High-flier believes sky’s the limit at London City Airport
The former chief executive of Dublin Airport Authority has an ambitious plan to double passenger numbers at the docklands hub
Declan Collier: “By the time that my contract [with the DAA] was coming to an end I had reached the point where I had achieved what I wanted to achieve.”
Declan Collier sounds like he’s on first-name terms with London’s lord mayor Boris Johnson. Several times he refers to him as “Boris” – so are they mates? The London City Airport chief executive laughs. “Everybody calls him that,” he says. “What would you prefer, ‘Boris Johnson, lord mayor’, or ‘lord mayor Johnson’,?” He’s right, “Boris” sounds much better.
There is a good chance that Johnson will be hearing a bit more about the Irishman who runs the airport at the Royal Docks in the city’s east end over the coming months. It has just applied Newham Borough Council for planning permission for a £200 million expansion that will enable it to double passenger numbers to six million over the next 10 years.
The application comes on the back of approval, given in 2009, for the airport’s plans to accommodate the actual number of flights – 120,000 a year – that will bring in the extra passengers in the first place. The facilities include a new taxiway, a terminal extension, a new arrivals hall and aircraft stands. Collier says that if the proposals get the green light, the business will be able to create 1,500 new jobs on top of the 2,100 it already employs and it will boost links with the rest of Europe and the US.
Creating jobs, strengthening transport connections and enhancing London’s reputation as a financial and business hub are all close to its lord mayor’s heart, and, as it is possible that he will have a role to play in deciding if the airport’s plans get to fly or not, Collier is hopeful that he will see the likely benefits that they can deliver.
Johnson may wield political power, but he is not Collier’s direct boss. Two funds, Global Infrastructure Partners (GIP) and Highstar Capital, own London City Airport. It’s a direct contrast to Dublin Airport Authority (DAA), the State-owned company where he was chief executive for seven years until April 2012.
When it emerged late in 2011 that he was leaving and would not be renewing his contract, one of the theories ran at the time that politics had everything to do with his move. The DAA was under fire, it had spent large sums on Terminal 2, but the recession had put paid to passenger growth, throwing a question mark over the project in the first place.
At the same time, there was a strong focus on State company executives’ pay. The Government was seeking to impose a limit of €250,000 a year. Collier’s entire package was worth €612,500 in 2010 and he received €445,400 in 2011, after forgoing a €77,000 bonus. Meanwhile, Ryanair chief Michael O’Leary was firing various salvoes from the sidelines.
There was a feeling that the Government, and particularly the Minister for Transport and Tourism Leo Varadkar, wanted to be seen to be taking a hard line and Collier fell victim to all of this.
“It’s the first time I’ve heard that theory,” says Collier. “I don’t know what the Minister’s thoughts were. I was head hunted to come into the DAA from the oil industry. There was a very particular challenge presented to me by the board and by the owner, the Government.
“By the time that my contract was coming to an end I had reached the point where I had achieved what I wanted to achieve. I was presented with the chance to renew my contract, but at the same time, I was presented with a really interesting challenge by Global Infrastructure Partners to go to London City Airport.”
He stresses that GIP knocked on his door, there was no question of him approaching the London airport’s owners. Whatever the background, he says left the DAA feeling “very proud” of what he achieved. He restructured the company, helped make it profitable and then, of course, there was T2.
Dublin’s second terminal remains controversial. Most recently, the Commission for Aviation Regulation said that its cost was 20 per cent higher than allowed at €923 million. During its planning and construction, it became a flashpoint between the DAA, the Government and O’Leary, who gleefully seized on it as an example of unrestrained State-company wastefulness, for which passengers would ultimately be forced to pay.
The row still rankles a bit with Collier, who repeats three times in several minutes that it did not, in fact, cost €1.2 billion. “Michael [O’Leary] always maintained that it was going to cost €1.2 billion, so a lot of people are coming out and saying it was €1.2 billion,” he says.
“It’s totally incorrect. The terminal was not delivered at a cost of €1.2 billion. The total transformation programme was €1.2 billion and there were a massive range of projects that had to be delivered at Dublin Airport. Pier D was delivered, which was essential to allowing Ryanair to grow at Dublin Airport.
“Look, we were dealing with a piece of infrastructure that was opened in 1940. What was needed was a huge investment, the centrepiece of which became Terminal 2, which was mandated by the shareholder, the Irish Government. The construction cost of Terminal 2 was about €400 million, those costs were, to the best of my recollection, marginally exceeded, by 4 to 5 per cent.”
What the airport has now, he argues, is a “fantastic asset” that will last for another 50 years. He accepts that the debate will continue and understands “exactly” where O’Leary and Ryanair were coming from.
“Every single airline operator in every airport around the world, especially airports that are regulated, argues vehemently against the delivery of any infrastructure, as long as they have got sufficient infrastructure to grow themselves,” he points out.
“What we didn’t have at Dublin Airport was the opportunity to expand our long-haul connectivity, and what Terminal 2 has done, and what it was designed to do, was to allow Ireland to improve its connectivity, particularly to the east, so we won the business from Etihad, and Dublin is now in their top 10 destinations. They went twice daily within months of coming in.
