Air travel market review

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Airtravel market review

Department

LiverpoolJohn Lennon Airport is an international airport that is located inthe South Eastern part of Liverpool. Its naming is in memory of JohnLennon, a Liverpool resident who was a member of the Beatles Band. Ithas gone through several phases of rebranding and has previously beenknown as Speke, RAF Speke, and Liverpool Airport. Its main businessas an international airport is to provide airline services to variousdestinations across Europe although it also offers some domesticflight services.

LiverpoolJohn Lennon Airport is licensed by the Civil Aviation Authority ofthe United Kingdom to offer public air transport. It is also allowedto offer flight instructions in collaboration with teachinginstitutions for students in the aviation and aeronautical fields.The airport is serviced by six key airlines namely: EasyJet, Ryanair,Blue Air, Flybe, Wizz Air, and Czech Airlines. Statistical data fromCivil Aviation Authority in 2013 ranked Liverpool John Lennon Airportnumber twelve (12) in the United Kingdom using passenger traffic asthe parameter.

EasyJetis United Kingdom’s largest airline with two hundred and twoaircraft, and offering domestic and international flights in onehundred and thirty four (134) destinations. EasyJet is a low costcarrier, only falling behind Ryan Air in all of Europe. FromLiverpool John Lennon Airport alone, Easyjet has flights to thirtyone (31) destinations.

Flybeoperates only within the European region and is in fact the largest,low cost, regional airline. It is licensed to carry mail, cargo andpassengers. Flybe services sixty five (65) airports in Europe. In2013 alone, Flybe carried over seven (7) million passengers. FromLiverpool John Lennon Airport, Flybe carries passengers thrice a dayto Isle of Man and flies seventeen (17) times to Belfast City.

Ryanairis based in Dublin Ireland. It is a low cost carrier with a fleetsize of three hundred and two (302) aircrafts, offering flights toone hundred and seventy nine (179) destinations. In 2013, Ryanair wasthe busiest international airline, and carried the largest number ofscheduled passengers. It stands out from its competitors by itsbusiness model which focuses on low cost flights. Ryanair flies tothirty one (31) destinations across Europe from Liverpool John LennonAirport.

BlueAir operates from Romania and is a low cost airline. It has eleven(11) aircrafts only and its year-round destinations are twenty nine(29), except for limited charter flights to Southern Europe. Blue Airdoes not have cargo and mail services. Currently, Blue Air fliesthree times every week from Liverpool John Lennon Airport toBucharest City Airport. From 31stMarch 2015, Blue Air will expand their operations at Liverpool JohnLennon Airport to include flights to Bacau.

WizzAir operates from Hungary, and uses secondary airports to servecities in Europe, North Africa and Middle East. It is also a low costairline with fifty four (54) aircrafts offering flights to ninetyseven (97) destinations. Wizz Air currently flies to Warsaw andGdansk from Liverpool John Lennon Airport. However, flights to Rigaare due to commence from April 24th2015.

CzechAirlines is Czech Republic’s national airline. Its fleet size istwenty three (23) and it offers flights to eighty nine (89) worldwidedestinations. 40% of Czech Airlines’ flights is in nine key citiesin Europe. It is also licensed to offer cargo services. Flights toPrague from Liverpool John Lennon Airport are set to commence on 18thMay 2015.

Allthe six airlines that service Liverpool John Lennon Airport have onething in common: they are low cost carriers. Three of them, Easyjet,Flybe and Ryanair, attract large numbers of passengers every year.The implication of this would be that the presence of the threeairlines within Liverpool John Lennon Airport provides reliablepassenger traffic at the airport. All six airlines except Flybe offerflights across the world. These variety of flights to variousdestinations is a good balance for the airport as all terminals havea flow of traffic.

Assessmentof the local catchment area

LiverpoolJohn Lennon Airport is well linked to major cities in the UnitedKingdom by both road and rail transport. There are regular trains toManchester, Wigan, Preston, Leeds, Middlesbrough, Newcastle, Norwich,Stafford and many other cities throughout England. There aremotorways connecting the airport both to the north and south of theUnited Kingdom.

Thereare several cities near Liverpool John Lennon Airport whosedemographic figures ought to contribute significantly to traffic atthe airport. The first among those cities is Liverpool. It is a hostto over 400,000 people. Liverpool is mainly a service sector hubalthough other aspects such as tourism and port services aresignificant in its economy.

