Background: This Business Barometer research study is commissioned by The Gatwick Diamond Initiative (GDI) to help monitor local economic conditions on a quarterly basis. Conducted by Prowse & Company Ltd, this online survey is designed to source primary data from local businesses to measure how the Gatwick Diamond is performing as a location for business. The survey provides quantitative and qualitative evidence of business trends to aid the three Gatwick Diamond Task Groups in their activities. Importantly, the survey offers a snapshot of business confidence in the Gatwick Diamond area. In addition to general business questions each survey also considers a particular theme. This quarter focuses on London Gatwick Airport. A total of 62 responses were received during the months of November and December 2011.

Gatwick Diamond Initiative - Business Barometer Survey Findings – November 2011

Respondents Profile

Which industry sector are you in? Advanced Manufacturing

Biotechnology/Life Sciences

Business/Professional Services

Creative Industries

Energy/Green Technologies

Financial Services

ICT

Membership/Trade Body

Public Sector

Retail

Travel/Leisure/Tourism/Hospitality

What is your company's estimated turnover per annum?

£250k or less

£251k - £500k

£501k - £1 million

£1.1 to £5 million

£5.1 to £10 million

£10.1 to £50 million

£51 million +

How many people does your company employ?

1

2-10

11-20

21-50

51-100

101-250

250+

Gatwick Airport

Gatwick Airport makes a real contribution to the local economy generating around two billion pounds

annually. How important is being located near Gatwick Airport to your business?

Very important

Somewhat important

Not important

The airport is projecting growth in passenger numbers from £31.6m today to £40m in 2020. Gatwick says this will benefit the economy. Do you think your business will experience year on year growth in income as a result?

Yes - by approx 7.5% each year

Yes - by approx 5% each year

Yes - by approx 2.5% each year

Possibly

No

Gatwick Airport/cont

Yes

No

Don’t know

Gatwick’s strategy states that they have no plans to build a second runway but that they will use existing and planned infrastructure more efficiently including an increase in wide body aircraft, average passenger load and North Terminal usage along with little or no increase in peak movements per hour and pier developments. Do you believe this is the right approach?

Verbatim Comments

• Gatwick needs additional runway capacity to maintain and improve our global trading competitiveness and to grow inbound tourism.

• Increasing the number of routes, particularly to commercial destinations and emerging economy countries, is becoming increasingly important in order to maximise our exporting and inward investment potential which will be curtailed unless the number of flight movements can increase.

• Given the long lead time for infrastructure projects, additional runway capacity planning needs to be addressed now. although they need to think about a second runway in the longer term.

• Given that the covenant is time limited, GAL should be planning for when it expires.

• I think to ensure that Gatwick maintains its level of competitiveness and to be a transfer airport it needs a second runway.

• London - general - needs more runway capacity. If it is not going to be LHR then there is the opportunity for LGW despite the objections from Charlwood.

• This is exactly the approach I had to use in a previous role at the T5 Inquiry as an expert witness - same runway, bigger aircraft. It is a valid argument.

• Build a second runway

• This is good as far as it goes but Gatwick needs a second runway.

• A second runway is the only option for long-term sustainable growth.

• Not in the long term

• The increase in passenger numbers is theoretical.

• During one of the consultancy meetings I asked the question why they think there is an expected increase and what kind of traffic that would consist of (holiday, business etc). There was no clear answer. Additionally, the UK Government instroduced an airport tax some years ago with the intent of reducing traffic loads. This has had no effect at all and passenger numbers are still increasing with none of the proceeds coming back to the region for development (it is is nothjing more than a "nice little earner" for the Govt it appears)

• There may be further such restrictions over the next 10-20 year, perhaps restricting traffic loads.

• From a number of perspectives, this strategy is the right one.

• Rational approach given political current viewpoints If it's possible to maximise what's already in place, safely, before expanding, then this is the right approach. However they must also ensure the land required for the runway is protected and in my opinion lobby for approval for the runway.

• 2nd runway will reduce congestion and possibly allow more landings into LGW.

• The southeast needs more runways unless it is happy to become a hub to Europe. This however is a relatively short-term strategy and relies upon airlines to co-operate.

• Raising efficiency is the correct approach up until 2020 BUT given its infrastructure importance a post 2020 plan must also come forward now to assist with the national travel and economic design of UK Plc.

• I believe that increasing the business / leisure ratio would also be beneficial.

• The Gatwick capital strategy is appropriate.

• Why use scarce capital to try and pursue a second runway with the legal agreement, expiring 2019, with the West Sussex County Council.

Yes

No

Unsure

The strategy says that the mix of business versus leisure travel will remain the same at 14.3%. This means an increase of 1.9 million business passengers and an increase of more than 11 million leisure passengers. Should the airport be more ambitious in

its plans to increase business passengers at the expense of leisure?

