London Gatwick Lures Asian Airlines To Fuel Growth

April 24, 2012

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London's Gatwick Airport aims to grow traffic by a third in the next decade by attracting long-haul carriers from emerging markets and taking advantage of capacity constraints at the capital's Heathrow hub, its chief executive said.

Stewart Wingate also said that Gatwick, Britain's second-largest airport, had not ruled out building a second runway that could transform it into an international hub, though it would stick to an agreement not to do so before 2019.

"In recent months we have attracted long-haul carriers Vietnam Airlines and Hong Kong Airlines, while Korean Air and Air China start services in the coming days," Wingate said.

"Gatwick handled 33.8 million passengers last year and I think we can grow to 45 million by the mid 2020's, helped by our push on routes to Asia."

Global Infrastructure Partners (GIP) - an investment fund founded by Credit Suisse and General Electric - bought Gatwick for GBP£1.5 billion (USD$2.4 billion) from Ferrovial-owned BAA in 2009 and has since focused on improving the airport's facilities.

In the last three years GIP has invested GBP£750 million upgrading its two terminals and revamping its security, baggage and inter-terminal shuttle services.

"The investments have helped attract Asian airlines who have high standards in terms of the new airports in Asia they operate from. Plus Heathrow is full and we are not," added Wingate.

BAA-owned Heathrow, the UK's busiest airport, is operating at almost full capacity after Britain's Conservative-led coalition government blocked development of a third runway when it came to power in 2010, as further expansion of the west London site would mean a huge increase in the number of planes flying directly over the capital.

The British government is under pressure from British business leaders to extend airport capacity in the south-east of England but Wingate points out that Gatwick has spare capacity available.

"There's a misconception that because Heathrow is full that Gatwick must be too but in actual fact we are only three-quarters full. London is not full and not closed for business," said Wingate. "We're looking to fill the additional 25 percent by having more long haul flights to Asia."

Gatwick is a point-to-point airport, mainly focused on the leisure market, whereas Heathrow operates as a hub with around a third of its customers being transfer passengers. Only about 10 percent of those using Gatwick are transfer passengers.

"The option of building a second runway at Gatwick is there - we have safeguarded the land needed to do so with the local borough council - but we will not look to upturn an agreement not to build a second runway before 2019," said Wingate.

GIP on Monday added to its UK portfolio by sealing an GBP£807 million deal to buy BAA's Edinburgh airport.