Analysis: Airport’s new owners to invest in flight routes – but will keep travel tax
13:11 12 June 2014
copyright: Archant 2014
New owners have touched down at Norwich International Airport with far-reaching plans to make passenger traffic soar.
Self-made billionaire Sir Peter Rigby has bought the transport hub from regional airport operator Omniport in an undisclosed deal that will see Norfolk County Council and Norwich City Council hang onto their stakes in the business.
Sir Peter said the takeover by his technology, hotel and aviation company The Rigby Group would protect 650 jobs while channelling fresh investment into the airport to expand its flight networks across the UK and abroad.
But he has ruled out scrapping the airport’s controversial travel tax on passengers claiming the £10 charge was crucial to making the airport run profitability.
Few would envy the challenge faced by the top bosses at Norwich International Airport when the recession first began to bite.
As people clawed back their spend on holidays abroad, passenger numbers were sent into a tailspin, falling from 575,000 in 2008/09 to 404,000 in 2010, while its turnover also dropped from £12.4m to £10m.
Since then, the airport has emerged from the worst of the turbulence and recovered some lost ground. Last year it notched a 17pc growth in passenger traffic to 463,401 – a sign of improvement on the long road ahead.
It is these signs of growth that will have made it an attractive acquisition for The Rigby Group at a time when the economy is starting to strengthen.
However, some will argue that the new owners have already missed a golden opportunity to rekindle lost relationships with passengers by keeping the £10 development charge – a tax still deemed unpalatable at a time when people’s spending power is still squeezed.
Yet it is hard to argue The Rigby Group are not talking good business sense when they champion the benefits the airport can enjoy from being part of a wider group. The might of group buying will certainly ease the pressure on its bottom line when it comes to services and fuel.
But such efficiency savings will not come overnight, and they can only be considered as good as the investment that is being driven back into the airport to make the it more cost-effective for passengers.
Speaking during a launch event yesterday, The Rigby Group confirmed that its Regional & City Airports (RCA) division would take charge of the Norwich International Airport, with Andrew Bell remaining in place as the airport’s chief executive.
The RCA – which owns and operates Coventry and Exeter Airports – said the government had “given short shrift” to regional airport’s across the country as some experienced their worst spell in aviation history.
Sir Peter Rigby
Widely regarded as a doyen of the technology sector, Sir Peter Rigby spent 40 years nurturing a computer start up business into one of the biggest privately-owned organisations in the UK.
He began in 1975 when he launched Specialist Computer Centres (SCC) on the back £2,000 cash investment, before steering the company through 30 years of growth. The business recorded a £2.75bn turnover in March 2012.
Not afraid to branch out into a variety of sectors, The Rigby Group has grown through acquisition to gain a significant foothold in a range of markets from airports to hotels, real estate, financial and aviation.
In 2002, Peter Rigby was knighted for his contribution to IT and business in the Midlands.
But it believes Norwich airport will benefit financially as part of a wider group by accessing its investment pot and using its buying power to make efficiency savings.
“Regional airports will have more strength in future if they are part of a group rather than being an individual organisation,” Sir Peter said.
“What we can bring to the table is more expertise in areas that small airports can’t afford to employ, from retailing to airport runways and air traffic control systems.
“We will also be buying fuel and services collectively for all our airports to instil best practise.
“And we are in a position to invest as a very successful privately owned business.
“Passenger numbers are directly related to the state of the economy,” Sir Peter added. “If the economy is on the rise then more people will fly for business or for leisure.
“Across our businesses we are seeing a 10pc improvement year on year. But that growth needs to be stimulated by dialogue and actions with the airlines to put more routes into Norwich – and more routes means more passengers.
“We have a capability in the RCA to employ the sort of people who can maintain that constant dialogue with the airlines to encourage them to do deals and implement those new routes.”
Building blocks for the sale were put in place six months ago when Omniport approached The Rigby Group in the hope of striking a deal.
The approach comes after the Sir Peter’s company swooped for Coventry Airport in 2010 and Exeter International Airport last year as additions to the management contracts it has for Blackpool International Airport and City of Derry Airport.
It is understood that The Rigby Group will now own 80pc of Norwich International Airport, with Norfolk Country County Council holding 12pc and Norwich City Council 8pc.
The buy-out deal will also ensure investment is in place for future projects, including the ambitious plans to create an Aviation Academy to train apprentices, and an Aeropark providing an aeroplane painting service.
John Spooner, head of RCA, said its organisation was looking to harness the benefits of regional airports – many of which have struggled to get through the recession.
“Our view is that regional airports have got short shrift from the government despite navigation the worst period in aviation history,” Mr Spooner said.
“There are many things done at Norwich International Airport that are best in class. Norwich is famed within the industry for its travel shop and that is the kind of service that can be rolled out to our other airports as well.
“It is inconceivable that Norwich International Airport will not benefit from being part of a larger group. The overhead costs will come down for a start.
“I think you will see us add additional regional airports to our portfolio, whether that be through the acquisition of assets or through new management contracts. There is no reason why the Rigby Group cannot be the biggest regional airport operator in the country.
“But we want to see traffic growth in Norwich, which means more services and more amenities that will bring investment.”
Norwich airport saw a 17pc increase in passenger traffic from 396,676 in 2012 to 463,401 last year.
It recently recruited 50 part-time staff to help cope with the busy summer season.
Andrew Bell, the airport’s chief executive, said: “The change of ownership is really exciting for us as a team and the airport itself.
“They are a nurturing organisation that will build up the strengths of Norwich airport and they will bring benefits that help us going forward.
George Nobbs, leader of Norfolk County Council, welcomed the news of the buy-out deal. He said he was confident Sir Peter shared the council’s aims and ambitions.
Meanwhile, Brenda Arthur, leader of Norwich City Council, said she would look to work closely with The Rigby Group to shape an aviation business cluster around the airport as part of the Norwich City Deal project.
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