Cardiff airport needs public money, and cannot survive without it

Cardiff Airport’s CEO says it would not have kept going without an £85m bailout from the Welsh government during Covid.  The Welsh government wrote off £42.6m of airport debt in March this year and also gave it a 5 year recovery grant of £42.6m.  The airport’s passenger numbers were down by 90% in August 2021, compared to 2019.  It currently has flights to 15 destinations, while in 2019 it had 52.  It loses business to its rival, Bristol airport. The value of the airport has dropped by more than two thirds. The Welsh Conservatives have said the Welsh government should sell it. The Welsh government bought the airport in 2013 for £52m and has since invested more than £130m of taxpayers’ money into it.  The airport was doing reasonably well before Covid. The airport claims to still support many jobs, and that in “normal times” it generated some £240m per year in revenue. The Welsh government is aware that it has climate commitments, and increasing flights from Cardiff will conflict with targets of reducing carbon emissions.  Professor Calvin Jones, an economist at Cardiff University’s business school, questioned how compatible owning an airport was with tackling a climate emergency.
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Covid: Cardiff Airport dead without bailout, boss says

By Emilia Belli  (BBC News)

28.11.2021

Cardiff Airport was bought by the Welsh Government in 2013.  It would not have stayed alive without an £85m bailout from the Welsh government during Covid, its boss says.

Chief executive Spencer Birns said despite a slow recovery, it could “provide the economic value back to Wales”.

But the Welsh Conservatives said the Welsh government should sell it.

The Welsh government said it was committed to the airport because of the benefits it brings the Welsh economy.

Mr Birns said the the bailout had “given us the framework to stay alive”.  “They’ve helped us get into position that we can help re-grow the business, that can provide the economic value back to Wales,” he said.

The Welsh government wrote off £42.6m of airport debt in March this year and also gave it a five year recovery grant of £42.6m.

The airport’s passenger numbers were down by 90% in August 2021, making it the second-lowest number in the UK.   Its value has also dropped by more than two thirds.

Mr Birns said that recovery had been slow “primarily because people have been encouraged not to travel overseas this year”.

Fifteen destinations are currently up and running, but prior to the pandemic there were 52.

Next year, Wizz air will start running out of Cardiff, while TUI will increase the number of flights from the airport.

The Welsh government bought the airport in 2013 for £52m and has since invested more than £130m of taxpayers’ money into it.

It’s run at arm’s length by an independent company HoldCo and before Covid it had seen significant growth in passenger numbers.

Welsh Conservative MS Natasha Asghar says the Welsh government should sell the airport
But the Welsh Conservatives’ transport and technology spokeswoman Natasha Asghar MS said funding the airport was “pumping” taxpayer money into an “empty pit”.

“I would say cut your losses and sell it, accept what’s happened and spend that money on other things more important and a priority to the people of Wales right now,” she said.

Despite airport debt totalling £27.2m in May, Mr Birns said the business contributes to the Welsh economy through employing 2,500 people.

He said that in normal times it generates more than £240m a year in revenue.

Wizz air will start running out of Cardiff next year

CBI Wales, which represents Welsh businesses, said having a Welsh airport would encourage international investment coming out of the pandemic.

It would “disadvantage” Wales and be “odd” to not have one, CBI Wales’ director Ian Price said.

Last month, the UK government announced flight tax Air Passenger Duty would be halved for domestic journeys from April 2023 to boost the sector and develop better UK travel links.

But Mr Birns questioned how helpful that would be.  “Why is the UK government waiting 18 months to do this?,” he said.  “If they’re talking about economic stimulation for connectivity to the regions, what’s stopping them doing it tomorrow?”

The UK government said they have “announced reforms and rates over 12 months in advance to provide airlines with sufficient notice and to acknowledge the length of airline booking cycles”.

Meanwhile, longer-term concerns have been raised about the ownership of the airport.

While the Welsh government committed to net zero by 2050, its own plans say that in future flights will be one of the biggest remaining carbon emitters.

Professor Calvin Jones, an economist at Cardiff University’s business school, questioned how compatible owning an airport was with tackling a climate emergency.

