You wouldn’t expect one of the world’s largest aviation consultancy firms to be setting up a European aircraft maintenance base at Teesside International Airport in the middle of a global pandemic, which has dampened the outlook for that industry more than most. But I suppose nothing is quite what you expect it to be in this strange new world.
Multi-billion dollar US firm, Willis Asset Management’s move to Teesside couldn’t come at a better time for the Combined Authority, which brought the airport back into public ownership last year, buying an 89 per cent stake in the business.
Tees Valley Mayor Ben Houchen explains: “The fact that, in the middle of the pandemic, we’ve been able to get the lease signed with Willis and get the deal over the line just shows that the long-term plan for the airport is going to work.
“It also sends a short-term signal out there that, despite the airport currently being closed, we’re still making the progress we said we would make.”
As coronavirus pulls the rug out from under airlines, airports and other stakeholders in the aviation industry, Mayor Houchen is clear that it’s the long-term strategy that will get Teesside Airport through this.
“It’s about taking a long-term view on really important pieces of infrastructure”, he explains, “rather than what’s usually a political, short-term view.
“That’s really what a regional mayor and combined authority should be doing because, as an organisation that focuses on economic regeneration and job creation, you can’t be working on political cycles. You’ve got to set [long term] plans in place.”
Since being brought back into public ownership last year, Teesside Airport has added numerous domestic and international flights to its roster, from London, Cardiff and Aberdeen to Alicante, Amsterdam and Bulgaria.
But what’s been crucial in safeguarding the sustainability of the airport at a time when all flights are grounded is the long-term commercial vision, which is to diversify what the site can be used for.
The Willis Asset Management deal, which will create 20 jobs initially, and the £200 million logistics and manufacturing park, which is moving forward in lockdown, will ensure that the fundamentals of an airport, where passenger numbers had fallen to around a third of peak levels over the last decade, remain strong.
“The airport will not be going back because of this; it’s just a bump in the road to recovery,” Mayor Houchen confirms.
The Tees Valley Combined Authority’s vision for the recovery combines a ten-year plan for the airport with a 20-year plan for the former SSI steelworks site, which the South Tees Development Corporation took control of last month.
Ben adds: “You’ve got to have these plans in place so you know that, irrespective of the ups and downs of the economy, the long-term goals can still be reached.”
If the pandemic is so far proving to be a bump in the road to recovery for Teesside Airport, then it looks more like the end of the road for other players in the industry that are more exposed.
Boeing, for example, is still reeling from a Q1 2020 loss of $1.5 billion and has decided to axe 16,000 jobs from its worldwide plane-making operation. Meanwhile, competitor Airbus, has cut 10,000 jobs, describing the pandemic as the “gravest crisis” the industry has ever seen.
The world’s foremost aerospace manufacturers have taken these drastic steps because of the crippling effect coronavirus is having on airlines, which won’t be buying new planes any time soon.
IAG, the parent company of British Airways, has also announced it will make a quarter of its workforce redundant – that’s around 12,000 jobs, all lost due to the collapse in global travel.
British billionaire Richard Branson made himself unpopular last month when he asked the Government for a £500 million bailout to support Virgin Atlantic, which has subsequently announced 3150 job cuts and plans to stop flying from Gatwick.
Budget carrier Ryanair has also announced 3000 job cuts, while Europe’s largest travel operator, TUI, has said it is going to permanently cut costs by 30 per cent, putting up to 8000 jobs at risk. TUI lost £650 million in the first three months of this year.
These are just the headline figures, which illustrate the emerging financial impact COVID-19 is having on the aviation industry.
“It’s not easy for anyone,” Mayor Houchen confirms.
It’s also not surprising that the industry has been asking for more Government support, with airlines looking to shore up dire balance sheets and profit forecasts.
For the Tees Valley Mayor, airports should be at the front of the queue for any extra funding.
“I think Government should be looking at airports as a piece of infrastructure, which is not necessarily the way they should look at airlines,” he explains.
“Airports are key pieces of infrastructure for regions to be able to attract investment through connectivity, not just internationally but domestically as well.”
With many question marks hanging over flight safety, it’s expected that it may be some years before the aviation industry can recover to levels seen at the beginning of this year.
But Teesside Airport is doing as well as could be expected given the circumstances and the mayor is keen to stress that flights will restart as soon as it is safe to do so.
He concludes: “This isn’t going to knock us off course in any way, shape or form.”