- Author, Douglas Fraser
- Role, Editor of Business Administration and Economics
Edinburgh Airport is embarking on a new route as it comes under the control of a French company that claims to be the largest private airport operator in the world.
The new owner, Vinci, is backing an airport company that has rebounded strongly from the pandemic and expects to reach record passenger numbers this year and grow by a further third within the next six years.
Paris-based Vinci owns 70 airports worldwide, including London Gatwick and Belfast International – and has now confirmed the transfer of a 50.1% stake in Scotland’s busiest airport for £1.27bn.
That means the value of Edinburgh Airport has more than tripled in the 12 years since its continuing co-owner, GIP or Global Infrastructure Partners, bought it for what appeared to be an eye-watering £807m.
That was the amount paid to BAA, which inherited the airports of Edinburgh, Glasgow and Aberdeen from its nationalized predecessor, the British Airports Authority, along with Heathrow and Gatwick in London.
These airports have since become highly valued sources of profit for huge investment funds, competing for business where BAA previously put the brakes on competition and growth.
For the investors behind GIP, for whom their interest in Edinburgh Airport was limited in time, the tripling of the valuation is not a clear gain.
Edinburgh Airport has invested heavily in expansion in those years, as regular users know from the extensive construction work during these years. And the work continues.
The figure of £1.27 billion for half the airport means a total valuation of £2.5 billion, a remarkable achievement just four years after the pandemic hit aviation harder than any other sector.
The airline IATA calculated that global losses in 2020 totalled almost $138 billion (£109 billion at current exchange rates).
The recovery was extraordinary.
The Civil Aviation Authority says passenger numbers at UK airports have fallen from 300 million in 2019 to 65 million two years later.
Two years later, in 2023, the number of passengers passing through terminals had risen again to 276 million.
British aircraft movements fell from 2.3 million in 2019 to 800,000. They have returned to 2 million.
The occupancy rate – a crucial metric for the sector, which measures the percentage of occupied seats – fell from 84% to 57% and rose to 82% last year.
Edinburgh Airport’s passenger numbers increased by 28% to 14.4 million last year, and the airport expects to exceed its previous peak this year.
Teesside and Heathrow were the only major UK airports to grow faster.
Edinburgh almost overtakes Heathrow as the busiest airport for domestic British passengers, with 4.3 million last year compared to the London hub’s 4.6 million (although only one in 17 passengers are on domestic British routes).
And despite the tensions surrounding the drive to reduce fossil fuel use, expansion continues.
By 2030, Edinburgh’s management plans for annual passenger numbers to grow to 20 million.
That’s a growth of a third, which is roughly equal to Scotland’s total population of five million.
This endless development of facilities does not come without growing pains.
Finding staff for peak periods has been a challenge in the tight labor market due to the pandemic, leading to long wait times to get through security. There have been labor disputes and a large baggage backlog has arisen.
The declining share of business travel has also led to longer delays. This used to account for half of the passengers.
Leisure travel now makes up two-thirds of travelers going through security, and leisure travelers are taking longer to comply with the rules.
However, they spend a lot in the airport terminal, which is why critics of airport expansion point out that passenger terminals are more interested in operating shopping centers, restaurants and bars.
Further expansion will put greater pressure on ground transport, which already accounts for 16% of the airport’s total carbon footprint.
Public transport to and from the airport is used by only 37% of air passengers, less than the five main airports around London, while 40% use cars and 9% taxis.
Parking fees and the ‘kiss and fly’ drop-off charge are not only intended to raise a lot of money for the airport, but are intended to encourage the use of public transport.
The target for 2028 is to achieve 7.3 million passenger journeys on public transport to and from the airport, while 2.8 million car journeys will be off-road around the Ingliston site.
The airport is offering to build a new link road and cycle route, connecting to the city’s Gogar roundabout, and then hand it over to the city council.
But this has delayed planning because much of the airport’s growth conflicts with city and national goals for reducing greenhouse gas emissions.
The airport sector has responded to this threat by investing in low-carbon activities in its ground operations, and there are plans to invest in new fuel capacity.
With the area a focus of activity for residential expansion in Edinburgh’s popular property market, airport managers are exploring the potential of a district heating project, which will serve more than 10,000 nearby homes.
A large solar farm is lining Edinburgh’s runway as the industry looks to engine manufacturers and airlines to develop SAF – sustainable aviation fuel made from crops, cooking oil and synthetic chemicals – to commercial viability and the necessary global scale.
That is the only way aviation can hope to meet net zero targets. New co-owner Vinci aims to reach net zero later than most, by 2050.
Edinburgh’s growth is not going unnoticed on the other side of the M8 motorway.
Glasgow Airport has also recovered from the pandemic, but has just over half Edinburgh’s passenger numbers, and growth was much slower last year at 13%.
Glasgow retains the lucrative Emirates link to Dubai, but in tough competition to attract long-haul airlines as they return to Scotland post-pandemic, Edinburgh has secured connections to Hainan in China, Istanbul, Qatar, two airlines connecting to Toronto, and six planned US destinations last year to the seasonal destination of Glasgow.
One of the advantages of Edinburgh is that it is a city brand that is instantly recognized in overseas marketing.
It also benefits from its proximity to the center of the central belt, on a ground transport network more accessible to more of Scotland than Glasgow Airport.
And the people of Glasgow have noticed. Bookings for parking at Edinburgh Airport by people with a Glasgow postcode have more than tripled since 2019, and a fifth of these bookers now come from outside Harthill in west-central Scotland.