City Airport boss banks on revival of business travel to pre-pandemic levels
Sinclair resists shift away from corporate to leisure customers as investors offer financial backing to help navigate crisis
London City Airport’s boss is banking on the revival of corporate travel to help it recover after turning to lenders and shareholders to raise hundreds of millions of pounds to navigate disruption from the pandemic.
Robert Sinclair said he is “very optimistic” the travel industry will recover rapidly from the impact of the Omicron variant, and predicted a “step change” in demand for flying from this summer.
“Two years into this pandemic, I think hopefully we are starting to see the end of it . . . the government’s messaging around living with Covid is hopefully resonating with people,” Sinclair told the Financial Times.
Significantly, he has resisted shifting the airport’s model away from lucrative corporate customers, despite fears business travel could struggle to recover to pre-pandemic levels in an era of videoconferencing, changing work patterns and climate awareness.
In the autumn, when passenger numbers hit their highest levels of the crisis, business travel returned to 35 to 40 per cent of normal levels, he said.
London City has the highest proportion of business flights of all UK airports, a status Sinclair guards “jealously” because it attracts airlines looking to generate more money per passenger through higher fares.
Shareholders are also backing the airport through new funding with £200m in loans and a £190m private placement to help it survive the collapse in passenger numbers.
The “strong support” from shareholders and lenders underlined the long-term resilience of airports as attractive investments, said Sinclair.
“It has been very good for us to see the response from the financial markets, that I think do not see this as being an existential event,” he added.
His optimism follows two torrid years for an airport that has built up a loyal following from business executives who value its proximity to London’s financial districts and emphasis on quick, hassle-free travel.
Just 714,000 passengers travelled through the airport in 2021, less than 15 per cent of 2019 levels and lower even than the 905,000 travellers in 2020, when there was a normal start to the year.
The collapse mirrors the trend at larger rival Heathrow, which carried fewer passengers in 2021 than in the first year of the pandemic.
But while Heathrow boss John Holland-Kaye was notably downbeat about the pace of the travel industry’s recovery as he urged the UK aviation regulator to allow him to raise landing fees, Sinclair said he expected to return to close to pre-pandemic levels of flying at London City this year.
“We do think it will return to pre-pandemic levels, but it will take longer [than leisure travel],” he said.
City Airport had spent the years before the pandemic diversifying to attract leisure customers to complement its regular stream of corporate travellers, providing a welcome buffer during the pandemic.
It is a strategy the airport intends to maintain, with the announcement of new leisure-focused routes for this summer, including Thessaloniki, the Greek port city, and Barcelona on British Airways.
“It is a large market which we are increasingly tapping into. But equally, it doesn’t come at the detraction of our core market, the bread and butter for London City, which is business travel,” Sinclair said.