This is not just a question of how the aviation industry and its supply chain gets back on its feet, but how people flow through and around airports for all the other jobs which they support. The airport is also hugely important in relation to the broader mix of how the transport system will be affected by social distancing and new behavioural norms which will be a topic of future blogs.
Whilst Government support for businesses has been forthcoming there is no detail yet on potential sector-based financial support packages coming forward despite the major aviation announcements including the following most relevant to Gatwick:
- Gatwick warns it may take four years for passenger numbers to return
- British Airways to cut up to 12,000 jobs and may not reopen at Gatwick once pandemic passes
- Virgin Atlantic to cut 3,000 jobs and quit Gatwick
Of particular concern is the future of the Virgin headquarters which is situated on Manor Royal. Although passenger numbers are small (Virgin only carries 3% of all passengers to/from Gatwick) they are also high paying and high spending so it will have a big impact on the economy around the airport. Also many Virgin staff live in our area so the wider impact of jobs lost will be high.
Richard Spofforth, a partner at accountants and business advisers Kreston Reeves, which has offices across Sussex, Kent and London comments:
"The 'Gatwick Diamond', the cluster of towns in Sussex and Surrey that surrounds Gatwick Airport, has a combined economy of over £24bn employing more than 368,000 people. It is a symbiotic relationship between the airport and the local area that has grown up over 70 years. Crawley alone contributes £5bn to the UK economy.
Many people will be employed directly by the airlines, the industries that support them, catering and servicing for example, alongside those employed by and in the airport. If BA were to withdraw from Gatwick it is unlikely other airlines will be in a position to acquire its landing slots. Jobs will be at risk.
The region is also home to many international businesses - including American Express, Nestle and Canon - who are likely to have chosen Sussex for operations because of the excellent transport links. What happens at Gatwick Airport matters not just to the aviation industry but to the wider Sussex business community. Whilst global giants are likely to be weather the storm, smaller businesses are more vulnerable.
Research Kreston Reeves conducted in April shows that 59% of businesses in the region have just 12 weeks' cash reserves to keep them going: 38% have just eight weeks cash in the bank. A blow like the withdraw of BA and the possible collapse of Norwegian might be one too many."
Gatwick has secured a £300m loan to help recover from impact of COVID-19 and other airports in the UK are agreeing financial packages to help them weather the storm and come out stronger in the years ahead. The airport will continue to work with Virgin Atlantic to get them flying again from Gatwick and are positive about the future for the industry:
"The COVID-19 pandemic has had a severe impact on the aviation sector but we remain confident that the industry will recover as air travel demand returns. We remain very optimistic about the long-term prospects of Gatwick Airport and our resilience as a business, and having remained open throughout this pandemic we are in a strong position to extend our current operations quickly to meet demand. We will continue to work closely with our other airline partners, including easyJet, the IAG Group, Wizz, TUI and Ryanair to strengthen our business for the future. We also welcome the recent news that another of our major airline partners - Norwegian Airways - has taken important steps forward to secure its future at Gatwick.
And Richard agrees with a more upbeat longer view.
"The demand for air travel might currently be at an all-time low and slow to recover, but we believe it will recover. Gatwick Airport is the UK's second largest airport. Demand for space at Heathrow is at breaking point and its third runway is decades away. Gatwick well placed to soak up future excess capacity. And when Gatwick does well, so too do local businesses."
However, through the work of our Growth Hub and network of Growth Champions we are working hard to support businesses in the Gatwick economy with their immediate challenges.
Work also continues on our Local Industrial Strategy to prepare for the long term recovery of our economy. It will include a phased plan with immediate, medium and longer term actions. To inform this we are also working closely with the Local Authorities around Gatwick and Business Representative Organisations. We are analysing our complex aviation based economy, engaging with key businesses in particular those based on Manor Royal and taking part in recovery groups established by Local Authorities, including the Economic Recovery Taskforce established to help rescue Crawley's Economy.
It is vital that we understand the impact of the pandemic on our region, in particular the now very vulnerable Gatwick economy and what is required to restart it.
Jonathan Sharrock,
Chief Executive at Coast to Capital
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