While we approach the end of 2018, we wish all of our clients and readers a safe and joyous holiday season. However, as we look forward to 2019, it’s impossible to ignore the recent events at Gatwick Airport, where, in the lead up to the busiest travel season of the year, drone mischief caused the cancellation of over 780 flights, affecting over 140,000 passengers.
Over a week (and an embarrassing mistaken arrest later: a couple was initially detained and then released), the drone pilots are still at large. The perpetrators caused massive disruptions for those traveling to see their loved ones over the holiday season. The silver lining: an industry-crossing wake-up call with no casualties.
However, the purpose of this research note is to estimate the direct economic damage experienced by Gatwick Airport: one of the busiest airports in Europe with 45mm passengers passing through annually. For the fiscal year ending in March 2018, Gatwick’s reported profit was £132.4m. During this period, 70% of flights departed within 15 minutes of their scheduled departure. The recent drone disruption will severely impact these vital statistics.
The precise economic impact of the Drone Disruption will become known when Gatwick’s latest financials are released. In the interim, we can attempt to approximate it. Airports derive their revenue from three primary sources (year ending March 2018 for Gatwick Airport):
– Aeronautical Income (£396.6m)
– Retail Income (£177.3m)
– Car Parking Income (£87.8m)
– Other sources (£190.3m)
– Total Revenue (£764.2m)
For this analysis, we focus on Aeronautical and Retail Income as it is challenging to assess Car Parking income. Aeronautical Income per passenger is £8.68. Retail Income per passenger is £3.82 per passenger. Combining these amounts provides a conservative total revenue per passenger estimate of £12.5.
There are varying estimates of total passenger disruptions but assuming an average of 150k passengers per day for three days, we arrive at approximately £5.62m in lost revenue.
£5.62m in lost revenue may not seem excessively large when compared to Gatwick’s overall revenues or operating budget. However, this amount would easily afford a comprehensive counter-drone strategy and implementation. Moreover, this does not take into consideration the price paid by Gatwick Airport regarding its reputation and brand.
Initial feedback from Boards and Executive Committees is that more awareness, education, and resources are needed to mitigate the rising threat presented by drones. Given the minimal cost of implementing a counter-drone strategy within the context of operating budgets, the cost of not having appropriate counter-drone risk management is becoming prohibitively expensive. Implementing an effective counter-drone strategy has become an essential component of any airport’s best-in-class safety standards.