‘Challenging’ duty and tax free sector hits Gatwick per-pax retail income

“The Government should back Gatwick when making its airport expansion decision – no ifs, no buts”Stewart Wingate
CEO
Gatwick AirportUK. Buoyed by the busiest six months in the airport’s history with a record 23.5 million passengers (+4.7% year-on-year), Gatwick Airport posted a +5.2% rise in revenues to £411.8 million (US$626 million) for the half year ended 30 September 2015.

Combined with careful cost management, this resulted in a +6.8% rise in EBITDA to £241.0 million (US$367 million) and a pre-tax profit of £135.2 million (US$205.7 million) on a consolidated basis

Retail income rose +1.4% to £85.5 million (US$130.6 million) but, importantly, net income per passenger decreased by -3.0% to £3.60 (US$5.48) due to “challenging trading” in the duty free and tax free category. Income from duty free and tax free declined by -2.5% period-on-period.

The specialist shop category continued to perform well with per-passenger income broadly in line with traffic growth despite some impact from landside closures as a result of the North Terminal Development programme. Summer 2015 saw several new openings amid an ongoing revamp of the retail offer, including a new Boots store in the South Terminal while Simply Food was also updated in both terminals (a new store in North Terminal arrivals and an extended and modernised unit in the South Terminal).

“Where we have opened new or modernised stores, performance has been strong and we have delivered strong growth compared to last year,” the airport company said.

FOOD & DRINKS AND CAR PARKING FLOURISH

Food & drinks performed well. “Catering remains a particular highlight, where we have grown per passenger income by +2% compared to last year,” said the company. Summer 2015 saw several new openings, including Wondertree restaurant in the South Terminal departure lounge along with Wagamama in the North Terminal departure lounge. Landside the company opened a new Costa Coffee in both terminals.

“Passengers can look forward to some further development in this area as we open new restaurants in both terminals in the
second half of the year,” Gatwick Airport said.

Car parking income rose +7.4% and net income per passenger increased +11.9% to £1.60 (US$2.43) due to improved yield management, valet capacity increases and cost savings.

Gatwick Airport said that the mid-year results were “in line with expectations” as it continues to compete to attract new airlines and routes, invest in new facilities, and deliver an excellent service to passengers.

Specialist retail and food & drinks both performed stronglyLinking the results to the ongoing controversy over the granting of an additional runway to London (controversially awarded recently to Heathrow, a result that is being challenged by numerous parties), London Gatwick CEO Stewart Wingate said: “The Government should back Gatwick when making its airport expansion decision – no ifs, no buts.

“In the week of our results, Gatwick achieved 40 million passengers a year – a global record for a single runway airport. Such is the flawed analysis of the Airports Commission, it predicted that Gatwick wouldn’t achieve this milestone until 2024.

“The Airport Commission also estimated that, with a second runway, Gatwick will generate two million passengers in first year of operating. In reality, as today’s results show, Gatwick grew by 2.7 million passengers last year alone with only one runway.

“Gatwick is the best solution, does not breach air quality legal limits – even with a second runway – requires no taxpayer funding and can be delivered quickly. A decision for Gatwick is a decision for a runway which can actually be delivered and built by 2025.”

Car parking revenue was buoyant but retail income per passenger was hit by challenges in the core duty free and tax free sectorsPassenger traffic hit record heights in the six-month periodClick on the above to view the enlarged image. Gatwick Airport’s heavy investment in improved facilities (notably a much-enhanced food & drinks offer) has paid off in improved consumer ratings.Gatwick’s passenger traffic growth is a combination of more planes, bigger planes and fuller planes – load factors have increased to 87.2%

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