Yahoo Finance Gatwick airport: Costs of shutdown could easily reach into the millions
London’s Gatwick Airport reopened on Friday morning, but the costs of the unexpected 36-hour shutdown of Britain’s second largest airport are still being tallied.
Businesses including airlines, retailers, hotels and taxis could easily have lost millions in combined revenues after drones were spotted around the airfield, forcing the airport to stop operations and call in the military for help.
The airport alone is expected to have lost hundreds of thousands of pounds in revenue, according to estimates by John Grant, director of the UK-based consulting firm, JG Aviation Consultants.
Gatwick Airport’s parent company makes roughly £400m ($506m) per year from passengers that take-off and land at the airport, according to the company’s latest annual results. That means the airport makes about £1.1m per day in average aeronautical revenue.
If passengers cancel their flights or go to a different airport, those revenues would be lost, noted Grant.
“They probably would have retained maybe 50% or 60% of those [daily] revenues,” he told Yahoo Finance UK.
Gatwick Airport did not provide its own estimates of lost revenue.
“Our priority today is to get our operation back on track so that people can be where they need to be for Christmas,” the airport said in a public statement, noting that delays and cancellations would continue on Friday.
The UK Civil Aviation Authority has told affected passengers they can get a refund if they want to cancel their flights, but they wouldn’t be able to get financial compensation from their airlines due to the “extraordinary circumstances” surrounding the shutdown.
Even still, the overall economic impact is “going to be very significant,” said Richard Taylor, a spokesperson at the Civil Aviation Authority.
A 2014 report from the UK Airport Commission found that the value of a flight delay for a leisure traveller was about £6.60 per hour. The value to a business traveller ranged from about £47 to £49 per hour.
Over 100,000 travellers were affected by this shutdown.
It is not immediately clear what the financial impact will be on the main airlines operating from Gatwick, including easyJet (EZJ.L), British Airways and Norwegian (NAS.OL).
“It is too early to say at this stage so we won’t be able to provide a number,” a spokesperson at easyJet told Yahoo Finance UK.
Both Norwegian and British Airways, which is part of International Consolidated Airlines Group (IAG.L), said they were focused on their customers and wouldn’t be able to provide any financial details.
Similarly, a representative for Gatwick Express said he “wouldn’t be able to estimate any loss of revenue for some weeks.”
But the airport and the aviation industry can thank their lucky stars that Thursday was not a particularly busy day for flying, according to Grant.
“It’s certainly not the busiest day. That is the second week of July… when everyone is going off on school holidays,” he said.
Gatwick’s drone nightmare is thought to be the most disruptive yet at a major airport and indicates a new vulnerability that will be scrutinised by security forces and airport operators across the world.
With files from Reuters
