Lois Jones Stansted has evolved from a little known local airport in the south-east of England to be the new rising star of the London airport scene, and still holds ambitions to become a base for global alliances launching long-haul services

It is the tale of a poor relation which has begun to strike it rich. For years, London Stansted Airport was seen as little more than a curiosity coming a poor third behind Heathrow and Gatwick - its two successful siblings within the parent BAA Group. Many questioned whether it would ever amount to more than a beautifully designed folly on the outskirts of London.

But Gatwick and Heathrow have since proved victims of their own successes. Congestion at the two senior London airports means generous overspill for Stansted and it is reaping the benefits with explosive growth.

Stansted, around 50km (30 miles) north east of London, has emerged among the fastest growing airports in Europe. And unlike its stablemates still has plenty of room for manoeuvre. At the end of March, Stansted was granted planning permission to double its existing capacity to 15 million passengers a year by 2006.

As with the best of all success stories, it started from humble beginnings. Stansted opened its doors in 1991, after a relatively modest development spend of £400 million (then worth around $700 million). Serving just one million passengers, the airport was "practically an irrelevance", overshadowed by the mighty Heathrow and Gatwick, concedes Stansted's managing director John Stent.

"We were very much a regional airport serving the local community in terms of the services we provided, but international in terms of infrastructure," says Stent, referring to the airports' large surplus runway and terminal capacity.

The airport has grown steadily from such modest beginnings. Only in 1997 did the number of passengers passing through its departure and arrival gates top five million.

Initial growth was fuelled by the then Air UK - since acquired and rebranded as KLM uk. Resident charter airlines made up much of the rest. But recently it has been low-cost Ryanair that has made the running with its rapid expansion after arriving in Stansted in 1995, making the airport its second home after Dublin. Ryanair has already overtaken KLM uk as the main driver of growth.

A year ago Ryanair went into overdrive launching six European routes from Stansted, doubling its services out of the London airport. This aggressive move is in the process of being repeated again for the current summer season with the launch a further 10 routes from Stansted. Ryanair's explosive expansion catapulted the airport forward, with passenger numbers reaching 5.4 million in 1997 and soaring another 27% again last year to reach 6.8 million.

"Before May 1998 we had 30 scheduled routes. Now we've got 62 and with eight more planned this year," says Stent. Ryanair has already attracted a second low-cost carrier - British Airways subsidiary Go, helping to fuel a further spurt of growth. It introduced nine aircraft last year, with more set to hit the runway this year. "Go is one of the reasons behind Stansted's current success. We're its only UK base - thank goodness we took them seriously," says Stent, adding that it had made great efforts to court the carrier.

Making a go of it

Go has put 600,000 passengers through the airport between May last year and March this year and is the third largest carrier at the airport, behind KLM with 1.6 million passengers and Ryanair with 2.3 million passengers. "Go and Ryanair are adding new services like billy-oh," says Stent.

With Ryanair, Stansted is the home base of Europe's largest and most profitable low-cost operator, and, with Go, the region's first low-cost venture by a major. Other European flag carriers are paying serious attention to an airport they once overlooked. "Flag carriers like Lufthansa, SAS, Sabena, and Swissair took a second look at Stansted when they saw how successful these new routes were," says Stent.

The great attraction of Stansted has been the availability of slots. "Those carriers starting at Stansted are finding it virtually impossible to get slots at Heathrow or a decent slot at Gatwick," says Stent.

While a £200 million ($325 million) expansion of the current terminal, which commences in 2000, will begin to allow the airport to cope with the growing demands on it, in the short-term the airport could be heading for a capacity crunch, since it is approaching its 8 million passenger limit. Stent is therefore anticipating a more measured growth to reach its new 15 million limit by 2006.

"This year will be Stansted's second boom year, seeing extraordinary growth which is then likely to stabilise to more normal single figure growth rate. There isn't a third boom year left in the system," says Stent. As a measure of the airport's rapid growth, it has become fully slot-co-ordinated in time for the summer, having recorded a 47% increase in requests for slots over summer last year.

Capacity constraints may force Stansted's most aggressive customers to develop other UK or continental bases. "Two years ago, Ryanair had a handful of routes out of here. Now they have 19 and are intending to announce more this calendar year. Ryanair is very gung-ho about pushing the number of destinations they have. It's quite possible that they will need to establish another base," says Stent.

