Crisis for Airlines as Passenger Figures Fall by 500,000

Scotland’s main airports have lost almost 500,000 passengers in just 10 months, signalling a reversal in the era of expanding air travel and highlighting a major dent in the Scottish economy.

Flight statistics recorded by the Civil Aviation Authority show that in the period January to October 2008, the last month for which figures are available, 20.5 million people used the country’s five biggest airports – the first decline in a decade.

Analysis shows that 56 destinations had been axed by October when compared to the same month the previous year. Only 40 new routes had been established, a net loss of 16.
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The retrenchment follows a crisis in air travel prompted by a rise in oil prices last summer which led to the collapse of tour operators XL and Seguro Holidays, leaving thousands of tourists stranded abroad.

Passenger figures for Scotland’s biggest airports – Edinburgh, Glasgow, Aberdeen and Prestwick – show that the drop in passengers accelerated in November, while industry analysts and business leaders told The Herald that the UK’s economic problems would put more pressure on airlines in 2009.

Garry Clark, head of policy at the Scottish Chambers of Commerce, warned that a drop in international destinations served and the volume of flights would impact on the ability of businesses to compete.

He called for the Scottish and UK governments to consider reinstating a form of the controversial Route Development Fund, the subsidy which helped drive major airport expansion until it was scrapped last year, to help the industry recover.

He said: “Going into this year, there’s going to be a bit of pain to come but it’s essential that we’re prepared for the recovery when it comes. It’s particularly important that we’re able to compete internationally and having high- quality international links, in as short a timescale as possible, is integral to that.

“Perhaps as we look towards emerging from the recession period we’re now in, the Scottish and UK governments should look again at some kind of scheme to incentivise route development within Scotland. Even with EU regulations there is scope for additional market subsidy there. It may help to kick-start the replacement of the transport linkages that we’re likely to lose.”

The downturn has been driven by a collapse of the chartered holiday market, with tourists abandoning traditional package holidays in favour of scheduled flights, and domestic UK flights, which have come under pressure from reduced business demand and competition from rail.

At Prestwick, passengers on non-scheduled flights were down nearly one-fifth compared to the previous year.

It follows a dramatic expansion in airline capacity in Scotland which saw the number of passengers using Glasgow, Aberdeen and Edinburgh increase by one-third between 2002 and 2007. Prestwick also experienced massive expansion as passengers took advantage of low-cost flights.

While few doubt that aviation will continue to expand in the long-term, especially in scheduled flights to foreign destinations, industry insiders said 2009 would be a “tough year” which could threaten the survival of some airlines.

RDC Aviation, a consultancy which analyses passenger and flight trends, predicted further shrinkage in the industry.

A spokeswoman said: “Comparing 2008 capacity to 2007 levels, all major Scottish airports, with the exception of Aberdeen, have decreased. It is thought there are going to be more defensive measures put into place by airlines with additional reductions in capacity, frequency and destinations served, in an effort to maintain load factors and thus operate profitable flights.”