The Rigby Group has acquired Bournemouth Airport from Manchester Airports Group (MAG) to expand its portfolio to seven airports. It is one of only two such small private independent operators that are still expanding in the UK.
- Regional & City Airports (RCA), the airports management division of Rigby Group, has completed its fourth regional UK airport acquisition with the purchase of Bournemouth Airport for an undisclosed sum from Manchester Airports Group (MAG).
- The purchase further expands RCA’s network of growing passenger and commercial aviation facilities across the South of England, which already includes Exeter and Norwich airports.
- RCA plans to help grow both commercial and passenger activity at the airport, leveraging the group’s scale, contacts, and expertise to power continued progression. Bournemouth Airport currently offers flights to 22 destinations across Europe, with 700,000 passengers using the airport in 2016.
The UK was well known for small British airport owner/operator chains in the late 1990s and early 2000s, mainly from the surface transport and property sectors, when the privatisation of airports from (usually) municipal owners became popular though most have since left the business or been acquired by other entities. They included the Stagecoach Group, a bus and rail operator that bought Glasgow Prestwick Airport and then sold it to Omniport, which also had a majority share in Norwich Airport.
Thomas Bailey Investments, a small Welsh real estate developer became TBI, walked away from shopping centres, offices and business parks and invested instead in airports in the UK (London Luton, Cardiff and Belfast International) and abroad before becoming part of the Spanish conglomerate Abertis (which has since left the business) while another bus and rail operator, National Express, bought East Midlands and Bournemouth airports, which it subsequently sold to MAG after a bad experience with a U.S. airport concession.
The Peel Group, another property developer with interests in ports and shopping centres, invested in airports such as Liverpool, Doncaster-Sheffield (which it converted from a military airfield) and what is now Durham Tees Valley. It is one of few to have stayed the course despite some difficult times during the last recession.
Airport investment has moved on since that era and has become the domain of investment banks, pension funds, private equity and even sovereign wealth funds. But it goes without saying that such huge, well-capitalised global entities are not going to be interested in small regional secondary level airports that mainly host tightfisted, opportunistic budget airlines and where prospects for the enhancement of non-aeronautical revenues (shopping, food and beverage, car parking etc) are limited. No more than they would be in similar airports in, say, India.
So there will continue to be a role for the entrepreneur (there is a handful of them worldwide) and the small independent operator. In the UK, the independents are now really down to three – the Stobart Group, which bought Southend Airport from Regional Airports and which also operates Carlisle Airport; Highland and Islands Airports Limited, a public corporation which operates and manages 11 airports in Scotland; and the Rigby Group.
Rigby Group is a British Midlands-based company that is active in technology, transport, hotels and real estate in the UK, Europe and the Middle East. Its general aviation group, previously known as Patriot Aviation Group, bought Coventry Airport in Apr-2010, a functioning ‘low cost airport’ until Nov-2009 handling mainly TUI services, when it was closed down following the failure of a planning application for a new terminal. It reopened in late Aug-2010 but has no commercial services The group aims to develop the airport ultimately into a commercial hub with full air traffic services and scheduled passenger services may be introduced at a later date.
Rigby subsequently went on to acquire Exeter Airport in the English southwest in 2013 from Balfour Beatty for GBP6 million. The following month it bought Regional and City Airport Management from Balfour Beatty, which was responsible for the overall operation of Blackpool and City of Derry airports. The former closed as a commercial airport while Balfour Beatty was managing it but has since reopened in a more limited way, while a 131-acre enterprise zone that will create 3000 jobs is being constructed on part of the site. The Derry airport is still operational commercially and handles around 300,000 passengers annually.
It then took on the management of Solent Airport in Hampshire, where it hopes to commence commercial services and where the local council has a GBP50 million master plan to transform the site into a business aviation focused airport; a location for aviation, aerospace engineering and advanced manufacturing businesses in the south, and to create 3500 new local jobs over the next ten years.
In Jun-2014 Rigby Group acquired 80.1% of the equity in Norwich Airport (East England) from the then majority shareholder Omniport (Penta Capital and Caledonia funds) for GBP24 million. Norwich City Council and Norfolk County Council remained as minority shareholders. Passenger traffic increased by 10.1% in 2016 to just over 500,000 and in the first seven months of 2017 by 27.3%.
CHART – Norwich Airport is seeing a significant rise boosted by enhanced connectivity delivered since RCA acquired majority control of the East Anglia facilitySource: CAPA – Centre for Aviation and UK Civil Aviation Authority
Rigby Group said then that it planned actively to build its portfolio of owned or managed airport assets over the next five years and did so at the beginning of Dec-2017 when it acquired Bournemouth Airport, which will be its second busiest airport after Exeter, together with its aviation business park. Bournemouth had become dispensable to MAG, which is investing heavily at Manchester Airport in particular and which will now concentrate on that facility, also London Stansted and East Midlands airports.
With this acquisition, now totalling seven airports of which four are invested, Rigby Group becomes close to being classified as a ‘Major Global Investor’ (MGI) in the CAPA Global Airport Investors Database. The criterion for that accolade is five invested airports of which one is in a foreign country. There are only 55 MGIs in that database out of 831 profiles and only two that are British – a hedge fund and an investor that has UK offices but is actually headquartered in Bermuda, a British overseas territory. Rigby Group actually has one more invested airport than does MAG, which is Britain’s biggest airport operator with almost 60 million passengers.
Operating any airport with less than a million passengers a year is unlikely to be a profitable venture according to authorities such as Airports Council International and academics. What Rigby Group has done is to position itself so that it can attack several markets.
Firstly, the business parks and enterprise zones that attach themselves to airports such as Blackpool, Derry and Bournemouth. Then, traffic at secondary level airports that are able to attract a variety of airlines, not just LCCs. Bournemouth Airport for example was home to an independent charter firm, Palmair, one of the first in the UK, from as early as 1958 and continues to appeal to the high number of retirees that live in the surrounding area. Exeter Airport is the de facto home of Flybe and one of its bases, while Norwich is close to unique in the UK in the ratio of regional airline capacity it attracts owing to the presence of oil and gas related industries on and off the nearby coast.
CHART – Scheduled operations at Bournemouth Airport are dominated by LCC Ryanair with both easyJet and TUI Airways also currently offering flightsSource: CAPA – Centre for Aviation and OAG (data: w/c 11-Dec-2017)
There is a diverse mix of airports here. Bournemouth is a wealthy area in a heavily populated sub-region and close to Southampton, a major commercial city. Exeter is an important regional centre that has taken over from Plymouth since that city lost its airport while Norwich is another important regional centre that is at the hub of UK east coast north-south flights.
It is a good thing that there are organisations like Rigby Group and Stobart Air that are willing to take on the challenge of regional and non-commercial airports like this. Increasingly, municipalities are loath to do so and most airport investors now have eyes only for primary airports. As for whether any serious money can be made it has other profitable divisions against which a benchmark can be achieved. While small regional airports are not usually a recipe for success the diversity inherent in this portfolio of regionally important airports and attendant industrial and commercial facilities suggests that it can.