinstated last year’s most popular route, to Amsterdam, connecting two major business centres,” Hill said. “The European HQs of businesses like Nike, Netflix, Uber, IBM and dual-listed Unilever and Shell are based in and near the city. This is already up to three times daily.”

British Airways subsidiary BA CityFlyer has also brought back flights to Germany’s Frankfurt and Berlin-Tegel airports, while Air Antwerp and Luxair are back onboard. “We expect to see more popular business routes resuming through the autumn and many are planned by the airlines. For instance, Lufthansa will bring back its flights on the important Frankfurt route in October,” Hill added.

Out Of Office

The term “ghost town” is widely used to describe cities impacted by coronavirus, but it’s becoming an almost accurate description for London’s Canary Wharf the UK’s financial hub and close neighbor to the airport. The capital’s historical square mile, home to the Stock Exchange and the Bank of England, is also just a few miles away and streets remain quiet. “It feels like a Sunday” say most City workers who do venture in.

With most of the banks and other financial institutions continuing to allow staff to work from home for the rest of this year, and in some cases until summer 2021 or even permanently, many businesses — including airports — are feeling the pain. But Hill is confident that when the bankers eventually return, flights won’t be far behind. “Demand for business travel is still there. Although it is curtailed at the moment, we’re confident it will return over time. London is a global economic, leisure and cultural hub — this hasn’t changed,” he said.

A successful airport is one that knows its customers, and in August it polled 500 business leaders in the UK. The survey found 64 percent believe air travel is important to the future success of the business, nearly twice as many who disagree (34 percent). It also found 60 percent believe air travel is important for maintaining business relationships, while 61 percent believe travel by air helps enable business events and conferences.

“We are confident that people still want to fly for business and leisure — especially to and from London’s most central airport, offering passengers convenient access to the capital in a safe and speedy way.”

Hill also insisted London City Airport’s shareholders, which comprise AIMCo, OMERS, Ontario Teachers’ Pension Plan and Wren House Infrastructure Management, are fully behind it to ensure the business weathers this crisis and is in a strong position to resume operations.

Finding The Balance

Last year was the airport’s busiest, with 5.1 million passengers. Surprisingly, 55 percent were traveling for leisure in 2019, compared to 45 percent on business.

With company travel bans digging in to next year, you’d imagine the leisure market could expand in 2021, but Hill said he expected the split to remain in the middle.

“Over the years we have deliberately built resilience into the business by growing a strong bank of leisure routes and passengers,” he said. “This is an opportunity for the airport to maximize our capacity outside of the busy business hours.”

BA CityFlyer has also resumed international flights to Ibiza, Palma de Mallorca, Malaga, Florence, Nice, Mahon, Faro and Bergerac, and the airport has a range of Covid-secure measures including crowd tracking technology, temperature checking and anti-microbial surface treatments, perspex screens and one-way systems to reassure holidaymakers.

In all, London City Airport has flights scheduled to 17 destinations, but it’s a fraction of last year and sadly a similar picture to other UK airports.

Heathrow Airport last week revealed that August passenger demand was down 81.5 percent compared to the previous year, with 1.4 million people passengers — less than a fifth of what is usually seen in the summer getaway. North American passenger numbers were down by more than 95 percent compared to last year.

According to reports, the airport could axe a quarter of its frontline staff after months of talks with trade unions about employee pay and conditions failed to land an agreement.

In a statement issued on September 2, the airport said: “Discussions with our unions have taken place over four months and our final offer is informed by feedback we have received from them. But with air travel showing little sign of recovery, these discussions cannot go on indefinitely and we must act now to prevent our situation from worsening. We have now started a period of formal consultation with our unions on our offer, which still guarantees a job at the airport for anyone who wishes to stay with our business.”

Gatwick Airport, meanwhile, set out a restructuring proposal at the end of August that could result in 600 job roles being lost, or 24 percent of its workforce. Compared to this time last year, the airport is operating at around 20 percent of its capacity. Currently 18 airlines are flying to 115 airports across 42 countries.

Common Goals

As well as their bids to restructure, there’s something else these airports have in common: views on the urgent need for airport testing.

As an island nation, Covid-19 testing is seen as critical to shorten the quarantine periods that the UK government imposes on a range of destinations. Heathrow Airport even built a testing facility, without waiting for government approval.

The facility at Terminal 2 was set up with Collinson and Swissport, and enables arriving passengers to be tested for Covid-19 upon landing and know just hours later if they have tested positive. More than 13,000 passenger tests can be carried out each day using the existing facility.

Heathrow must have thought this might prompt the government to officially approve these tests. It didn’t.

Could London City Airport just go ahead and build its own testing facility, to get a headstart if/when the government allows testing to shorten quarantines, and open up more destinations? The airport’s August survey saw 48 percent of respondents cite the government’s travel and quarantine restrictions as the single biggest barrier to preventing corporate air travel.

Hill said the airport would rather wait it out.

“We remain supportive of a coordinated and effective airport testing regime,” he said. “It’s already happening in other countries and would make travel to and from the UK viable for many more people, and would also give passengers and businesses greater confidence to book and travel.

“What we need first however, is approval and clear guidance from the government on the approach required. This includes important aspects like where testing should take place — our preference would be on arrival, which is consistent with the rest of Europe — and crucially the kind of testing that is suitable and most effective.”

As the airports, and the rest of the travel industry, shout louder about the need for testing, London City Airport can at least look to leverage its position as an airport  designed for a mostly domestic and short-haul market. And with Brexit looming, the government will hopefully be realizing that building those new trading relationships will be heavy reliant on opening up aviation.

“If we are to be ‘global Britain’ and make a success of Brexit, a thriving aviation industry is going to be needed to underpin this so that people can get out to make deals or come to the UK to invest,” Hill said.

Painful as these restructuring announcements are, airports will be hoping the government is at least paying attention to their plight, and take some decisive action to restart the sector.

Register Now For Skift Global Forum, Happening Online September 21-23


The Daily Newsletter

Our daily coverage of the global travel industry. Written by editors and analysts from across Skift’s brands.

Have a confidential tip for Skift? Get in touch

Tags: air france-klm, british airways, collinson, gatwick, heathrow, london, london city airport, lufthansa

Photo credit: London City Airport currently operates flights to 17 destinations. London City Airport

Up Next

Loading next stories