Leading UK airport operator, Manchester Airports Group (MAG), reports that its retail revenue grew by 6.7% to £83m ($124m) in the first half of FY2016 despite ‘challenging conditions’ for duty free retail.

MAG owns and operates Manchester, London Stansted, East Midlands and Bournemouth Airports, together with a significant property business. In North America, the new MAG USA is looking to work with airports to develop and operate terminal and retail solutions, passenger lounges and car parking facilities.

MAG is managed on behalf of its shareholders who include Manchester City Council (35.5%), IFM Investors (35.5%) and the nine other Greater Manchester local authorities (29%).

The group’s biggest airport (Manchester) is still undergoing a ‘transformation programme’ – a £1bn ($1.5bn), 10-year plan – which will see MAN conduct a phased upgrade of its facilities, including its retail. As reported, World Duty Free Group officially launched its redesigned, 100% walk-through Biza store at Terminal 2 in September.

 

 

At 1,787sq m, the duty free and travel retail store incorporates a number of firsts for the terminal including the use of several hand-held tills to allow customers to complete transactions smoothly while immersed in the retail environment.

The Terminal Transformation Programme at Stansted is now nearing completion, delivering a significantly improved retail and food & beverage offering to passengers. The completion of the East Midlands Airport terminal upgrade has also boosted retail performance.

In terms of passenger growth, MAG says that it has experienced ‘its most successful summer ever’ in 2015. London Stansted Airport added more passengers year-on-year (1.2m) than either Heathrow Airport (0.9m) or Gatwick Airport (1m), making it the fastest growing major airport in the UK.

Manchester Airport experienced the busiest month in its 77 year history in August and continued this momentum into the autumn.

The introduction of 31 new routes across the Group has helped to boost passenger numbers to record levels. The new routes include new long haul routes such as Manchester to Boston and Los Angeles and from Stansted to Las Vegas, Orlando and Cancun. New short haul routes from MAG airports include the Azores, Deauville, Castellon, Stuttgart and Porto.

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“Increased revenues have also been driven by more passengers upgrading their airport experience with a ‘little slice of luxury’ and taking advantage of MAG’s award-winning Escape Lounges, Premium ‘Meet and Greet’ valet parking offers and fast track security clearance,” adds MAG.

The Group’s EBITDA rose by 10.7% to £202.5m ($302m), driven by record passenger numbers and successful new route development – with Manchester and Stansted in particular both handling increasing numbers of passengers.

August was the busiest month in the airport’s history and passenger numbers to September 2015 were 0.6 million (4.5%) up on the same period last year. The increase has been driven by new long haul routes as well as incumbent short haul carriers adding capacity through additional services and larger aircraft.

As mentioned, STN experienced impressive growth in passenger numbers – 1.2m (10.6%) up year on year. The airport is now handling 4.8m more passengers than when MAG acquired the airport in early 2013, an increase of 27.4%. The airport says it still has significant spare capacity and is well-placed to meet future growth in London’s aviation demand, prior to any new runway being built.

East Midlands Airport performed slightly ahead of expectations, with cargo income up 8.8% as an increasing volume of express freight traffic takes advantage of the airport’s freight facilities and central location.

Bournemouth Airport performance was in line with the previous year.

Interestingly, cargo income has grown strongly for MAG, up 5.7% year-on-year, benefitting from the continued growth in internet shopping, new route launches and also businesses diverting freight operations away from the Channel Tunnel due to the ongoing disruption. Cargo revenue at East Midlands Airport in particular is up 8.8%.

The recently launched MAG USA is said to be making good progress, with its first premium ‘Escape Lounge’ opening at Minneapolis-St Paul International Airport next week. Today, MAG USA is pleased to announce that it has secured its second contract to build and operate an Escape Lounge in the USA, at Oakland Airport, California.

 

Charlie Cornish, MAG CEO, comments:
 “The first half of the year has seen sustained growth; outperforming our challenging targets in many areas with record numbers of passengers using our airports.

“Our Group operating model continues to deliver benefits and support our airports in competing to attract new passengers and airlines.

“This has been our busiest summer ever and as we approach the milestone of handling 50m passengers a year, we are responding to changes in the way people want to travel by giving them the opportunity to upgrade their airport experience and begin their journeys in style. Our offerings in this area are driving strong growth in our retail revenues.

“Our Escape Lounges, in particular, have been a real hit with passengers in the UK, and we are now exporting the concept to the USA, with our first lounge opening in Minneapolis-St Paul next week, which we expect will be the first of many across North America.

“I was also delighted to welcome The President of China, His Excellency Xi Jinping, to Manchester Airport in October as part of his State Visit to the United Kingdom. The President and the Prime Minister unveiled a new direct link from Manchester to Beijing, starting in Summer 2016, which will give the 100,000 passengers travelling each year between the two cities the convenience of direct scheduled services. The new route demonstrates the key role that the airport plays as a Global Gateway from the North.

“It was great to be able to announce last month that passenger numbers reached an all-time high of 23 million and we are set to see even more growth in 2016, as direct long haul services to destinations including Los Angeles, Boston and Beijing get underway.