Local Councils asked to reject Newcastle Airport’s request for a £5.1 million loan of taxpayers’ money
Local group, Aircraft Noise Action Group (ANAG), at Newcastle say the 7 North East Councils, which own 51% of the Airport, are being asked to prop up (by £5.1 million of taxpayers’ money) for an at-risk business which mostly enables people to take holidays and visit friends and relatives. Newcastle Airport has suffered huge financial losses as a result of Covid with revenues falling by £46 million according to its 2020 Annual Report. The airport is struggling financially – so it is asking for loan facilities to support its continued functioning. As well as the councils, the airport is asking the 49% private shareholder, AMP Capital, for a similar sum £4.9 million. Newcastle Airport claims to be a key driver of business in the North East. In practice, it is primarily a holiday and leisure facility with a small proportion of business specific travellers. Most travellers are British, taking their holiday spending money out of the country. ANAG says people need holidays, but a loan for this purpose is not an investment in the economic future of the north east. They also think it is environmentally short sighted and irresponsible and that the loan request should be rejected.
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Local Councils asked to reject Newcastle Airport’s loan request.
The 7 North East Councils are being asked to prop up an at-risk business which mostly enables people to take holidays and visit friends and relatives. People need holidays but we think a loan for this purpose is not an investment in the economic future of the north east. We also think it is environmentally short sighted and irresponsible and that the loan request should be rejected.
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1. Newcastle Airport losses and financial state:
Newcastle Airport has suffered huge financial losses as a result of the pandemic with revenues falling by £46 million according to its 2020 Annual Report. The Airport continues to struggle and, as reported by ITV News on 5/10/2021 ( https://tinyurl.com/s2s4h4mw ), it is asking for loan facilities to support its continued functioning.
The 7 North East councils, which own 51% of the Airport, are being asked to stump up a sum we understand to be £5.1 million pounds of taxpayers money. The Airport is also asking the 49% private shareholder, AMP Capital, for a similar sum (£4.9M). Councils are already struggling to provide core statutory services with further cuts to come and potential rises in council tax. They can ill afford to risk the loss of further sums to prop up an uncertain local business, any loss could mean a further reduction in services or jobs.
This loan will have to be added to existing historic, large-scale debt for which the Airport is already struggling to make payments. The major lenders have agreed to waive repayment requirements until the end of 2021 and the Airport is trying to extend this until the end of 2022 to prevent the airport breaching the existing loan covenants – this is a measure of how bad the situation is. The new loan facility will probably be used to fund the day to day running of the airport, let alone any repayments due.
2. Due diligence and investigation
Due diligence should be carried out by the 7 Councils before handing over this amount of taxpayers money to support their own 51% share in the ownership of Newcastle airport. This will surely reveal that aviation is in a poor state nationally and globally and that its future is precarious. Many economies are in a volatile state of flux and this has a direct effect on the UK which is also experiencing economic damage arising from Brexit. All this will negatively impact demand across the board including aviation. If made, this would be a high risk loan.
3. Global warming and the climate change emergency:
Diligence will also show that global warming and climate change are major and urgently pressing issues and there are huge costs to come to address them. The use of fossil fuels for almost any purpose is now massively in doubt. Aviation is totally dependent on these for the energy rich fuel that it uses. Electric aircraft are unlikely to be viable for a very long time, if ever. There is a finite amount of the minerals used in batteries in the ground, vehicle and other manufacturers are competing aggressively for this resource and the pollution impact of their extraction and processing is significant.
Sustainable fuels rely on setting aside vast tracts of land to grow the crops required to manufacture the energy rich fuels to replace those derived from fossil sources. This land would have to include land currently used to produce food for a growing global population if sustainable fuels were to be expected to support even current levels of activity, let alone any growth. At this scale. it could be a matter of fly (or drive etc.) and go short of food, even if we could ignore the environmental impacts of the growing of these crops.
4. Aviation’s unchecked growth:
Aviation, until the onset of Covid, was a rapidly growing unchecked contributor to global warming while servicing a small, relatively wealthy group of travellers (frequent flyers). All use of fossil fuels – including cars and gas heating – has to shrink rapidly and massively if catastrophic global heating and mass extinction are to be avoided.
The recent report from the UN’s Intergovernmental Panel on Climate Change makes this clear and reinforces what we can all see from the news: severe weather events are worse and more frequent everywhere, including in the UK. Aviation does not pay VAT on fuel and is effectively exempt from meeting other environmental costs associated with its activity. It is massively subsidised to continue its damaging activities and, if the playing field were level and it were to pay taxes on travel costs like the rest of us do, it would cease to be an affordable mass transport option.
Aviation is coming under increasing pressure to reduce levels of activity.
5. Newcastle Airport – primarily a holiday and leisure facility:
Newcastle Airport claims to be a key driver of business in the North East. In practice, it is primarily a holiday and leisure facility with a small proportion of business specific travellers. UK holiday makers are net exporters of income and wealth, much less comes the other way into the UK. This is true of many regional airports across the UK as well as applying to a lesser extent to Heathrow and the other London airports.
