“Forget The South East, Think Birmingham Airport”

Birmingham’s two passenger terminals were recently rebuilt into a single facility. (All images – Birmingham Airport)

As fresh arguments continue over the Heathrow problem, CEO Paul Kehoe tells Roy Allen that many should consider the merits of fast-developing Birmingham Airport.

Birmingham’s two passenger terminals were recently rebuilt into a single facility. (All images – Birmingham Airport)

Birmingham Airport lies just six miles (10km) from the heart of England’s second city and a short distance away from the M6 and M42 motorways.  It is 70 minutes by train away from London’s Euston Station.  It’s the third-largest airport in terms of passenger numbers outside the London region and the seventh-largest overall in the UK.  Its passenger numbers grew by 6% in 2011 and are expected to reach the target of 9.1 million for 2012.  Currently it can offer connecting flights to over 400 different places worldwide.

Because of these facts, Paul Kehoe, its Chief Executive Officer, believes strongly that travellers would do well to look at what Birmingham Airport (IATA: BHX) might offer them for their future travel needs.  “As a regional airport we’ve always been behind the market.  In the past we backed the wrong horses, but you can’t blame the management.  British Airways left us and we lost 2.5 million passengers, and then Ryanair and easyJet (initially) went into other airports.  We were left with a number of other airlines which all failed.  But today we have Ryanair, Flybe, Monarch, Lufthansa, United, Emirates and others and we’re operating 1,750 flights a week.  Altogether, we have 30 airlines using the airport and traffic has been running at sustained growth since March of this year.  Passenger traffic was up 6% in June against June of last year and was up 9% in August.  With all the development work under way we will do even better.”

Much promotional work and publicity has gone into achieving all this, and the airport now has a major expansion plan in progress.  Mr Kehoe was asked to describe this and the airport’s objectives for Airports International.

“We have a new control tower, which cost us £10 million [US$16 million] and which should be operational by the end of 2012, and our main runway is being extended from its current 8,560ft [2,600m] to 9,840ft [3,000m].  Work on the new road relating to this is under way and the runway extension work will start shortly, when we’ll add the extra 1,280ft [400m].  The road should be operational by September 2013 and the runway work complete by that November.  Then we’ll take time to resurface all of the runway to give us what will virtually be a brand new runway.

“Previously we had two passenger terminals but we merged them into one and we can now handle up to 18 million passengers a year, or double our present throughput.  With further terminal infrastructure we could probably cope with another 18 million, for we have approval for handling 30 million passengers a year.  We’ll have a runway that will be capable of quadrupling the number of passengers currently using the airport, or over 30 million per year; but to provide for 30 million we would need more terminal capacity, and we would have to ask ourselves where we could locate that extra space.  Do we find it on the existing site or do we move it closer, or indeed on top of the planned HS2 [high-speed train] terminal?

Paul Kehoe became Birmingham’s CEO in 2009.

“Now HS2 can happen: as you know it’s intended to be a high-speed rail link running from London’s Euston station to Birmingham initially, and at a later date to Scotland.  The co-location of the airport to HS2 would make great sense, in the same way as Paris CDG has its TGV, the same way that Frankfurt has a railway, the same way as Amsterdam has a high-speed line beneath the airport and many other airports have a rail line.  So that’s an option, and if we don’t choose that option and we have a people-mover connecting the airport to the railway station, then the Terminal 3 envisaged in the current master plan would sit alongside the old Terminal 2, where our current long-stay car park is.

“We have the space, as we own the land.  When we were looking at our land-take and considering what a 34 million-passenger airport would look like, we took Gatwick and superimposed it over Birmingham – and said if that’s the kind of land-take Gatwick requires, do we have that sort of space available or can we acquire it?  The answer is yes, we can.  The ownership of the land locally is with Birmingham City Council, [which] is a shareholder in the airport company [West Midlands District Councils 49%; Airport Group Investments Ltd 48.25%; Employee Share Trust 2.75%].”