“And we won the business from Emirates, because we had T2. I spent 18 months of my life negotiating with Emirates to get them into Dublin. There had been an attempt for the previous eight years to do that, we didn’t have the infrastructure, they wouldn’t come in. But within a couple of months of coming in, they actually increased the gauge of aircraft, they’d never done that before.”
The new terminal also facilitated US customs and border clearance at Dublin, which he says is benefitting Aer Lingus’s efforts to grow its transatlantic business, partly by offering connection with regional airports in Britain. “I think in the past year, Dublin saw an 800,000 increase in its long-haul passengers, that would not have been possible without Terminal 2,” he says.
That may not be enough to convince O’Leary, whose farewell to Collier repeated the dreaded “€1.2 billion” figure. Given that in public, O’Leary always seems to reserve a special brand of vitriol for the DAA, were he and his organisation just as unpleasant to deal with behind closed doors? “With Michael, what you see is what you get. He is very, very tough and very, very aggressive,” he says.
“But it’s absolutely essential that you do deal with him. I spent seven years dealing with Michael and it was an education. Did I enjoy all of it? No. But I enjoyed quite a lot of it, and I have massive respect for him and what he’s done to project Ireland as a force in the aviation industry.”
Does he buy O’Leary’s recent conversion and pledge to be softer and gentler? “If Michael is doing something, he’s doing it for very good commercial reasons,” he says. “What’s made him stand out is that he has always been able to identify what needs to be done in order to generate significant profits for his business and his shareholders. He’s very successful, he’s flying 80 million people a year.”
O’Leary’s change of heart on customer service, he argues, is simply a sign that he’s moving the airline to the next phase. “He’s come through the model where you treat them mean and fly them cheap and if they’re not happy with it, well that’s tough,” he says.
“I think that for the next stage is that he has clearly identified that he has to do some things differently. I think he looks out the window of Stansted and he sees other models like Easyjet.”
Collier points out that the airline, which many see as Ryanair’s nearest rival, has been following a deliberately different policy in recent years. “They have been flying from somewhere to somewhere rather than from nowhere to nowhere,” he explains.
It’s more expensive than the Ryanair approach, but Collier says that it has opened up the business market to Easyjet, a group that has been critical to seeing a lot of airlines through the recession.
“Easyjet,” he says, “has done that very well and Michael has obviously seen the opportunity to do exactly the same thing. I genuinely think that he is looking at the opportunities provided by accessing a different type of customer, the business community, those who want a little bit more comfort in terms of being able to book their seats and have a little bit more room, and not have to do the 100-yard dash across windswept and empty airfields.”
While O’Leary’s ambitions may not yet be clear, Collier’s are very definite. This year, London City Airport will handle about 3.3 million passengers and he’s aiming to double that. It does face a number of problems. The clue to one is in the name: it is, literally, in London, less than 5km from Canary Wharf and about 11km from the city. This limits its capacity – its plans do not include an extended runway – and the aircraft that can use it.
Collier says there is a partial solution to this on the way. New shorthaul craft, such as the Bombardier C Series, are currently undergoing tests and should be ready for delivery to airlines by 2016. They will treble the range that can be served from the airport to about 3,000 nautical miles, opening new destinations in the Gulf, Middle East and the east coast of the US. The aircraft are cleaner and quieter, really important for an inner-urban airport, but they have large wingspans, which is one of the reasons the airport needs to expand.
There are other challenges. His business, he points out, operates in the world’s biggest airport system, which last year handled 126 million passengers, and will need to find the room for up to 32 million more over the next five years. However, capacity is constrained – Heathrow, the region’s biggest hub is at full capacity.
The government-appointed Davis Commission is looking at the various options. That includes up to two new runways at Heathrow, a “constellation of airports” dotted around the city, extensions at Gatwick and Stansted, and even a new hub in the Thames Estuary. The final report is due in 2015, and from there, any solutions will have to go into the planning process, all of which, Collier says, will take too long.
“We need to respond to the fact that there are going to be another 30 million passengers in the London airport system,” he says simply.
His airport is already taking up much of the “overflow” and the 11 carriers using it now include the likes of Alitalia and BA, as well as Easyjet and Irish-based Cityjet. Numbers there are up 14 per cent on last year, helped by the beginning of a recovery in the British economy.
The real drivers of its growth, however, are coming first of all from developments on its own doorstep. “London is moving east,” he says. “Within the next five years, 60 per cent of the population is going to live in east London.”
Alongside this, industrial development, specifically in the technology sector, is moving in the same direction. “We see the catchment area massively improving and the infrastructure, in terms of cross-rail and roads, is already going in,” he points out. “We see that driving huge business and London City Airport is essentially the gateway to the new east London.”
CV: Declan Collier
Name: Declan Collier
Job: Chief executive, London City Airport
Why is he in the news? The airport has just
submitted a planning application for a £200 million expansion.
Career: Was chief executive of Dublin Airport Authority from 2005 to 2012. Before that he spent a long period with the world’s biggest oil company, Exxon Mobil, and ran a number of its businesses. He has a Master’s in Economics from Trinity College Dublin.
Something you might expect: He is vice chairman of the world board of the Airports Council International and is a previous president.
Something that might surprise: He loves theatre and is chairman of the Dublin Theatre Festival, an event in which his old employer, DAA, is still involved in sponsoring.