In our continued coverage on the demise of Monarch Airlines our analysis shows that its collapse will have a greater impact on one of the UK’s smaller airports than at the four larger ones where it operated, with one exception.
Monarch, which in its previous incarnation before it joined the low cost throng was an upmarket leisure scheduled service and charter airline with a generous loyalty scheme, operated from only five UK airports, eschewing London Heathrow, also Scotland, Wales and Northern Ireland airports. Its home base of London Luton Airport to the north of the capital and London Gatwick to the south was for quite some time supplemented only by the ‘red brick’ primary airports of Manchester and Birmingham.
This conservative approach to capacity distribution was highlighted in 2012 when Leeds Bradford Airport (LBA) was selected as a new base with (from 2013) 12 destinations. Concerns were expressed that it would cannibalise its own routes out from Manchester. Ultimately it did not – there was little route duplication – but it was the last time that Monarch added a new UK base airport.
Indeed it is LBA which looked most likely to suffer from Monarch’s sudden closure. It was scheduled to have 9.4% of seat capacity there in week commencing 09-Oct-2017. While that is considerably less than home-based carrier Jet2.com and Ryanair it is not insignificant, especially given the fact that Monarch had been forced to fly to a greater degree in very competitive markets such and Spain and Portugal as terrorism closed down potentially more profitable recent ones such as Tunisia and Egypt. Taking over ultra-competitive routes from a failed carrier at a small airport in a time of economic ambiguity is not an enticing option.
However it appears that Thomas Cook Airlines has already stepped into the breach. It already operates seasonal services at LBA (and some summer 2017 flights were with Monarch-branded aircraft) and its programme will be expanded to include Tunisia, which the UK Foreign Office is no longer warning citizens not to visit. Jet2 will also step up its programme.
With the exception of Birmingham, other UK airports are less impacted by the developments if only because of the volume of alternative airlines that might be in a position to pick up the new capacity. The relative ratios of seat capacity Monarch had for week commencing 09-Oct-2017 are shown below.
CHART – Birmingham and Leeds Bradford face the largest exposure to Monarch Airlines’ collapse but airlines have already started to backfill capacity to fill the void left by its collapseSource: The Blue Swan Daily and OAG
In Birmingham’s case there is a not inconsiderable 14.3% of capacity make up. Fortunately, Jet2.com is in expansionist mode there. Having only opened a Birmingham base in Mar-2017 the airline announced on 09-Oct that it would add 55,000 seats this winter and it already is operating to Monarch destinations such as Venice and Dubrovnik. Thomas Cook also has a long-established station at Birmingham, while Ryanair is the largest low cost carrier with 15% of capacity.
At Gatwick, none of those airlines is well established. Norwegian is, but with only 6% of the capacity and some of that on long-haul routes. There is no obvious carrier to step into the breach but on the other hand there is less capacity than anywhere else to be re-allocated with the exception of Luton.
At Monarch’s home base it had only 3.6% of capacity. With easyJet and Wizz Air dominating the capacity at Luton (77% between them) it is not easy to see who will be in a position to fill what is admittedly only a small gap unless there is a reappraisal of strategy by the other airlines there or another airline moves in and opens a base.
Manchester falls in the middle of the degree of impact Monarch’s failure has caused. What it has in its favour is that as the most diverse major airport in the UK by way of the airline mix (the largest airline – Ryanair – has only 15.2% of the capacity) there are many potential candidates to fill Monarch’s capacity gap, including Ryanair, Thomas Cook and Jet2.com.
easyJet has not been mentioned here because that airline principally serves primary airports. Some of Monarch’s routes would be appropriate to easyJet, but not many.
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How the collapse will impact on what were its passengers is yet to be determined. Monarch, apart from being the UK’s fifth largest airline, had been in business since 1968. It had attracted, and retained, a hard core following amongst expat retirees especially, many of whom considered it to be ‘old faithful.’ Regrettably they were not faithful in sufficiently large numbers when it, perhaps mistakenly, re-launched itself as an LCC.
It was particular strong on Spanish and Portuguese routes, because most British expat retirees live there. Over half of its route network (18 of 34 routes) from the UK was to the Iberian Peninsula or Spain and Portugal’s islands. It did not fly into Africa and did not commit itself to inordinately long sectors (the furthest was Tel Aviv).
Essentially a ‘Mediterranean sun airline’ it had only one destination to the north of the UK (Stockholm). It did not indulge in fifth, sixth, seventh or eighth freedom operations, only the first four. It was the quintessential British airline for British passengers and its chief executive officer said earlier in 2017 that the government should always be mindful that the fundamental need of the UK travel industry (during the Brexit negotiations) is to get people to and from the UK and not to concern itself with what foreign airlines think.
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Latterly it had been trying to reinvent itself again with a much-needed modernisation of its fleet (45 Boeing B737Max-8 aircraft were on order) and a strategy to reintroduce long-haul services, which was not perhaps complementary, and sell off the short-haul product. But it was too late.
So its ex-passengers are now faced with a shift towards unknown territory – airlines with which many will be totally unfamiliar – unless some entrepreneur somewhere is prepared to take the plunge and attempt to recreate Monarch, with more cost effective equipment and a business model that is more appropriate to the zeitgeist. There is little chance of that.
For the airports that will mean that they need to be more competitive. The airlines that they attract to ‘replace’ Monarch will have a substantial impact in some cases on their own immediate future business. There will be winners and losers.