London’s extensive airport market comprises six scheduled commercial passenger airports, each with their own niche and catchment areas—although all tap the same large London metropolitan market of nearly 15 million inhabitants.

All these gateways are in the hands of private parties, and some large ownership changes have taken place. Ferrovial is selling a large portion of its Heathrow (LHR) stake to Ardian and PIF; Vinci bought into Gatwick (LGW); and Carlyle has taken over Southend (SEN).

Looking at recent years’ growth, it is unsurprising that London Stansted (STN), being a Ryanair hub, recovered nearly all its pre-pandemic traffic in 2023 (at -0.6%). Slot-constrained LHR, with higher airline demand than capacity available, also swiftly approached its 2019 traffic last year (-2.1%), and in the first half of 2024, Europe’s busiest airport exceeded its pre-pandemic passenger count for the same period, breaking records in the process.

LGW and Luton (LTN) followed, with some 10-12% less traffic in 2023 than 2019. However, the slowest to recover have been London City (LCY) and SEN, which were still 33% and 93% down, respectively.

Throughout 2024, SEN and LCY remain behind on their recoveries, while LGW was making up ground in the first five months of the year (+9%) and both LHR and STN grew strongly (+8%).

London City Airport

The airport serves a core business market (45% passenger share in 2019) and increasingly more tourism routes. The airport is niche in the sense that only smaller aircraft up to, for example, the A220-200 and Embraer E195-E2, can operate on its short runway.

The gateway is therefore not attractive or relevant to many airlines, which limits the potential market. One of its main carriers, Flybe, ceased operating definitively at the start of 2023. LCY is now mainly a base for BA Cityflyer. In addition, there are routes from European legacy airlines such as Swiss, Lufthansa, KLM, and LOT, which have the right aircraft in their fleets.

In recovering to pre-pandemic levels, and even up to their proposed new cap of nine million annual passengers, LCY is largely banking on BA Cityflyer. A program to densify their cabins should provide extra growth. However, a real game changer will be additional aircraft to the current 20-strong E190 fleet.

There are currently no indications for this to happen in the short term, which leaves the airport below the recovery path of London peers, and below the forecasts of investors who paid a premium price for the asset in 2016.

Southend Airport

Suffering the hardest blow is SEN, which largely relied on its EasyJet base pre-pandemic. The low-cost carrier’s decision to consolidate its operations in larger hubs like LTN and STN has had an impact. Meanwhile, Ryanair, which also entered the airport in 2019, retreated a year later and has not returned. SEN was left with less than 5% of its 2019 traffic volume in 2021 and 2022.

Some improvement was seen in 2023, with EasyJet offering a small summer schedule, and there have been further improvements this year when there were flights in the first months of the year, and the winter season as well.

While EasyJet is offering an increased schedule compared to last year, with routes to Spain, Geneva, Paris, and Amsterdam this summer, it is not at the level of 2019. A major change will happen next March when EasyJet will make SEN its 10^th UK base and station three aircraft there. This should bring EasyJet’s traffic up to pre-pandemic levels.

However, while Ryanair and Flybe are not operating, the total airport passenger volume is still expected to remain 50% below the 2019 peak. With the major gateways recovering and approaching their capacity limits though, there is some potential for SEN to take any over-spill. As 2019 showed, passengers used the airport when more flights were offered.

This picture across the London landscape shows that smaller airports which are heavily dependent on one or two major airlines have struggled in the recovery. They have been left at the mercy of airline strategies while the larger airports showed resilience in demand.

Careful consideration of the airline mix is therefore proving to be an important aspect of airport acquisitions and risk profiling.