Gatwick Airport/cont

Verbatim Comments

• Surely the yield to the airport is higher from a business passenger who is spending more on his/her seat, transportation etc.

• Business traffic is also less seasonal providing a steady growth of all year revenue.

• Based on the City airport model.

• As discussed during the consultancy meetings, these projections are not that certain of their facts either - there is no real way to give a reasonably accurate estimate other than comparing to past developments.

• Intercontinental business travel is one segment that could be further developed (China, India traffic) but EU business travel is more likely to disappear altogether.

• Much of our business relies on business organisations meeting in the UK, and in particular the South East. Gatwick has always been perceived as an airport for mostly leisure departures and I do not feel that this needs to change.

• This is disappointing because GIP were originally targeting 30-33% business customers. As these are generally higher value I would assume their reduction in target shows the difficulty of competing with LHR and/or the deficit of business in the locality or perhaps simply the advance of technology.- it would be useful to know which?!

• Whilst Leisure might spend some monies at the shops in the airport, they do not generate any other business within the area.

• Additional business routes might mean new/other businesses settling in the Gatwick Diamond.

• An increase in leisure traffic will have little impact on the local economy.

• Would give greater range of destinations.

• Gatwick has tried to be a business airport but finds greater success, to my knowledge,tilted towards leisure.

• The balance may be ok but there are many variables to consider.

• It is the business traffic that will be more of a driver for sustainable economic growth.

Verbatim Comments: Restrictions are based on current runway capacity. At the very least there should be an integrated strategy for cargo using our ferry ports. Cargo ensures local growth around the airport - making more leisure and less cargo stops opportunities for local people to be more involved in airport expansion. Not relevant to our business so no inside knowledge With efficient clearance agents, and with cost control being a main factor, I cannot see how it would benefit businesses in the Gatwick Diamond to have increased cargo into Gatwick. Whilst UK has focused towards service industries their is a bounce back towards Manufacturing and if it continues the market may need more cargo led flights out of Gatwick. There is a clear market and need for increased cargo handling capacity.

Gatwick Airport projects only modest growth in cargo handling. Do you believe that this approach will benefit Gatwick Diamond

businesses?

Yes

No

Don't know

Gatwick Airport/cont

Over the forecast period, the mix of routes is expected to change. There is the potential for long-haul leisure markets to shift from Heathrow to Gatwick and the potential for additional long-haul services from Gatwick. Which destinations do you think

Gatwick should target to benefit the local economy?

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Verbatim Comments: Plus CDG Paris. There is no flight from LGW to one of the busiest European capitals from LGW This is a difficult question to answer without knowing the existing distribution of Gatwick routes to identify the gap that needs to be filled. This will reduce costs in our business as we have people travelling to these destinations on a regular basis. The more the better. Of course they could be prioritised with perhaps fast developing nations being at the top of the list! Don’t know - think you can go most places from Gatwick already! All of the above

Verbatim Comments: With increasing pax volumes you need more road access/parking etc unless you can provide fast efficient rail access from other centres. A rail fast link to LHR would be a bonus to the Airport surely. Can't really answer this without background knowledge on the reason for levels set If the target is to increase, then public transport links, reliability, comfort and most of all affordability needs to be dealt with. What ever gives the best return at an acceptable environmental impact

Gatwick has met the target of 40% public transport access use. (34% rail / 66% bus &

coach) What would you like to see the target be set at for 2020?

75%

60%

50%

Remain the same

Lower

Gatwick Airport/cont

Yes

No

Don’t Know

Verbatim Comments: Views dependent upon routing, cost, disruption, etc. Yes - Faster rail communications from major centres to Gatwick also mean faster communications from Gatwick to the major centres which can only be a great advantage to the area. Depends on how many GD businesses rely on UK business. I wouldn't want to see UK business routes decline in favour of long haul routes aimed at leisure passengers. Any growth in numbers will add to turnover of local or companies within the diamond connected with aviation. We need to re-establish more long-haul routes to emphasise the Gatwick Diamond as a world-class business location.

11% of Gatwick passengers travel between UK destinations. The strategy proposes a new train service between Gatwick and the proposed High Speed 2 (HS2) at Old Oak Common (between Harlesden and Acton, London). High speed rail to destinations such as the Midlands and the North could enable a reduction in domestic routes so that more long haul routes can be scheduled. Would this be attractive to the Gatwick Diamond business community?

Is your business turnover likely to expand, contract or remain the same in the next six months?

Expand

Contract

Remain the Same

How has the ongoing turmoil in European markets affected your business confidence?