While point-to-point traffic has driven expansion until now, airline alliances will be become an important extra growth factor in the future, predicts Stent. Once one airline joins the fold, the rest of its fellow gang members tend to follow. The airport plays host to members of the leading airline alliances - Qualiflyer and the Star Alliance and the "Wings" alliance of KLM, Northwest, Alitalia and their associate airlines.

Alitalia, Braathens and Eurowings, in alliance with KLM uk, started services from Stansted in October. Qualiflyer carrier Sabena and its codeshare partner Virgin Express also launched services to Brussels while Swissair has started serving Zurich.

Lufthansa began services to Munich in November, which it strengthened with an additional service to Düsseldorf and its main hub Frankfurt this year, following the lead of fellow Star Alliance member, SAS, which launched routes to Stockholm in March 1998.

While this expansion will initially be short haul and "inevitably cautious," airline alliances will gradually push Stansted into the long-haul market, says Stent. An airline like United, working with Lufthansa and SAS, might be tempted in summer next year. We will see one or two key routes, such as New York and Chicago, maybe for United in summer 2000," predicts Stent.

Long haul for the future

He believes the airport has created the necessary critical mass for onward destinations. Long-haul routes would be fed by Stansted's existing European services and, according to Stent's forecast, 1-1.5 million of the 15 million passengers in 2006 will make long-haul journeys.

Stent says the addition of long-haul services will fit in well with an airport catering for a variety of passengers. "Stansted does not want to be thought of as a low-cost airport but as offering a wide range of choice. We can cater for business travellers as well those looking for cheap and cheerful trips," says Stent.

Around 50% of the 5 million plus scheduled passengers at Stansted are flying on business trips. KLM uk is investing in a new business lounge to meet the growing demand from business passengers for top quality facilities to join one opened by SAS last summer.

A move into long-haul services and higher yield traffic may not please Stansted's existing operators, however. These carriers are anxious that the airport continues to reflect their concentration on low-cost, point-to-point short-haul services.

"Both Go and Ryanair have so far taken the stance that they will go for simplicity in everything that they do. Transfer passengers would create a complication - Ryanair just doesn't want to know about codeshares and Go simply isn't geared up for that right now," comments Stent.

But Stansted is not London's only out-of-town alternative to Gatwick and Heathrow. While City Airport remains a small niche player providing high frequency, high yield services close to the financial district, Luton Airport, north west of London, has matched Stansted's double growth record. Like Stansted, low-cost operators, such as easyJet and Debonair, are the engines of growth.

Luton competition

Frank Pullman, Luton's chief executive, says: "There is an enormous amount of competition between Luton and Stansted. Airlines flying to the south east of England will look at both of us".

While Stansted seeks to differentiate itself from Luton by claiming to be more up-market and successful at attracting higher yield scheduled traffic, Luton is keen to point out that it is no longer a charter-focused airport. "There have been some substantial changes over the last few years at Luton," says Pullman. The mix of charter traffic has dipped below 70%, he adds. "People don't see it as simply a charter airport anymore".

Luton, Pullman claims, also has "superior road and rail access" to Stansted. But what it has lacked up to now is a heavyweight backer. Pullman cannot suppress a hint of resentment when he talks of Stansted benefiting from the deep pockets of the parent BAA Group, which with sales around the $3 billion mark ranks as the world's largest airport operator. "BAA has invested huge sums of money in Stansted and competing with that is very difficult. Basically we're competing with a monopoly and the world's best airport operator in BAA."

Indeed, Pullman is worried that Stansted may take advantage from the financial strength of its parent, allowing the airport to undercut Luton's user charges. "Luton has in the past complained about predatory pricing at Stansted. I feel very nervous that we're in for a repeat of that previous cycle, putting us at a distinct disadvantage".

No doubt the award of a 30-year management contract to a private consortium headed by US airport operator Airports Group International will help give Luton the kind of muscle it needs.

Luton caters for 5 million passengers. But numbers were up by one third in December compared with a year ago. And Pullman hopes to take the throughput to 10 million within the next five or six years. His aspirations for the airport do not stop there. "We could easily grow to 15 million and beyond that," he says.

Pullman predicts that air traffic in the south east will double in the next 15 years in the next 15 years. That just leaves two new stars to fight it out.

London's airports 1998


Passenger number (m)

% Change 1997-1998



















Source: BAA, Luton, City

Source: Airline Business