Business Weekly

London Southend Airport is looking for a buyer to enable it to undertake a £35m development plan in time to take advantage of the 2012 London Olympics

 The airport’s owner, Regional Airports Ltd (RAL), said a number of approaches for the business had prompted it to review its funding options, which it subsequently decided were best served through a trade sale.

Southend Airport is becoming an increasingly attractive proposition, boosted by a massive passenger growth rate, the potential for revenues from the forthcoming 2012 London Olympic and Paralympic Games, local investment into the Thames Gateway and improved rail links that connect straight into London’s busy financial districts.

It is currently undergoing its biggest rate of growth in the modern era with a 14-fold increase in passenger figures in three years, up from 3,658 in 2004 to 51,169 in 2007 and has been turned from a loss making organisation to a profitable company.

Following an increase of 20,000 passengers from 2006, London Southend is targeting yet greater passenger growth in 2008 as Flybe starts new overseas routes from of the Essex hub.

Following the publication of the Airports’ White Paper, which encouraged growth at London Southend Airport, the airport intends to grow this further in the long term through a number of initiatives including a new £12 million train station, new hotel, new terminal building, new control tower and extended runway.

It is in view of these changes and plans that RAL has decided to seek a buyer with sufficient capital to develop the airport to its full potential over the next few years.
An RAL statement said: “There is a strong community demand for a fully functioning airport to be delivered as soon as possible and RAL have brought the airport to a stage where this can be realised.

“The growth at the airport is a reflection of the growth and regeneration in and around Southend. The Joint Area Action Plan will seek to maximise the employment and economic opportunities at the airport and RAL are keen to have an investor in place to deliver the vision that it sets out.”

While the airport wants the sale to finance the upgrades it requires to meet what it sees as its full potential, funding is believed to be arranged for Phase 1 of the developments, which includes the hotel, rail station, control tower, and terminal improvements.

Funding would need to be arranged for Phase 2 – a new terminal and extended runway – however.

Airport managing director, Alastair Welch, said: “We’ve worked hard to put the foundations in place to make the airport attractive to commercial operators. A new owner would look to accelerate this process and build upon the great community support we have in the area.

“The aim is to have the new terminal up by May 2011, in time for the summer. This gives us a full year in operation to show what we can offer.”

A key element in attracting new business will be the new airport train station, which was granted planning approval earlier this month – it will have a principal contractor installed by September 2008 with work expected to begin in February 2009 in time to open August 2009.

The station’s ability to provide fast and frequent train services direct to Stratford – for Docklands and Canary Wharf and home of the 2012 Olympics – and to the Square Mile’s London Liverpool Street Station in just 45 minutes may prove crucial, particularly long-term.

Despite a recent £750m acquisition, some believe that London City Airport may one day fall to the pressures from London developers looking for prime real estate opportunities.

The Airport’s congestion-free airspace location also offers some of the fastest gate-to-destination times of any designated London airport, including importantly, London City Airport.

Apart from charter flights, Southend doesn’t offer international destinations, though that is soon to change as Flybe launches regular flights to Le Touquet, Calais and Bruges/Ostend, followed by a second weekly service to Jersey – growth which has led to staff numbers at the airport increasing 35 per cent in 2007.

The existing terminal allows for a potential 4-500,000 passengers a year.

Larger numbers however remain a long-term target and though Welch would like to one day match airports like Southampton which carries around 2 million passengers a year, it doesn’t expect to do so until at least 2020.

London Southend Airport is also specifically included in the Thames Gateway blueprint plan, projected to become one of the UK’s fastest growing development regions. It already includes the new DP World London Gateway Port opening nearby in 2010.

The airport is a major asset of the Thames Gateway Regeneration Zone, and enjoys positive support from its community and local authorities for the introduction of more scheduled passenger services to European destinations.

The Joint Area Action Plan is currently reviewing options to extend the runway which would make it ideally suited to meet the demand for European business and leisure travel which is best served by up to 150-seat capacity aircraft, such as the Embraer 195 and Airbus 319.
 

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