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Regionalisation - UK - March 2009

Throughout most of the decade, the UK’s travel and holiday industry has enjoyed boom times. Driven by a buoyant economy and fundamental changes to the way we book and take holidays, the industry has seen several years of unprecedented growth.

This trend has also accelerated as a result of the increasing regionalisation of the UK’s air travel map. In the five years between 2003 and 2007, UK regional airports increased their share of passenger traffic from 40% to 42%. In addition, Eurostar’s move to St. Pancras International and the completion of the HS1 line have opened up this option to travellers outside the London region – although in comparison to air travel’s regionalisation this has had a negligible impact.

Indeed, the key driver has come from the growth in international scheduled air services, more than doubling since 2002. Primarily down to the expanding route networks of the budget airlines, 20 regional airports now feature scheduled international programmes.

But the harsh economic climate is taking its toll on the entire travel market. A number of regional airports are experiencing a reversal in their growth curves. Newcastle, Glasgow and Cardiff are witnessing declining passenger numbers, as are some of the smaller local airports in locations such as Durham Tees, Coventry and Blackpool.

In addition, with the majority of the UK’s airports now privately controlled, the competitive environment is becoming more intense. More travellers now have more than one option available to them. And the choice process is a complex one involving the trading-off of factors such as cost, time, convenience, availability of desired connections – even the levels of stress that have to be endured.

Key report themes:

  • The travel market in general, its past performance and more crucially, the challenges it now faces.

  • The background economic, demographic and key socio-economic factors that shape regional differences.

  • Detailed analysis of the performance of regional airports.

  • Evaluation of regional holiday patterns and channels of distribution.

  • Assessment of traveller preferences and attitudes in relation to regionalisation.

  • Key opportunities for regional airports in terms of meeting passenger needs.

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Table of contents

  1. Issues in the Market

      • Definitions
        • Abbreviations
        • Future Opportunities

          • Stress busters go local
            • Think and act local
              • Improving catchment and incentives marketing
                • Appealing to the green traveller
                • Market in Brief

                  • Regions grow faster than London’s airports
                    • International links drive growth
                      • Rapid growth from the outlying regions
                        • Regional contrasts in holiday duration patterns
                          • London region is the independent holiday capital
                            • London books closer to departure
                              • No regions immune to the recession hit holiday market
                                • Cheapest vies with convenience
                                  • European holiday travel by rail faces price problems
                                  • Internal Market Environment

                                    • Key points
                                      • Total travel volumes peaked in 2006/07
                                        • Figure 1: Visits abroad and expenditure, by UK residents, 2004-08
                                      • Travel expenditure more resilient
                                        • Holiday sector feels the economic stress
                                          • Figure 2: Holiday volumes, 2003-08
                                          • Figure 3: Holiday volumes for sea and tunnel, 2003-08
                                        • Holiday activity in the regions
                                          • Figure 4: Average number of holidays taken, 2004-08
                                        • Holiday duration varies across regions
                                          • Figure 5: Nights spent away on last overseas holiday, by air, by region, 2008
                                        • Traditional holidaying preferences still important
                                          • Figure 6: Index of packaged and independent trips taken, by region, 2008
                                          • Figure 7: trends in packaged and independent holiday trips (millions), 2003-07
                                        • The developing regional air map
                                          • Figure 8: Top 20 UK airport movements and passenger numbers (scheduled and charter), 2007
                                        • Regional growth outpaces London
                                          • Figure 9: Regional airport movements and passenger numbers in 2007, compared with 2003
                                        • Regions connect to new hubs outside the UK
                                          • Regional growth factors
                                              • Figure 10: Growth in airport passenger numbers, 2007 versus 2003
                                            • 2008 puts five-year growth into reverse
                                                • Figure 11: Airport passenger volumes, by region, 2007 and 2008
                                            • Broader Market Environment

                                              • Key points
                                                • Declining wealth as recession bites
                                                  • Figure 12: Trends in personal disposable income and consumer expenditure, 2003-13
                                                • Unemployment threatens travel prospects
                                                  • Figure 13: UK unemployment trends, 2003-08
                                                  • Figure 14: Regional unemployment rates for period July-September 2008
                                                • Population increases mean bigger market
                                                  • Figure 15: Population trends, by government office regions, 2000-11
                                                  • Figure 16: Forecast adult population trends, by lifestage, 2003, 2008 and 2013
                                                • Internet usage shapes travel patterns
                                                  • Figure 17: British internet penetration at home/work/place of study or elsewhere, by gender, socio-economic group, age, region and working status, October 2008
                                                • Recessionary impact on spending plans
                                                  • Figure 18: Key areas of spending cutbacks over the next six months, December 2008
                                                  • Figure 19: Spending cutbacks planned on a main holiday over the next six months, by region, December 2008
                                                • Declining value of sterling adds further pressure
                                                  • Figure 20: Five-year trends in interbank rate for leading holiday currencies, 2005-09
                                                  • Figure 21: Change in cost to UK visitors resulting from currency movements, Feb 2008 to Feb 2009
                                              • Innovations and Developments Around the Regions