A second runway

Asked if the airport would need a second runway for such expansion and aircraft movements, Mr Kehoe said: “No.  It’s not likely.  In the Aviation White Paper of 2003 [The Future Development of Air Transport in the United Kingdom, Dept for Transport], they identified a second runway for Birmingham, but we won’t bring that forward today because we don’t see a need for it.  But we’re not going to give up our option on it because it’s very valuable.  The board has said we will maximise our use of the single runway.  We will reserve the right of the option unless there are changes by the government in deciding what they want to do on runway capacity. We have that facility and must consider it in the longer term.”

It has been said the airport is Airbus A380-compatible now – we put it to Mr Kehoe: “The airport doesn’t actually fulfil the requirements to be compatible, but we can undertake limited A380 operations and have done.  From a terminal point of view we are capable; and with the runway extension the aircraft will be capable of flying to Singapore.  Whether there is a current market for that is another issue.

Asked if much of the planned expansion being made is because of the high-speed train, Mr Kehoe replied: “Certainly it helps.  Our original master plan for 27 million passengers did not have high-speed rail in it.  People talk of Birmingham being a local airport for local people, as we do, but many of our local people go down to Heathrow, Gatwick and Stansted, and if you can bring a measure of those back [to fly from Birmingham], it’s important.  Today 80% of our passengers are home-originating.  We’re now looking to connect the market with passengers who have not flown, or will not yet fly for a couple of years, to places like China and India and Brazil.  You’re shortly going to see an explosion of people looking for tourism opportunities.  They could come into the Midlands by train and then go on to London; and if you have a rail link and high-speed rail, what it does effectively is move Birmingham Airport 70 miles (112 km) closer to London.  If 54 minutes can reclassify Southend as a London airport, a future CEO of Birmingham Airport might say that if we are closer than Southend, as close as Gatwick, as close as Luton and closer than Stansted and about nearly as close as Terminal 5, then shouldn’t we be serving the great metropolitan city of London?

“But you are quite right.  Travellers want to start their visit to the UK with London.  If I’m an American I’ve only ever heard of London, which is why the LON code for Southend or Luton is so important, and I’m sure that my successor will be looking to have LON attached to BHX.  Passengers like to get to a final destination, and Americans love that.  In Europe we’ve done a brilliant job of conditioning passengers using and monitoring brand loyalty; as an example of that, when BA left here they took 2.5 million passengers with them.  Now a lot of passengers came back with a different [loyalty scheme] card and they were very different passengers.  The power of the loyalty card is tremendous.

“But passengers want to go to a destination; they don’t want to go to Heathrow.  Airlines funnel them through Heathrow because that’s where they make their money.  But at some point you’ll have a capacity problem at Heathrow which will slow the whole journey down.  And when people find other routes to market they will find other routes start to work.  And this is where we gain.  You can look at the success we’ve had at Birmingham.  Eleven years ago we did not have a route to Dubai.  It’s grown to be our second most popular route, up from zero to half-a-million passengers in ten years.  We thought that this year it might overtake Dublin as our most popular route.  I come back to the important point – it’s down to the airlines.  We can provide as much product as we like but the market will decide.

“However, airlines are looking for opportunities and we are seeing a lot of business passengers from multinational companies joining the tourists travelling on airlines which serve their destinations.  In 2010 the leisure market fell away but the business traffic increased.  Business passengers now represent 27% of our traffic.  This is why we have just signed an agreement with Chicago O’Hare Airport to work collaboratively to strengthen trade, tourism and cultural links between the two cities.  We’re hoping to reinstate direct flights between the two cities before long, which ceased 11 years ago on September 11.  As I said at the meeting [with Chicago representatives], Birmingham enjoys a special relationship with Chicago with over 350 North American companies providing employment for 60,000 people in the area.  We’re committed to strengthen the links further.

“On the rail front, there is absolutely no doubt that we need new rail capacity and the high-speed train can provide that.  There also is another side to its use: there’s a growing rail freight market, and a lot of the freight traffic that comes this way by road could be handled by train.”