21 NOVEMBER 2011

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Article from BTNews 21 NOVEMBER 2011

COMMENT: London Luton Airport Where now?

Today Boris Johnson unveils his latest thoughts on the London airports dilemma.  In fact of the six London scheduled service operations that use the UK capital’s name in their branding only London City is within his jurisdiction.  Gatwick, Heathrow, Luton, Southend and Stansted are in practical terms the remit of the Secretary of State for Transport.  Boris is right of course to hold a watching brief on all of them.  The south east airports are the lifeblood of London, and some would argue the whole country.

Heathrow is very much the property of BAA as is Stansted, at least for the time being.  Gatwick now has new owners, who have an interest in London City, whilst Southend is by a very large margin the smallest of them all.

But what of London Luton International Airport?  The time is fast approaching when the freeholder will have to make a vital decisions as to its future.

Luton Airport is owned by Luton Borough Council (London Luton Airport Ltd – LLAL) who in 1998 entered into a 30-year concession agreement with London Luton Airport Operations Ltd (LOAL) for its management and operation until 2028.  There is a one-off opportunity to terminate the current concession agreement with effect from April 2014.

London Luton Airport Operations Ltd, which runs the airport, is part of TBI Plc, ultimately owned by Abteris Infraestructuras, a company registered in Spain.

LLAL agreement with the concessionaire requires that it gives one year's notice and the final date for any decision would therefore be 31 March 2013.  It will come around very quickly.

LLAL says any plans to expand the airport would go through all due process, including specific impact assessment and the required consultation with key stakeholders, including neighbouring local authorities.  In the meantime LLAL is exploring all options for the airport’s future development. 

The airport in effect has reached a crossroads.  Does the Council say goodbye to the current leaseholder in 2014, and put the airport out to tender, or stay with the present operator?  If put on the market (assuming there are people out there interested) would a new tenant make a better job of the operation?  Is the bottom line everything.  In 2010 (2009) the airport made a operating profit of £20.5m (£19.3m) on a turnover of £102.2m  (£98.5m). 

The Department for Transport has published an indicative forecast of 15m passengers per year by 2050, well down from the 50m suggested in the 2003 White Paper.

Cllr Robin Harris, Chair of LLAL, said: “London Luton Airport is without doubt the single biggest asset owned by the people of Luton and it’s imperative for our future prosperity that the airport continues to grow to its full potential.  This is about delivering jobs and economic growth not only to our town but surrounding areas as well.” 

“We believe the Government’s forecast significantly underestimates the contribution that London Luton Airport can make to the national, regional and local economy.”

For both the Council and operator the first objective will be to consider the capacity that can be created within the existing airport boundary.  It is estimated this could be around 18m passengers per year.

In the meantime the Council welcomed news that it has received provisional Government support for a vital improvements scheme at Junction 10A of the M1.  The scheme would see removal of the existing roundabout and widening of the M1 Spur road to three lanes, to provide a continuous east-west carriageway into the airport.  Work could begin in early 2013 and completed during 2014.

Besides its (mainly low-cost) airline operations, Luton Airport is the country’s leading executive jet operation.  That will have to be taken into account for the future.  50 business jets can often be seen parked at one time in the tight executive aviation area.

At present Luton is what it is.  An airport that feels like a budget airport, very unsophisticated (no air bridges for instance) and a poor road infrastructure in the terminal area, although improvements are promised.  The actual departure lounge itself is one of the better, but in spite of (limited) new plastic plants the airside walkways are dreary.  The passport and customs area is inadequate, and whether the blame should be allocated to the Home Office or the airport the wait that Brits sometimes have to endure to get back into their own country can be frustrating.  It’s easier if you are non-EU (unless your transit coincides with an easyJet or El Al arrival from Tel Aviv).

Luton is the jewel in the TBI crown.  Belfast and Cardiff suffer for a number of reasons.  But have the Spanish owners done enough in 15 years to justify another period of the same length?

Luton is booming.  It aspires to be a City.  Motor production and media are expanding.  Even its football team (the only soccer club to win a place in Europe, never to have actually  played on the Continent – all because of the 1995 Liverpool Heysall Stadium problems) is getting its act together.  Under construction is the Dunstable to Luton Busway which finishes at the airport via Parkway Station.  A new £56m Sixth Form College opened last year.

Should Abteris Infraestructuras be sent packing? 

Luton in fact is the best positioned of any of the London airports and has the motorway and rail potential for an integrated transport hub. 

What it now needs is visionary management with the skill and financial backing to plan for a potentially very prosperous future.

Let us hope it is in Mr Johnson’s thoughts.

Luton Borough Council needs to come to a decision quickly.

Malcolm Ginsberg
Editor in Chief

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