                                                • Key points
                                                  • Birmingham extends its European and global reach
                                                    • Liverpool looks East
                                                      • Ryanair continues expansion from Scottish capital
                                                        • Glasgow makeover
                                                          • Newcastle exploits codeshare
                                                            • Bournemouth improves the South Coast’s network
                                                            • Market Size

                                                              • Key points
                                                                • Overseas holiday growth fastest in Wales
                                                                  • Figure 22: Overseas holiday visits, by main region, 2003-08
                                                                • The broader travel picture
                                                                  • Independent travel now the default mode in most of the country
                                                                    • Figure 23: Overseas trips 2007 versus 2003, by main purpose and region
                                                                • Market Segmentation

                                                                  • Key points
                                                                    • Holidays with the scheduled carriers
                                                                      • Figure 24: Usage of scheduled airlines to travel abroad for last holiday, 2008
                                                                    • UK regional rail connections with Europe still on slow track
                                                                      • Figure 25: Usage of Eurostar for last holiday, by region, 2008
                                                                    • Booking ahead
                                                                      • Figure 26: How far in advance last overseas holiday, by air or Eurostar was booked, 2008
                                                                  • Travel Distribution

                                                                    • Key points
                                                                      • London leads online travel
                                                                        • Traditional offline channels still find a regional market
                                                                          • Figure 27: Method used to book last overseas holiday, by air, by region, 2008
                                                                        • Self-booking skews towards the southern UK
                                                                          • Figure 28: How last holiday abroad was booked, by region
                                                                      • Companies and Brands

                                                                        • Key points
                                                                          • UK airlines push into regions
                                                                            • Figure 29: Main UK airlines (scheduled and charter) and their regional coverage, February 2009
                                                                          • Flybe
                                                                            • Ryanair
                                                                              • EasyJet
                                                                                • Bmi and bmibaby
                                                                                  • Virgin Atlantic
                                                                                    • Thomsonfly
                                                                                      • Major international long-haul airlines spread their UK wings
                                                                                          • Figure 30: Major US and ‘other’ world carriers with scheduled UK regional links, February 2009
                                                                                        • European scheduled developing regional feeder links to continental hubs
                                                                                          • Figure 31: Major European carriers with scheduled UK regional links, February 2009
                                                                                        • Air France-KLM
                                                                                          • Lufthansa
                                                                                            • SAS
                                                                                              • Alitalia
                                                                                                • Iberia
                                                                                                • Holiday Travel Methods

                                                                                                  • Key points
                                                                                                    • Figure 32: Overseas travel method used in last five years, January 2009
                                                                                                    • Figure 33: Overseas travel method used in last 12 months, January 2009
                                                                                                  • Air top choice
                                                                                                    • Enthusiasm for rail
                                                                                                      • Two fifths stick to nearest airport
                                                                                                        • Regional preferences for holidays
                                                                                                          • Figure 34: Overseas travel method used in last five years, by region, January 2009
                                                                                                      • Attitudes Towards Regionalisation – Air

                                                                                                        • Key points
                                                                                                            • Figure 35: Attitudes towards regionalised air travel, January 2009
                                                                                                            • Figure 36: Index of regional attitudes towards air travel, January 2009
                                                                                                          • Go local
                                                                                                            • Bypass the local airport for cheap fares
                                                                                                              • Cheap doesn’t always mean cheap
                                                                                                                • Where can I get to from locally?
                                                                                                                  • Big airports still appeal
                                                                                                                    • Avoiding London
                                                                                                                    • Attitudes Towards Regionalisation – Rail

                                                                                                                      • Key points
                                                                                                                        • Figure 37: Attitudes towards regionalisation – rail travel, January 2009
                                                                                                                        • Figure 38: Index of regional attitudes towards international rail travel, January 2009
                                                                                                                      • Continental rail travel means London
                                                                                                                        • Taking the slow train
                                                                                                                        • Targeting Opportunities

