Comment: What now for the Midlands after United axes Birmingham flights?
The decision by United Airlines to axe its New York service from Birmingham Airport is doubly disappointing, not just for the loss of an important route but because of the question mark it leaves over the way the United States views the Midlands.
The country remains one of the region’s most important trading partners and the loss of the service leaves the airport with no direct US passenger flights other than holiday services to Florida.
With the Midlands Engine gearing up to promote the region as the UK’s industrial powerhouse, the question which must inevitably be asked is, does the US consider the Midlands an area worth investing in?
Figures released earlier this year showed the West Midlands had seen a 188% increase in Foreign Direct Investment (FDI) projects since 2011/12, with 81 new FDI projects in 2015/16, creating and safeguarding over 5,000 jobs. US firms have been the most prominent investors in that time, accounting for 32% of all projects.
While in surveys conducted by Midlands Connect in 2015, 71% of Midlands businesses with international customers said that Birmingham Airport was their most important airport.
Meanwhile, figures released only last week showed more foreign businesses invested in the West Midlands in 2016/17 than anywhere outside London and the South East.
Ironically, one of the major investors into the region was US automotive firm Tenneco, based in Tyseley, which gained 75,000 sq ft of warehouse space for the distribution of suspension parts and emission control components to the automotive sector.
By the autumn, the automotive sector could be the source of the only direct flight into the northern United States from Birmingham – a cargo service operated by Emirates and flying Jaguar Land Rover vehicles to Chicago.
West Midland Mayor Andy Street made much of the region’s connectivity and its ability to attract foreign investment during his recent election campaign.
United’s decision will be a major test of his faith in the early stages of his administration.
And what of United itself?
Its decision amounts to a stab in the back to the airport after 20 years of operations and the ferrying of more than two million passengers.
The decision is even more dramatic because it represents a major U-turn by the company, which just five months ago had professed its unstinting support for Birmingham.
Interviewed by TheBusinessDesk in February – a month after fellow US airline American Airlines had pulled its service to JFK – Bob Schumacher, United’s managing director sales – UK & Ireland, said Birmingham was an important destination for the airline and it had no intention of abandoning it like its rival had.
“United is proud to have served Birmingham Airport for almost two decades, and we thank all of our customers who have chosen to fly with us during this time,” he said.
“Birmingham is an important airport for us and we think that with the onset of the Midlands Engine then it is only going to grow in prominence.
“The West Midlands is such an important part of the UK economy and the ability of businesses in the region to have good access to the United States is vital. Our non-stop service offers customers in the Midlands access not only to New York City but also to hundreds of other destinations throughout the Americas.”
The interview was to mark the completion of two decades of business at the airport by United.
How hollow therefore, Aviation Minister, Lord Ahmad of Wimbledon, words now sound.
Speaking back in February, he said: “Aviation plays a crucial role in our economy, creating jobs, opening up new tourism opportunities and building vital business links. I am delighted that United Airlines has shown strong and lasting commitment to Birmingham Airport, helping strengthen links between the UK and US while boosting the Midlands Engine.”
So, what does the loss of the service mean to Birmingham Airport.
In financial terms, very little.
The United service accounted for less than 1% of the passenger volumes at the airport – a figure that could be clawed back quickly with the introduction of new short haul services.
In fact the short haul sector continues to make up the bulk of the airport’s business and the hub’s popularity with operators outside of the US remains undiminished.
Holiday operator Jet2.com will expand services from the airport next year with an additional 15 flights; the move coming after the successful launch of services back in March this year.
The airport said it was also hopeful of an announcement shortly about new services to North America.
What that is, remains to be seen.
It would be unfortunate if the lasting legacy of the airport’s outgoing chief executive Paul Kehoe – the extension of the airport’s runway – proved to be for nothing.
In an interview shortly before his departure as CEO, Mr Kehoe said the greatest achievement during his nine years in post had been the runway extension.
The original case for the runway extension was so that the airport could make use of under-capacity by attracting operators looking to introduce direct flights to China – another of the region’s key trading partners – and the West Coast of the United States.
Mr Kehoe also said his biggest disappointment his time in office was the failure of the Government to recognise the importance of Birmingham Airport; consistently overlooking its potential and opting instead to build a third runway at Heathrow and add to the already overly-congested airspace in the South East.
He said that with some foresight, the Government could have built Birmingham into a national gateway for one of the UK’s most economically viable regions.
This could still happen – although Birmingham will have to play the long game.
The arrival of HS2 in a few years’ time will see the introduction of a new interchange station at the airport, making it a crucial hub not just for the region, but the UK as a whole. It will put the airport within 45 minutes travel time to Heathrow, less than the time it currently takes to get to the airport by Tube from central London.
Should the potential be realised, then Birmingham’s current passenger volumes of around 13 million people per annum could rise dramatically.
In a post-Brexit world, many in the West Midlands business community will be exceedingly grateful.