Bullish Gatwick: Reviving Pre-Pandemic Prosperity or a Circle Unfulfilled?

Gatwick Airport’s Road to Recovery

Introduction

Gatwick Airport, the UK’s second biggest hub, is set to release its half-year results on Wednesday, with the aviation sector eagerly watching to see whether it can regain its pre-pandemic glory. The airport has shown strong performance this year, outshining its rival Heathrow, which continues to struggle with a cap on airline charges and a significant debt burden. While Gatwick swung into profit in its annual results earlier this year, there are still reasons to be cautious about its prospects for a full recovery.

Positive Signs of Recovery

In March, Gatwick reported profits of £196.5 million for the previous 12 months, a remarkable turnaround from a loss of over £830 million between 2020 and 2021. The airport welcomed 32 million passengers last year, generating revenues of £776.6 million, demonstrating the potential for a rebound in demand after the pandemic. This trend has continued in 2023, with numerous airlines, including Easyjet, forecasting record profits for the year.

Expansion Plans and Bullish Outlook

The positive performance of Gatwick Airport has coincided with a period of bullish activity in the aviation sector. In July, the airport joined the list of UK hubs seeking to expand capacity by submitting plans for a £2.2 billion second runway. This ambitious move reflects the airport’s confidence in its ability to attract more passengers and further enhance its position in the market.

Reasons for Caution

Despite the signs of recovery, there are factors that temper expectations of a rapid post-Covid rebound for Gatwick. The airport’s own cautious tone throughout the year suggests that a return to normalcy will take time. Even with a passenger forecast of 40.5 million for 2023, Gatwick expects to operate at around 87% of pre-pandemic levels. It believes that passenger numbers will not fully normalize until 2025.

Flight Disruptions and Other Challenges

Gatwick‘s recovery is also facing headwinds from consistent flight disruptions, which have become a regular occurrence this summer. Easyjet’s cancellation of 1,700 summer flights due to ongoing French Air Traffic Controller (ATC) industrial action caused chaos at the airport. Air traffic control restrictions across various parts of Europe have continued to disrupt flights, and major wildfires in Southern Europe have resulted in reduced flight operations to the region. Additionally, strike action threatened to disrupt operations throughout the summer, although these strikes were eventually avoided through pay increase negotiations with the workers’ union.

Improving Relations and Lessons from Heathrow

While Gatwick has shown success in attracting new airlines and expanding existing partnerships, there is room for improvement in its relations with ground handlers and their employees. Industry experts suggest that rival Heathrow has better industrial relations, indicating an area where Gatwick can learn from its counterpart.

Conclusion

Gatwick Airport’s half-year results will provide insight into its progress in reviving its pre-pandemic prosperity. The airport’s strong performance and ambitious expansion plans are positive indicators. However, caution is necessary as challenges in the form of flight disruptions and labor relations persist. Gatwick‘s ability to navigate these obstacles and sustain its recovery will determine whether it can bring the pre-pandemic era full circle.