The three months ended March 31 2009 represents the second consecutive calendar quarter that BAA's passenger airport traffic has weakened significantly as a result of the difficult global economic environment. But the retail performance was
nevertheless good, with net retail income per passenger up 8.8% to ?4.71 ($7.00) due to 'a very strong performance' by Heathrow as well as airside and landside shops across all the group?s airports.
BAA said that this performance was based on gross retail income of ?129.3m ($194.1m) in the period compared with ?128.9m ($193.5m) in the comparative period in 2008. At the same time, net retail income (NRI) came in at ?117m ($175.6m) for the three-month period, compared with ?119.5m ($179.4m) in the first three months of 2008.
BAA said: ‘At Heathrow, NRI per passenger increased by 12.7% to ?5.15 (2008: ?4.57) or 8.3% to ?4.95 after adjusting for non-recurring income. Heathrow?s performance was particularly driven by airside and landside shops where NRI per passenger increased by 13.8%. It was supported by the improved value of the offer to US and Euro zone travellers resulting from the depreciation of sterling and the benefits of Terminal 5 now having its full complement of passengers. The contribution of car parking to NRI per passenger declined after adjusting for non-recurring income.
‘NRI per passenger also continued to grow robustly at Gatwick, up 5.0% to ?4.44 (2008: ?4.22) with strength in airside specialist shops and duty and tax free offsetting weakness in car parking. At Stansted, NRI per passenger declined 3.8% to ?3.59 (2008: ?3.73) due to performance in car parking and bureaux de change.
‘In terms of total net retail income, the main drivers of performance were airside specialist shops, duty and tax free, advertising and car rental with market conditions continuing to challenge car parking income as demand was affected by the increased proportion of transfer passengers at Heathrow, fewer UK resident passengers (especially at Stansted) and reduced car park usage in favour of ?drop and drive?.
In terms of traffic levels, Heathrow Airport handled 14.4m passengers (-6.4%); Gatwick 6.3m (-14.6%) and Stansted 4.1m (-14.6%). In terms of the major passenger route markets being served, European routes carried 13m (-10.9%) passengers over the three-month period and long haul handled 9.4m (-8%). Domestic passenger numbers also fell by 12.6% to 2.4m, bringing the total number of passengers handled by these three airports to 24.8m (-10%) over the three-month period.
In a statement, BAA said that Heathrow continued to display the most resilience, benefiting from its position as a major global hub airport for long-haul services. BAA says that the underlying decline, after adjustments, is estimated to have been 3.6%. The proportion of transfer passengers at Heathrow increased to 38% in the three month period, resulting in transfer passengers up from 5.1m to 5.5m. BAA said this was at least encouraging, underlining Heathrow?s continued attraction as a major hub. Meanwhile, BAA said that the Gatwick and Stansted 'underlying declines' after adjustments were in the order of 11.5-12.0%.
Looking at the route categories, BAA added that the long-haul market continued to perform better than the overall market with reported long-haul traffic down 8.0% to 9.4m passengers (2008: 10.3m). Within the overall long-haul segment, traffic with many of the developing economies from where much of the long term growth in the aviation sector is expected to come, such as the Middle East, India and South America, continued to grow, despite the tough economic conditions. By contrast, North Atlantic traffic performance weakened as the quarter progressed.
Reported European passenger traffic also declined by 10.9% to 13m (2008: 14.6m) with weakness in both scheduled and charter markets. Domestic traffic continued the recent trend of being the weakest traffic segment, declining 12.6% to 2.4m passengers (2008: 2.8m).
In the three months ended March 31 2009, the main focus of the group?s investment programme continued to be at Heathrow. The most significant projects relate to construction of Terminal 5C, the second satellite terminal for Terminal 5, and Terminal 2B, the satellite for the new Terminal 2A to be constructed over the next few years.
Meanwhile, BAA said that it has received ‘a number of bids’ for Gatwick Airport and it plans to make a statement regarding the wining bidder within the next few weeks.