Scottish government outlines nearly £10m of public funding for failing Prestwick airport
The Scottish government bought Prestwick from Infratil for £1 in November 2013. Now Prestwick is to receive nearly £10 million of investment from the Scottish government. It will go towards operating costs, a repairs and maintenance backlog and to make improvements to the terminal building. The airport has lost nearly £10 million in 2013. It was announced towards the end of May that a taxpayer-funded report on the future viability of Prestwick would not be published, to protect commercially confidential information. This has led to accusations that ministers are expecting “blind faith” from the public and “keeping taxpayers in the dark” on spending public money. Deputy First Minister Nicola Sturgeon said £5.5m had been provided already since acquisition and the Scottish government would be required “to provide a further £3m in operating support”. There will be nearly £7m in capital investment – £4.5m for repairs and £2.4m to make improvements to the terminal building.. Future revenue could come from freight and retail development. Future revenue may come from freight and retail development.
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Prestwick Airport: Nicola Sturgeon outlines nearly £10m of new investment
18.6.2014 (BBC)
The Scottish government bought Prestwick Airport from Infratil for £1 in November
Prestwick Airport is to receive nearly £10m of investment from the Scottish government, Deputy First Minister Nicola Sturgeon has announced.
The funding will go towards operating costs, a repairs backlog and to make improvements to the terminal building.
Ms Sturgeon rejected calls to rename it Robert Burns Airport, saying this could cause confusion.
Labour accused of her of “keeping taxpayers in the dark” over how the money would be spent.
Rival airports voiced concerns about competition from publicly-subsidised Prestwick.
The Scottish government bought the struggling airport for £1 last year amid fears it would be forced to close.
Ms Sturgeon told Holyrood’s infrastructure committee the airport would be operated under public ownership “on a commercial basis”.
She said the Scottish government investment would be made “in the form of loan funding”.
She added that there was “no quick fix solution for Prestwick” and the airport may not be profitable for several years.
The airport had a pre-tax loss of £9.77m in its final full year under previous owners Infratil.
Ms Sturgeon is also the Scottish government’s infrastructure, investment and cities secretary.
She said the airport would operate as a public corporation on a commercial basis” at arms’ length from government.
She added that £5.5m had been provided already since acquisition. and the Scottish government would be required “to provide a further £3m in operating support”.
There will be nearly £7m in capital investment – £4.5m for repairs and £2.4m to make improvements to the terminal building, including refurbishment of the duty free area.
Lack of investment
Ms Sturgeon argued that Prestwick had suffered from a lack of investment and there was a “backlog of essential maintenance”.
The committee evidence session came after finance executive Romain Py completed a three month review of the airport, including options for ownership, on behalf of the Scottish government.
Ms Sturgeon described Prestwick as a “non-typical airport”, with only about half of its revenue dependant on passenger traffic.
She suggested that future revenue could come from freight and retail development.
The airport’s executive directors would be tasked with developing commercial opportunities.
A business plan would include an assessment of a reduced Ryanair schedule for summer 2014 and passenger numbers will be monitored.
Ms Sturgeon ruled out renaming the airport after Robert Burns. Apetition lodged with the Scottish Parliament by The Robert Burns World Federation earlier this year had called for a name change, with supporters arguing it would boost tourism.
The deputy first minister told the committee: “On balance I have concluded there are strong commercial reasons for retaining the Glasgow Prestwick airport name.”
She acknowledged the decision would disappoint some local people but the airport had to be marketed internationally.
She did not rule out a “Burns-related theme” for the airport.
‘Business case’
Scottish Labour’s infrastructure spokesman, James Kelly, said: “Nicola Sturgeon had the opportunity today to set out the Scottish government’s plans for Prestwick Airport, unfortunately she has failed to do so in any detail, and Scottish tax-payers remain in the dark.
“Last year Prestwick Airport was losing nearly £1 million a month.
“It is a nonsense that it will be close to a year since the Scottish government bought the site before a credible plan is put to the people of Scotland, especially when the Scottish government has blocked the publication of analysis they commissioned on the airport.
“Key information is available now, but it is being denied to the Scottish public.”
He added: “Nicola Sturgeon should make a statement before parliament on Prestwick, and publish the business case so that taxpayers can see how £15m of public money is being invested and when the airport will return to profitability.”
Scottish Conservative transport spokesman Alex Johnstone said: “By refusing to publish the report into the work by consultants Romain Py, on the grounds of commercial confidentiality, the Deputy First Minister has left many unanswered questions.”
‘No public subsidy’
A spokesman for Edinburgh Airport said: “Scotland’s main airports create jobs and attract routes with no public subsidy and we believe that the market should not be distorted. Competition should be allowed to flourish.”
A statement from Glasgow Airport said: “We have previously received assurances that Glasgow Airport will not be placed at a competitive disadvantage, but will continue to seek clarity on how the Scottish government intends to develop its asset.”
Stuart Patrick, chief executive of Glasgow Chamber of Commerce, said: “We believe that any strategy designed to increase passenger numbers at Prestwick must not be at the expense of Glasgow International Airport.”
A spokesman said the Robert Burns World Federation would continue the campaign to rename the airport.
“If George Best, Robin Hood and John Lennon are deemed worthy of being remembered, the iconic Robert Burns should be remembered in Scotland as he is revered the world over,” he said.
http://www.bbc.co.uk/news/uk-scotland-scotland-business-27897006
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