“They have something that probably don’t know what to do with now,” he said.

“I think that the right thing to do is just have some strategy where you wind the airport down.

“As soon as you take that on the chin and start to think about what we might do with this potentially valuable piece of land in a genuinely zero carbon way, then some good ideas might arise.”

The Welsh government said it was committed to maintaining an airport in Wales “while recognising the challenges this creates for meeting our targets on decarbonisation”.

https://www.bbc.co.uk/news/uk-wales-59434267

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See earlier:

 

Welsh Assembly Member questions £21m Cardiff Airport loan from taxpayer – on top of an earlier £38m loan, not yet repaid

Monmouth AM Nick Ramsay has criticised the Welsh Government for its ‘blank cheque’ approach to funding for Cardiff Airport. Mr Ramsay said: “The Welsh Government has committed to this new loan without providing any detail on what the money is for or when it will be paid back. This comes on top of a previous loan of £38 million in 2015 which has also yet to be paid back. Transport minister Ken Skates said the funding – in the form of a loan the airport will pay back – would support “ambitious plans for the future” including a target of two million passengers a year.  Mr Ramsay questioned the fairness of the loan, saying: “Businesses in my constituency do not receive this level of support from the Welsh Government and will understandably be questioning the fairness of these funding priorities.  We need far more clarity on what this money is being provided for and when we will see an end to what effectively amounts to a “blank cheque” for the Airport. … the public have the right to expect a coherent and rigid timetable for this money to be recovered.” But following the transport minister’s announcement, the Welsh Conservatives said Cardiff Airport would do better if it were re-privatised, where it would not need Welsh taxpayers to shoulder the financial burden. 

https://www.airportwatch.org.uk/2019/10/welsh-assembly-member-questions-21m-cardiff-airport-loan-from-taxpayer-on-top-of-an-earlier-38m-loan-not-yet-repaid/

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Welsh Assembly members say Cardiff airport lacks a long-term enough plan for expansion

The Welsh Public Accounts Committee has said Cardiff Airport is missing its passenger targets and lacks a long-term plan to expand. The airport was bought by the Welsh Government for £52 million in 2013. The decision to buy and the price paid caused controversy, but the Public Accounts Committee said ministers had had “a clear rationale” for going ahead with the deal. The transport minister said swift action saved the airport from closure. After the airport was taken into public ownership, passenger numbers rose from 995,000 to 1.079m in 2013-14, but in 2014-15 the numbers declined to 1.005m. The airport now expects numbers to rise to 1.4m by 2017-18, although the business plan produced at the time it was bought projected passenger figures of around 2 million by that date. Some consider the airport was only worth £20 – £30 million and the Welsh government paid too much. Flybe announced it would operate flights between Cardiff and London City Airport during the six week closure of the Severn rail tunnel from 12 September to 21 October. “Aviation Wales” hopes Air Passenger Duty will be devolved, so they can cut it. Bristol airport is very anxious about this, and launched a “A Fair Flight for the South West” campaign, fearing a loss of passengers to Cardiff.

Click here to view full story…

Cardiff Airport bought by the Welsh government for £52m (over-priced?)

March 27, 2013

The current owner of Cardiff Airport, Abertis, which bought the airport from local councils in 2005, has now managed to sell it to the Welsh Government for £52 million. That price is well above market value when compared to recent transactions involving UK airports. The airport was valued at about £34 million in 2010. It has been making large losses and losing passengers for many years. The Government is desperate that it gets more passengers and gets back to making a profit. Welsh First Minister Carwyn Jones said it would not be operated by the government and would be managed “at arm’s length” and “on a commercial basis”. Cardiff’s passengers have declined from around 2 million in 2007 to just over 1 million in 2012, as many have chosen Bristol airport instead. Bristol airport is now concerned that Cardiff would now unfairly benefit from state support. Cardiff was hit by the loss of bmibaby in 2011. The airport’s board will try and get in a commercial operator and hopes to attract long haul and transatlantic flights. Only recently there was news that Swiss airline Helvetic will pull out of Cardiff, 2 years after the Welsh government spent £500,000 marketing Wales in Switzerland.

Click here to view full story… 

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