Birkenheadis another large city whose main business is ship building and othersea port related business. It has a population of over 300,000 fromthe 2011 census, and is located only eight (8) way from the airport.St. Helens is another nearby town, twelve (12) miles away from theairport with a population of slightly over 100,000. Other neighboringtowns whose nearest airport is Liverpool John Lennon Airport includeKirkby, Formby, Maghull, Southport, and Prescot.

Currentperformance of the airport and major constraints

Datafrom Civil Aviation Authority (United Kingdom) indicate thatLiverpool John Lennon Airport offered flight services to 4, 187, 439passengers. This was a 6.2% reduction from the 2012 figures. Theall-time highest number of passengers handled at the Liverpool JohnLennon Airport was 5,468,510 in 2007. There has been a gradual dropin passenger traffic especially in 2012 and 2013.

Themajor constraint on Liverpool John Lennon Airport’s growth is stiffcompetition. Manchester Airport has significantly redirected trafficfrom Liverpool John Lennon Airport by wooing low cost airlines suchas Easyjet and Ryanair which were previously Liverpool John LennonAirport’s domain only. When Liverpool John Lennon Airport’sfigures fell from 4.51m to 4.18, Manchester Airport’s rose by 1million from 19.6m to 20.6m.

ManchesterAirport did not operate no-frill airlines but had insisted onpositioning itself for full service airlines such as British Airlinesand Lufthansa. However, things took a different turn three years agowhen they wooed Easyjet and Ryanair. As a result, Easyjet now haseight aircrafts based at Manchester and seven at Liverpool. Ryanairhas seven at Manchester and only five at Liverpool John LennonAirport.

Thissudden reduction on the number of planes available from two out ofthe three busiest airlines in the region took Liverpool John LennonAirport by surprise. In 2013, they incurred losses worth £7.1mwhich was an increase from £6.5 in 2012. As a result of the reducedrevenues, LiverpoolJohn Lennon Airport has had to resort into borrowing to cover theiroperational costs. Currently, their debt as per the 2012 filedaccounts balance sheet stands at £78m.

LiverpoolJohn Lennon Airport is reported to already have defaulted on some ofits borrowing agreements in 2013 and renegotiations had to be done.The cash flow issues could temporarily be solved by the change ofownership through the repurchase of 65% stake by Peel Group. However,the future of the airport depends on their speedy and innovativesolution to the declining passenger numbers.

Marketingobjectives for the airport for the next 3 years

  1. Start offering full service, business class and charter flights

LiverpoolJohn Lennon Airport’s single biggest problem is Manchester Airport.Traditionally, Manchester Airport offered long haul, business classand charter flights while Liverpool John Lennon Airport offered lowcost flights. Passengers around Liverpool who wanted to fly businessclass and charter had to travel to Manchester. Passengers who wantedto use budget airlines travelled to Liverpool John Lennon Airport.

ManchesterAirport’s strategic move to offer no-frills as well, caused adouble loss to Liverpool John Lennon Airport because they lost thebudget airline passengers from Manchester and could not capture thefull service passengers from around Liverpool. To respond to thiscompetition, Liverpool John Lennon Airport needs to begin offeringfull service, business class and charter flights. This way,passengers who need these services will not need to travel toManchester Airport.

  1. Increase flight destinations serviced from Liverpool John Lennon Airport

Thesecond marketing objective Liverpool John Lennon Airport shouldpursue is to increase the number of destinations passengers can flyto from Liverpool John Lennon Airport. For instance, Easyjet andRyanair offer flights to 134 and 179 destinations worldwide yet haveonly 31 each available at Liverpool John Lennon Airport. LiverpoolJohn Lennon Airport can negotiate with these airlines to avail moreairplanes departing from Liverpool so as to capture the passengersaround Liverpool who need such flights but have to travel to otherairports to catch their flights.

Thereare critical flights that Liverpool John Lennon Airport ought totarget having. One such flight is Amsterdam. There are reliablenumbers of passengers travelling to Amsterdam for connecting flightsfrom every airport at any given time. None of the six airlinescurrently operating at Liverpool John Lennon Airport offers a directflight to Amsterdam from Liverpool John Lennon Airport. As theairport seeks to increase destinations, they could begin with somelike Amsterdam whose traffic is guaranteed.