                                                                                                                            • Regionalisation in evidence when it comes to flying
                                                                                                                              • Figure 39: Size of air travel target groups, January 2009
                                                                                                                              • Figure 40: Size of rail travel target groups, January 2009
                                                                                                                            • Air – convenience over price in evidence
                                                                                                                              • Figure 41: Air travel target groups, January 2009
                                                                                                                              • Figure 42: Air travel target groups by agreement with key statements about air travel, January 2009
                                                                                                                              • Figure 43: Air travel target groups, by attitudes towards regionalised air travel, January 2009
                                                                                                                            • Three quarters of the ‘Go locals’ have flown locally in the past five years
                                                                                                                              • Figure 44: Air travel target groups, by travel in last five years, January 2009
                                                                                                                            • Bargain seekers take flight
                                                                                                                              • Figure 45: Air travel target groups, by travel in last 12 months, January 2009
                                                                                                                            • Rail – Eurostar demand is out there
                                                                                                                              • Figure 46: Rail travel target groups, by attitudes towards regionalised rail travel, January 2009
                                                                                                                            • ‘Lure of local rail’ group twice as likely to use local rail to go overseas
                                                                                                                              • Figure 47: Rail travel target groups, by travel in last five years, January 2009
                                                                                                                              • Figure 48: Rail travel target groups, by travel in last 12 months, January 2009
                                                                                                                            • Regionalisation – rail vs air
                                                                                                                              • Preference for local air travel does not necessarily apply to rail
                                                                                                                                • Figure 49: Air travel target groups, by rail travel target groups, January 2009
                                                                                                                              • Key target group demographics
                                                                                                                                • The North and older people more locally focused
                                                                                                                                  • Figure 50: Key demographics of air travel target groups, January 2009
                                                                                                                                  • Figure 51: Key demographics of rail travel target groups, January 2009
                                                                                                                              • Appendix – Holiday Travel Methods

                                                                                                                                  • Figure 52: Overseas travel method used in last five years, by detailed demographics, January 2009
                                                                                                                                  • Figure 53: Overseas travel method used in last 12 months, by detailed demographics, January 2009
                                                                                                                              • Appendix – Attitudes Towards Regionalisation – Air

                                                                                                                                  • Figure 54: Most popular attitudes towards regionalised air travel, by detailed demographics, January 2009
                                                                                                                                  • Figure 55: Least popular attitudes towards regionalised air travel, by detailed demographics, January 2009
                                                                                                                              • Appendix – Attitudes Towards Regionalisation – Rail

                                                                                                                                  • Figure 56: Most popular attitudes towards regionalisation – rail travel by detailed demographics, January 2009
                                                                                                                                  • Figure 57: Least popular attitudes towards regionalisation – rail travel by detailed demographics, January 2009
                                                                                                                              • Appendix – Targeting Opportunities

                                                                                                                                  • Figure 58: Air travel target groups, by detailed demographics, January 2009
                                                                                                                                  • Figure 59: Rail travel target groups, by detailed demographics, January 2009

                                                                                                                              Companies Covered

                                                                                                                              • Aer Lingus Group Plc
                                                                                                                              • Air France
                                                                                                                              • Air Mauritius
                                                                                                                              • Air Travel Organisers' Licensing (ATOL)
                                                                                                                              • Alitalia - Linee Aeree Italiane S.p.A.
                                                                                                                              • Asda Group Ltd
                                                                                                                              • Bmibaby
                                                                                                                              • British Airways Plc
                                                                                                                              • British Chamber of Commerce
                                                                                                                              • British Market Research Bureau (BMRB)
                                                                                                                              • Cathay Pacific Airways Limited
                                                                                                                              • Civil Aviation Authority
                                                                                                                              • Co-operative Group
                                                                                                                              • Competition Commission
                                                                                                                              • Continental Airlines Inc.
                                                                                                                              • easyJet Airline Company Limited
                                                                                                                              • Eurostar UK Ltd
                                                                                                                              • FlyBE
                                                                                                                              • Government Actuary's Department (GAD)
                                                                                                                              • International Air Transport Association
                                                                                                                              • Marks & Spencer
                                                                                                                              • OneWorld
                                                                                                                              • Ryanair Holdings plc
                                                                                                                              • Scandinavian Airlines
                                                                                                                              • SkyTeam Airline Alliance
                                                                                                                              • Star Alliance
                                                                                                                              • Tesco Plc
                                                                                                                              • Thomas Cook Airlines
                                                                                                                              • Thomsonfly
                                                                                                                              • US Airways Group Inc.
                                                                                                                              • Virgin Atlantic Airways Limited
                                                                                                                              • Virgin Trains
                                                                                                                              • Waitrose
                                                                                                                              • Wm Morrison Supermarkets

                                                                                                                              Regionalisation - UK - March 2009

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