March 5 (Bloomberg) -- London Stansted airport, Britain’s biggest low-cost terminal, will open its first premium lounge this year as its new owner seeks to establish the hub as a base for long-haul airlines.
Manchester Airports Group is spending 1 million pounds ($1.7 million) on the “Escape Lounge” in its main departure area, which will be free to some customers and otherwise operate a pay-on-the-door policy. Airline-specific rooms are a further option as Stansted seeks to broaden its offering, Andrew Harrison, the site’s managing director, said in an interview.
MAG aims to expand Stansted traffic by luring heavyweight airlines such as Emirates of Dubai, the No. 1 on international routes, after deals to boost flights at Ryanair Holdings Plc and EasyJet Plc, Europe’s top discount operators. While keen to draw new clients, other enhancements spanning security checks to retail areas should appeal across the board, Harrison said.
“The way we see the terminal operating is with a great level of service for everybody, but with the opportunity for the full-service airlines to differentiate,” the executive said, while adding: “They’ve got to be convinced that the market exists and the catchment area is strong enough.”
Stansted lifted passenger numbers 2.2 percent to 17.8 million last year, barely half the 35 million it could potentially handle within the limits of existing planning restrictions, Harrison said. That means the single-runway site can easily accommodate extra flights even as London’s Heathrow and Gatwick airports struggle to add operating slots.
Emirates already serves MAG’s Manchester base using Airbus Group NV A380 superjumbos. Other long-haul clients include rival Gulf carriers Qatar Airways Ltd. and Etihad Airways PJSC, as well as American Airlines, Delta Air Lines Inc., Air Canada Rouge, Singapore Airlines Ltd. and Virgin Atlantic Airways Ltd.
Access to the Manchester lounge cost 17.49 pounds per person and offers complimentary pastries, sandwiches and drinks, together with more substantial meals for an extra fee. Several carriers at the airport also have their own lounges.
Long-haul passengers are attractive to airports because they tend to arrive earlier at the terminal, taking more time there and spending more on retail, food and beverage purchases for use or consumption during their trip, according to an Airport Cooperative Research Program report published in 2012.
Since agreeing to buy Stansted for 1.5 billion pounds in January 2013, MAG has embarked on a program of upgrades to the 23-year-old terminal building designed by U.K. architect Norman Foster, who went on to build new hubs in Hong Kong and Beijing.
MAG has spent 5 million pounds on removing 40 check-in desks that aren’t needed as more people check in remotely or at machines, using the space vacated to create a new security screening area with one-fifth more lanes. That in turn has freed up 60 percent more air-side space for shops and food outlets.
Retail improvements at the airport located 35 miles north of London are slated for completion in the second-half of 2015.
Shops near the terminal entrance have conversely been pared back to reduce passenger-stress levels, Harrison said. Valet parking and fast-track security are among other enhancements being developed with an eye to the long-haul market.
Should the push to win new business prove successful, Stansted would dedicate one of three satellite buildings where departure gates are located exclusively to full-service airlines and refine facilities accordingly, Harrison said.
Unused spaces at the buildings, such as a short-lived mini lounge, would make upgrades relatively straightforward, he said.
Civil Aviation Authority data suggests Stansted captures 12 million journeys out of the 46 million made each year by people in its catchment area, according to MAG. About 6 million of the journeys using rival airports are to or from cities in the Middle East, Asia, Africa and Australasia, with a further 4.6 million involving locations in North America.
About 6.7 million people live within a 1-hour car trip of Stansted and 12 million within 2 hours. The immediate area includes Cambridge University and science and technology offices including the planned base of drugmaker AstraZeneca Plc.
Stansted helped boosted MAG’s operating profit 78 percent to 108.2 million pounds in the fiscal first half ended Sept. 30.
MAG, which also operates East Midlands and Bournemouth airports, bought Stansted from BAA Ltd. amid a forced breakup of the Heathrow-owner’s assets as U.K. antitrust regulators sought to foster competition.
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