Foods and drinks gross sales have overtaken duty-free to grow to be the most important retail class at London Gatwick Airport, indicating that vacationers may be looking for out necessities fairly than non-obligatory extras when they’re on the transfer through the pandemic.
Gatwick—historically Britain’s second busiest gateway behind London Heathrow—was compelled to shut its South Terminal as a result of Covid-19 and presently has 75% of outlets and meals and beverage shops open within the North Terminal.
Passenger numbers on the airport plunged by 66% to 7.5 million within the first six months of 2020 leading to a lack of £321 million versus a revenue of £47.7 million in the identical interval in 2019. The airport is to shed as much as 1 / 4 of its workforce in a major restructure following the 773% swing in profitability.
Whereas retail general declined by 60.5% within the half-year, amongst its elements, duty-free, operated by Dufry, fell furthest at 65%, whereas specialist outlets slipped by 60%. Catering earnings got here out finest with a 55% decline to £9.7 million, edging out duty-free’s £9.6 million. The one silver lining was that earnings per passenger rose by 17% to £4.73.
London Heathrow—which is presently benefiting from British Airways shifting its vacation short-haul community from Gatwick—additionally noticed higher resilience in food and drinks earnings this yr. This could possibly be a market distortion as a result of far fewer prospects in airports, however previous to the pandemic catering progress was already outstripping retail at a number of hubs.
Jean-Dominique Andreu, professor of promoting at Paris Faculty of Luxurious informed Forbes.com: “The fun of traveling and shopping at an airport is not there now. The experience is stressful and fear is a dominant factor. This doesn’t put people in the frame of mind to relax and shop.”
Authorities interventions aren’t serving to
In a press release right now, Gatwick’s holding firm, Ivy Holdco Restricted, stated: “All categories have seen the extreme impact of Covid-19 due to the reduction in passenger numbers and the various government restrictions implemented to control the spread of the virus.” These state interventions have been closely criticized by Charlie Cornish, CEO of rival UK. operator, Manchester Airports Group.
Earlier this month, airports affiliation ACI Europe launched June statistics that confirmed the massive extent to which the pandemic had disrupted visitors. London-Gatwick dropped from 10th place final yr to 92nd. The affiliation commented: “June saw UK. airports significantly trailing their peers due to overtly restrictive and non-targeted travel restrictions enacted by the British government.”
With visitors rising in the summertime getaway months of July and August, Gatwick has labored with its retailers to reopen extra items. Earlier than the Covid-19 pandemic the airport was near finishing a significant transformation of its meals and beverage providing within the North Terminal supported by prior robust gross sales progress within the catering enterprise.
On the monetary aspect, in April Gatwick—50.01% owned by Vinci Airports since final yr—secured a £300m loan with a consortium of banks to enhance liquidity. The airport’s cash steadiness was about £326m on June 30 2020.
Within the meantime, deliberate capital expenditure has been minimize by £157m for 2020 and £196m for 2021 whereas operational prices have been lowered by over £100m by actions like severance programmes, termination of fixed-term contracts, and consolidating visitors into one terminal.
Gatwick presently has 18 airways flying to 115 airports in 42 international locations. Though it says a restoration to pre-pandemic visitors ranges is as much as 5 years away, Gatwick Airport CEO Stewart Wingate took a optimistic stance saying: “On this publish Covid-19 world, we’re working onerous with our airways to make sure we proceed to supply a large selection of locations.
“We also expect to progress plans to bring the existing northern (stand-by) runway into routine use next year which, as we rebuild our passenger numbers, will enable us to offer more travel choices.”