Airport Expansion: Can it take off?
18/03/08 14:36 Filed in: Articles
by Localise Ayrshire
Airport Chief Executive Mark Rodwell also boasted that “Prestwick Airport is now vital to the Scottish Economy” and “We’ve carried out an economic study which has revealed the true extent of Prestwick’s potential and we’re in for a period of significant growth.” This optimism has led to the airport creating a masterplan of expansion that will set out their vision for the next 25 years.
These claims, although exciting, are unsubstantiated. At no point does the study, available on the airport’s website, actually conclude from its findings that growth to date will continue. It also neglects to take into account important factors which will have a direct bearing on the aviation industry’s capacity to facilitate the future growth that Rodwell boasts of.
The price of oil is fundamental to that growth. It has already reached a record high of $111 a barrel with no sign of it ever returning to previous levels. Even Michael O’Leary of Ryanair, the largest scheduled airline operating from Prestwick Airport, warns that the outlook for aviation looks bleak due to fuel costs. These sentiments are shared by other airlines including Easyjet and British Airways. Lufthansa, Europe’s second largest airline, are raising their fuel surcharge for domestic and European flights this month by 21% because of rising crude oil prices. Ryanair’s profits have fallen by 27% over the last three months and its share price by 40% in the last six months. O’Leary is under no illusion; he forecasts that oil prices will be significantly higher next year and that Ryanair profits could fall by 50%.
The growth of Ryanair is acknowledged by the airport’s study as being central to the expansion of the airport, yet the airline says it will focus its own expansion within Scotland at Edinburgh. However, any form of airline expansion does seem contradictory considering O’Leary’s gloomy outlook, but if Edinburgh is Ryanair’s preferred choice, where does that leave Prestwick?
In a recent report, the Civil Aviation Authority (CAA) stated that passenger numbers are barely rising. With food, fuel and petrol prices on the increase, personal disposable incomes are actually reducing. Therefore the present high level of air travel due to low cost flights will undoubtedly drop as a result of this, and as flights become less “low-cost”. Prestwick in particular owes its growth to the success of low-cost air travel.
In reality the airport’s assumptions are therefore only a hopeful belief that air travel will grow over the next 25 years at a similar rate to the last 10 years. They have no hard evidence that this will actually happen, but there is plenty of evidence to expect the opposite. The airport might be doing very well to even maintain its current passenger numbers!
Against this backdrop, Localise Ayrshire is concerned that Prestwick Airport’s misplaced and unsubstantiated optimism is misleading the Ayrshire public and Ayrshire businesses which are reliant on sustainable passenger numbers. The leader of South Ayrshire Council, Hugh Hunter, believes that “tourism is an economic growth sector in Scotland”, but tourism relies heavily on transportation and transportation needs oil. A report produced last year for UK Local Authorities, by the Oil Depletion Analysis Centre (ODAC), states “It has already been pointed out that these policies [2006 Progress Report on the Air Transport White Paper] are inconsistent with climate change imperatives, but with the advent of peak oil, such transport growth is likely to become physically impossible. Investments in expanded airport and road capacity will then have been wasted.” High oil prices, a weak dollar and looming US recession, the UK’s weakening pound and economic slowdown, a credit crisis, and food, fuel and petrol price hikes; all of these are a reality.
Ayrshire cannot afford to be misled and put all its economic eggs into this one basket, because Prestwick Airport is looking more and more like a hen whose wings may soon be clipped!
