Gatwick cutbacks mount with Virgin Atlantic the latest to flee

Bloomberg

The coronavirus is muddying the outlook for London’s second-biggest airport.
Richard Branson’s Virgin Atlantic Airways Ltd became the latest carrier to back away from London Gatwick, saying it will shutter its operation at least temporarily to focus on the much larger Heathrow.
With arch-rival British Airways reportedly looking to do the same, and Gatwick’s third-largest tenant, Norwegian Air Shuttle ASA, retrenching to survive the winter, the south London hub is feeling the brunt of a travel collapse that’s suddenly quelled the daily bustle of people through the city’s six main airports.
Business was booming before the health crisis crushed demand and prompted groundings of entire airline fleets. Gatwick, traditionally a hub for the leisure set, had aspired to snag some of London Heathrow’s full-service passengers. Owner Vinci SA is seeking to convert an emergency runway for regular use, while Heathrow has also targeted expansion. With operations by IAG-owned British Airways and trans-Atlantic specialist Virgin Atlantic now in doubt, Gatwick will be forced to evolve with more services focused on the low-cost end of the marketplace, said Peter Morris, chief economist of Ascend, which tracks air travel.

Low-Cost Reliance
London Luton-based Easyjet, the biggest operator at Gatwick, may decide to locate more services there in the aftermath of the lockdown, he said, as could discount giant Ryanair Holdings, which has its main hub at Stansted, north of the capital.
“With excellent access for catchment to London and the South East, Gatwick is better placed than Luton or Stansted to meet recovering passenger demand,” Morris said. “It could be the case that Ryanair and Easyjet choose to concentrate more services there, at the expense of the other two — although airport charges may be an issue.”
Traffic at Gatwick fell 23% to 7.5 million passengers in the first quarter. The airport has put over 90% of eligible staff on a UK furlough plan and is considering permanent reductions, it said last month.
Still, its expansion plans are proceeding. The airport moved a step closer to adding the second runway when the UK Civil Aviation Authority, in a decision published this month, said that the proposal wouldn’t require any changes to airspace use. The decision doesn’t authorise the start of physical works or dual-runway operations.
The decision by Virgin to retain its slots at the airport is an indication of Gatwick’s competitiveness, Vinci said on Wednesday. “We remain confident in the desire of our clients to remain mobile and the perspective of a rebound in traffic when confinement and border restrictions are lifted,” Vinci said.
The airline industry may lose $314 billion in revenue this year because of travel shutdowns and increasing toll on the global economy, the International Air Transport Association has forecast. Morris expects a recovery to be “pushed further and further out into 2021.”
Gatwick established itself as Britain’s chief leisure hub with the rise of the package holiday in the 1960s and 1970s through carriers including Dan Air and British Caledonian.