Ryanair deal at Stansted

SSE Comment

Michael O’Leary’s claim that an extra 7,000 jobs will be created by its latest deal with Stansted Airport owners Manchester Airport Group (MAG) has been described by Stop Stansted Expansion (SSE) as wild exaggeration of the worst kind because it could raise false hopes and it could also be seized upon by developers in their attempts to justify the need for ever more local housebuilding.

The reality is that this Ryanair deal for the next ten years will do little more than return Stansted to its 2007/08 peak, at which time the airport employed about 2,000 more people than today.

Highlighting the airport’s recent employment record, SSE points out that if the Michael O’Leary school of logic were to be applied, Stansted would have lost over 6,000 jobs in the past five years, in line with the fall in annual passenger numbers from 23.8 million to 17.6 million.

“Quite plainly – and thankfully – that scale of job losses has not happened,” said SSE’s economics adviser Brian Ross, “Michael O’Leary’s claim that 1,000 jobs are created for every extra million passengers is a wild exaggeration. In reality, low cost airlines generate about 300 jobs – including indirect jobs – for every million passengers”.

SSE has also expressed surprise at the about-turn which MAG appears to have undertaken to prop up falling passenger numbers. The airport has planning permission to handle 35 million passengers and 264,000 commercial flights annually and is currently operating at only half those levels.

“When MAG bought Stansted it said that it wanted to make the airport more broadly based, with more airlines and more destinations”, Brian Ross continued, “Ryanair already accounts for three quarters of all Stansted’s passengers and this deal will entrench Ryanair even deeper as the dominant airline at Stansted and reinforce the airport’s reputation as nothing other than a mecca for cheap leisure flights, especially since it comes on top of a similar deal that MAG did with easyJet a few months ago. In other words, this is just more of the same and MAG has done exactly the opposite of what it said it would do at Stansted.”

Brian Ross concluded: “In one respect however we can fully understand MAG’s decision to strike a deal with Ryanair: Stansted has run up losses of £206m in its past three financial years and in the past 12 months it handled its lowest number of flights for 14 years. Something had to be done and, ultimately, it’s a commercial decision for MAG to decide how best to use Stansted’s spare capacity.”

NOTES

• The £206m loss quoted above is for the financial years 2010-2012 inclusive, taken from Stansted Airport Ltd financial accounts, available from SSE upon request.
• Ryanair operations typically generate about 300 jobs (of which 138 are directly with the airline) for every million passengers handled, which suggests that an extra 7 million passengers per annum would generate about 2,100 jobs.
• Despite the fall in the number of airport jobs in recent years – and the wider economic downturn – local unemployment levels continue to be remarkably low, amongst the very lowest in the UK. In August 2013, the total number claimants in the two local districts of Uttlesford and East Herts combined was 2,010 – just 1.6% of the potential working population, compared to a UK average of 4.4%.