Increasingly, businesses are finding that meetings can be held electronically, saving travel time and eliminating travel costs, more people are working remotely/from home. Some countries are starting to ban short haul internal flights and the UK needs to adopt a similar approach and local Councils urgently need to consider pressing for this.
Cost of living rises, massively increased fuel costs and other financial impacts are already significantly reducing disposable personal and household income and, therefore, the number of people who can afford to fly and take holidays abroad for a long time to come.
Aircraft Noise Action Group calls upon the 7 Councils to reject the request from Newcastle Airport for such a high risk loan. They are also asked to consider other forms of transport for holiday and leisure purposes with much less environmental impact that could be supported, promoted and developed instead.
https://www.aircraftnoiseaction.com/post/reject-newcastle-airport-s-loan-request
https://www.aircraftnoiseaction.com/
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See earlier:
Liverpool Airport receives £34m loan from combined authority due to Covid-19 impact
Liverpool John Lennon Airport (JLA) is to get a loan of £34m from the city region combined authority to help give it stability during the Covid crisis. The funding was approved at a meeting of the combined authority on Friday, with the airport described as a “vital strategic infrastructure asset for the city region”. The Metro Mayor Steve Rotheram said: “International connectivity is essential for the local economy and the roles of international gateways such as ports, airports and cruise terminals as economic hubs and drivers for local economies and tourism need to be maximised.” ie. good to have people flying abroad for their holidays… The airport it indirectly supports around 6,000 local jobs, providing £250m per annum in economic impact, (not counting the contribution to the UK’s tourism deficit…) The 10 Greater Manchester local authorities are also lending £250 million to the Manchester Airports Group (MAG) to help then with the Covid pandemic. This is from money borrowed at a low interest rate from government.
Birmingham airport getting £32.5 million in loans from 4 of the 7 councils that half own it
Seven councils of the West Midlands own a 49% stake in Birmingham airport, a further 48.25% is owned by the Ontario Teachers’ Pension Plan and the remaining 2.75% belongs to an employee trust. The councils are putting in a lot of money, as loans, to the airport to keep it going. The total so far is about £32.8 million. The airport is getting £18.5 million from Birmingham City Council, plus £4.9 million from Walsall Council, plus £3.7 million from Solihull Council, plus probably a £5.7 million emergency loan from Coventry City Council. Coventry’s cabinet will discuss a loan up to £5.7m on March 9th before approval at full council on March 16th. Earlier Sandwell and Wolverhampton councils confirmed they will not be offering loans to the airport but Dudley declined comment. Ontario Teachers’ Pension Plan will also provide a loan. The Coventry loan “would be made available as and when needed by the airport to ensure it can have the maximum impact on Covid recovery.” A Coventry cabinet member said the airport had “given us a return on income of over £1.6m in the last two years.”
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EasyJet revealed last month that it plans to close its regional hub at Newcastle airport later this year, resulting in significant job losses
22 JULY 2020
Furious easyJet staff gathered outside Newcastle International Airport to protest against the airline’s plans to cut jobs and close its regional base. The budget airline revealed last month that it plans to close its regional hub at the airport later this year, resulting in significant job losses. As well as Newcastle, easyJet intends to close its operations in Stansted and Southend as part of efforts to bring down staff levels by 30%. The move means 1,290 jobs are at risk. EasyJet has flown from Newcastle Airport since 2003 and has 2 employees and 157 crew flying from the airport. The firm said that flights from the airport remain on sale and Newcastle will continue to be part of easyJet’s route network. Staff are losing their jobs. Unite claim that local businesses including taxis and hotels who rely on easyJet’s operation in and out of Newcastle airport will see “a huge detrimental impact”. Baggage handler Swissport is consulting with staff over the loss of 302 jobs at Newcastle Airport as it halves its staff numbers across the country as a result of the coronavirus crisis. BA are likely to lose up to 12,000 jobs with staff at Bamburgh Court, in Newcastle, like to be among those affected.
Newcastle Airport expansion plans slammed by Green Party as ‘harmful’ to health in the North East
The Green Party say planned expansion of Newcastle International Airport flies in the face of efforts to tackle climate change and improve public health in the North East. The Greens have set out a stinging critique of the wide-ranging ‘Masterplan 2035’ set out earlier this year. The public consultation on the plans closed earlier this month. By 2035, the aim is to drive passenger numbers up by 74% to 9.4m a year and increase the amount of freight coming through the airport – in order (in theory) to boost the region’s economy. Environmentalists say it is in incompatible with national and local policy designed to improve air quality and cut CO2 emissions. A spokesman for the Greens said: “More flights at Newcastle Airport would take us in the opposite direction to our national and international legal obligations, and the resulting increase in road traffic would worsen already-illegal levels of air pollution.” The airport claims that restricting its expansion “would undermine the competitiveness of our region and make it difficult for businesses to operate.” The airport wants more investment in public transport to the airport.