Welsh Economy Minister says Cardiff Airport likely to return to profit only in ‘long-term’

The Welsh Economy Minister, Edwina Hart, has said that Cardiff Airport  – now in public ownership – is likely to return to profit eventually, but not in the short term. She said its downward spiral is no longer continuing.  The airport finally becoming profitable is a “long-term” strategy. She was giving evidence to the National Assembly’s Enterprise and Business Committee on the airport, which was bought by the Welsh Government for £52m at the end of 2012.  Ms Hart suggested there wouldn’t be a quick sale of the airport back into the private sector, which the Scottish Government is seeking for the newly-nationalised Prestwick Airport in Ayrshire. Pressed by the Plaid Cymru economy spokesman on when the government expected the taxpayer to recoup its investment.  She said the Budget announcement for support for regional airports to set up new routes would apply to Wales and that they would “wait for the detail of it”, but confirmed the Welsh Government is likely to bid in for funding. Chancellor George Osborne announced a £20m annual fund will be used to encourage new routes from regional hubs like Cardiff.
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Cardiff Airport likely to return to profit only in ‘long-term’, Edwina Hart suggests

Economy Minister was giving evidence to National Assembly’s Enterprise and Business Committee on performance of publicly-owned hub

Cardiff Airport likely to gain a profit ‘long term’, Economy Minister Edwina Hart has suggested

Ministers only expect the publicly-owned Cardiff Airport to return to profitability as part of a “long-term” strategy, the Economy Minister has suggested.

Appearing before an Assembly committee, Edwina Hart said the hub – which was bought by the Welsh Government for £52m at the end of 2012 – was working well under public ownership, but cast doubt on a quick return to profitability.

She also suggested there wouldn’t be a quick sale of the hub back into the private sector, which the Scottish Government is seeking for the newly-nationalised Prestwick Airport in Ayrshire.

“I’m confident that the model we have currently suits us,” Ms Hart told AMs on the Enterprise and Business Committee.

She added she wanted the airport to be “viable”, adding: “That is the key issue for us. Our reason for intervening in the airport is we could see a downward spiral all the time, which we didn’t wish to continue. That downward spiral is not continuing.

“We’ve put in a private-sector management board, we’re not managing it ourselves. We have the expertise in there.

“We’re seeing changes in the airport. They will take a long while. But this is not something that was to make a decision that you turn a quick profit in overnight. Obviously there were people interested in partnership with us. With the private sector our door is always open for anybody who wants to approach us.”

Pressed by Plaid Cymru economy spokesman Rhun ap Iorwerth on when the government expected the taxpayer to recoup its investment, Ms Hart said: “We have always made it clear it is a long-term investment. So the answer is it is a long-term investment”.

Cardiff Airport has recorded a loss in the last two sets of audited accounts, with the Welsh Liberal Democrat business spokeswoman Eluned Parrott expressing alarm at a “huge increase in the loss” the airport was making.

But there have been signs the downward spiral of passenger numbers may have been stemmed, with the Welsh Government claiming a 9% projected increase in the year since it took it over.

Ms Hart’s comments come after Deputy First Minister of Scotland, Nicola Sturgeon, said it would take “a number of years for taxpayers to see a return on public investment in Prestwick”, but said it was a “working assumption” it would look to seek a private sector buyer.

She said the Budget announcement for support for regional airports to set up new routes would apply to Wales and that they would “wait for the detail of it”, but confirmed the Welsh Government is likely to bid in for funding.

Chancellor George Osborne announced a £20m annual fund will be used to encourage new routes from regional hubs like Cardiff.

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To help British businesses strengthen links with high growth markets, and to go further
to make the UK an attractive option for business visitors and tourists, Budget 2014 announces that the government will reform air passenger duty (APD) by abolishing bands C and D from 1 April 2015. This will eliminate the two highest rates of APD charged on flights to countries over 4,000 miles from Britain, cutting tax for millions of passengers travelling to China, India, Brazil and many other emerging markets. This will mean that flights to South Asia and the Caribbean will pay tax at the lower band B rate. The rates applying to private jets which offer an enhanced level of comfort will be set at 6 times the level of rates applying to economy class. The government will also extend the scope of the existing Regional Air Connectivity Fund to include start-up aid for new routes from regional airports. “

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Regional Air Connectivity Fund – The government will extend the scope of the existing
Regional Air Connectivity Fund to include start-up aid for new routes from regional airports, and will increase the funding to £20 million per annum. “

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