LiverpoolJohn Lennon Airport can also bank on expansion strategies that anumber of airlines are rolling out. Easyjet and Ryanair are planningfor expansion in destinations and fleet size. Liverpool John LennonAirport can negotiate in advance for a good stake in these expansionsto take more flight destinations.

  1. Benchmark on efficiency in capacity optimization and service delivery

Theservice industry relies heavily on customer satisfaction. Attractingnumbers is not enough. Lasting success will come from fulfilledcustomers who will not hesitate to use the airport’s services againand even refer people there. This is especially imperative for anairport that does not enjoy monopoly because if their service ispoor, there are other airports passengers can revert to.

Marketingactivities to achieve their objectives

  1. Aeronautical related activities

Toachieve the desired increase in number of passengers, Liverpool JohnLennon Airport may need to undergo another phase of expansion toprovide capacity for extra planes to new destinations. Immediateaction would be to optimize the current single terminal. The AirportMaster Plan for 2030 has plans to expand the runway from the current2,285m to 2,700m.

  1. Non-aeronautical related activities

Besidescapacity and variety of flights, there are other non-technicalaspects that draw and sustain customers. In an airport setting, thesecurity detail and screening process, ease of checking in, take offpunctuality, adequate and comfortable facilities such as waiting baysat arrivals, low cost restaurants and moderate-priced cab serviceswithin the airport.

Criticalfor Liverpool John Lennon Airport at the moment is to bounce backfrom its loss making trend. One best strategy is to capitalize onincreasing non-aeronautical revenues. Since all the flights currentlyoperating from Liverpool John Lennon Airport are budget, no meals areoffered to passengers on board. Therefore, the airport should makelease agreements with moderate restaurant, coffee and fast foodbusiness operators to operate within the airport. To increaseaeronautical revenues, the airport needs to recover the passengernumbers that they lost to Manchester Airport by operating fullservice and charter flights.

Someof these recovery initiatives can be achieved with the availablefacility and manpower at Liverpool John Lennon Airport. However, torise beyond the breakeven point, stay ahead of their competitors andremain profitable, expansion is inevitable. Besides runway expansion,they may need to explore constructing another terminal to accommodatethe extra flights needed to raise passenger numbers. Another terminalwould provide space for the businesses that will help generatenon-aeronautical revenues to supplement aeronautical revenues butalso keep the passengers satisfies hence winning their loyalty.

Bibliography

http://www.liverpoolairport.com/

http://www.liverpoolecho.co.uk/news/business/liverpool-john-lennon-airport-faces-6675439

http://www.airport-technology.com/projects/liverpool-john/

http://www.airportwatch.org.uk/2014/01/liverpool-john-lennon-airport-aiming-to-win-over-1m-people-who-prefer-fly-out-of-manchester/

http://www.airportwatch.org.uk/2014/04/peel-group-buys-back-the-65-of-liverpool-airport-that-it-sold-in-2010-now-owns-100/

http://www.placenorthwest.co.uk/news/archive/15700-peel-buys-back-liverpool-airport.html

http://www.liverpoolecho.co.uk/news/business/john-lennon-airport-aiming-win-6639994

http://www.ukaccs.info/liverpool/

http://www.liverpoolecho.co.uk/news/business/liverpool-john-lennon-airport-seeks-8624097

http://www.liverpoolecho.co.uk/news/liverpool-news/ryanair-launch-new-flights-liverpool-8578761

http://www.manchestereveningnews.co.uk/business/peel-takes-control-liverpool-john-7027721

http://www.caa.co.uk/docs/80/airport_data/2013Annual/Table_02_2_Summary_Of_Activity_at_UK_Airports_2013.pdf

http://www.routesonline.com/news/29/breaking-news/243091/wizzair-expands-riga-and-vilnius-operations-from-late-april-2015/

http://www.routesonline.com/news/29/breaking-news/244922/blue-air-to-start-bacau-liverpool-service-from-late-march-2015/

http://www.insidermedia.com/insider/north-west/105937-losses-widen-liverpool-airport/

http://www.liverpoolecho.co.uk/news/business/czech-airlines-launches-liverpool-john-8613663

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