It has had no impact on our business plans at all

It has made us less likely to invest in growth during 2011/2012

We have put plans on hold until the markets improve

It has knocked our business confidence badly

Do you anticipate the need to further consolidate and reduce business costs within the next six

months?

Yes

No

Unsure

Are your staffing levels likely to expand, contract or remain the same in the next six months?

Expand

Contract

Remain the Same

General Business Confidence

Have you, in the past three months, sought external finance to sustain and/or grow your business?

Yes No

Access to Finance

How do you rate the availability of financing options?

Excellent

Good

Poor

Don't know

What is the most pressing business concern for you currently?

Verbatim Comments: •Uncertainly in the Eurozone economy feeding through to lack of confidence. •Confidence and liquidity for businesses. •As a professional service provider the lack of client confidence remains an issue. •Continuing turmoil in the Euro/poor levels of external finance inhibit client's ability to purchase our services other than for "distress purchases" such as advice on redundancies. •Downward pressure on our fees coupled with upward pressure on salaries will continue to be a difficult circle to square... •Increasing business •Lack of footfall in the towns - lack of promotion by councils of the market towns, and as a result lack of takings. •The economy. Although we have not been effected yet the 2008 recession nearly bust us. •Companies unwilling to invest in developing their people or making change which needs project managing. •Whether the poor economic outlook will affect the confidence of our customers and how we will need to change our pricing structure to remain competitive. •Parking in the local manor Royal area, its non existent! •Competition from inexperienced business advisors. •The economy. •Whether consumer spending is likely to increase or decrease; the concern being what staff levels and stocking to plan for. •US economy. •Quick resolution of the Euro crisis, whichever way it goes (probably Southern State exit). •Our customers are not spending on themselves. •Financial liquidity to allow our clients to invest changes within my industry and a drop in value/standards. •Finding the competent resource with the right attitude to meet the needs of a very demanding industry. •Less companies are recruiting and putting their recruitment plans on hold.

•Market confidence in general - recession spin is hurting. •Retention of existing customers + finding new ones. • Driving our strategy and choosing key investment opportunities. •As business consultants, how to raise awareness with business owners that times will change dramatically over the next 10 years and that many do not have the business model and/or internal skills to adjust to the likely changes. •The method of forward thinking and planning needs to change while few in fact do take a well planned, realistic 3-5 year view. •Fluctuating costs from Asia. •Availability of finance for growth. •Continuity of orders. •This clueless inept government with no strategy for growth. Ridiculously high VAT rates which are stifling any possibility of recovery. I am really concerned about the changes in the welfare system and the effect it will have on finding housing for my employees at the lower end of earnings. •Attracting staff who are reluctant to leave current positions for security reasons. •Consumer confidence, banking stability and fuel prices. •Finding the right people with the relevant level of skills to ensure efficient growth. •Sales growth. •The recession affecting our retail sales. •Finding employees with the right attitude and skills. •Change the FiT legislation and not sufficient emphasis of Green Technology by the Government. •Trends to reduce costs. •Market security and any consequences to the insurance industry arising from a global insurable event e.g another 9/11 •Lack of business confidence to invest and grow. •Short term decision making by clients. •Sales through the public sector. •Continued lack of realistic bank finance. •Lack of business confidence amongst clients •Dealing with reductions in revenue support grant from central government and influencing the regeneration of Crawley town centre.

Conclusion

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Finally, please advise if there is anything that you would like the Gatwick Diamond Initiative to focus upon in the year ahead:

Verbatim Comments: Without vibrant towns retail will shut down. Its all good and well to support fast growth industry, and quick broadband and home working - but there is a real need to get their money back into local towns and into traders pockets - otherwise the shops will continue to churn with independent traders just losing money yr on yr. Cost effective, flexible business accommodation that will allow companies to grow into bigger companies without the fear of taking on dangerous leases. At times of uncertainty it is generally two things that break companies; their bank and their landlord. Widening the area within the diamond that benefits from Gatwick. Making the diamond less dependent solely on Gatwick . Try to raise more awareness, which includes basic skills in organisation, efficiency, forward planning and the right skill set to accomplish this, adaptability to changing business conditions, lower gearing ratios. Lobby the government to think again on just about everything they are doing. Short term politics ,and earning a quick buck is not good for anyone. Take a leaf out of Germany's book, invest in industry, and people, don't sell everything to the private sector at a knock down price! Local Procurement in real terms from SME's not always from the giants networking . We would like to see better incentives for SME's to invest and grow. As a local business we wouldl ike to be able to provide our services to local public bodies without the hurdles of EU procurement that limits our ability to win work in our region. We are seeking new/larger office space and cannot find good space, reasonably priced to support our expansion. Ideally we would like to be able to buy a site (from LA land stock) and build our own offices.