Government subsidising flights between London and Newquay, and London and Dundee, by £4.3m over 2 years

The DfT has announced that £4.3 million of public funds will be given for two regional air routes, through PSO (Public Service Obligation) agreements. Flights between Newquay and London, by Eastern Airways, will be subsidised by Cornwall Council receiving up to £1.8 million over 2 years, which the government claims will help tourism and business travel.  The flights have been subsidised for many years.  The other route is London to Dundee, by Loganair, for which the government has confirmed that it will provide up to £2.5 million to fund direct flights for a further 2 years. Again, tourism and business travel are cited as benefits. PSOs are for routes where there is not enough demand to even half fill a small regional aircraft and that to attract a commercial operator to fly the route, the government has to provide a financial incentive.  So it is mildly curious that Robert Courts Aviation Minister talked of “the hugely popular London to Dundee” route. Over the years, there has been a lot of churn in which airline can be persuaded to fly these routes.
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Government boosts regional air connectivity with £4.3 million to fund flights to London from Dundee and Newquay

Regional air services receive funding to bolster union connectivity to encourage tourism and business travel for years to come.

From:  Department for Transport, Robert Courts MP, and Iain Stewart MP

22 November 2021

  • £4.3 million confirmed for regional connectivity through 2 PSO agreements, bolstering government pledges for union connectivity across the country
  • government will fund reinstated flights between Newquay and London
  • flights between Dundee and London will also continue to run until 2022 after funding confirmed

The government has today confirmed that it will provide up to £4.3 million to fund direct flights between London and Newquay, and London and Dundee, in a major boost for regional links across the country.

Cornwall Council will receive up to £1.8 million over 2 years to run flights from London to Newquay in a reinstated public service obligation (PSO) agreement that will create hundreds of jobs and keep people connected as we build back better from the pandemic.

The government has also confirmed that it will provide up to £2.5 million to fund direct flights for a further 2 years between Dundee and London until 2023. This funding will keep an important route running, supporting regional links across the country.

The 2 PSO agreements ensure that people from both ends of the country can stay connected through direct flights and benefit from economic growth through encouraging tourism and business travel for years to come.

The airline Loganair will continue to run the flights to Dundee, operating from Dundee Airport to London City Airport. Flights from Cornwall Airport Newquay to Gatwick will start on 9 December 2021 and will be operated by Eastern Airways.

Robert Courts Aviation Minister said:

We’re maintaining these vital transport links, including the hugely popular London to Dundee and the reinstated Newquay to London routes, for people right across the country for tourism and business travel.

The government is fully behind UK regional connectivity and strengthening these routes as we build back better from the pandemic.

UK Government Minister for Scotland Iain Stewart said:

It’s great news that flights between London City and Dundee have been secured for another 2 years.

As we work to improve transport connectivity across the whole country, this route will continue to allow quick and easy travel between Tayside and the UK capital, supporting economic growth and job creation.

Cornwall Council cabinet portfolio holder for transport, Philip Desmonde, said:

It is vital for our residents and business community that direct flights between Newquay and London are maintained and I welcome the news that Eastern Airways will operate our key route. This PSO service not only protects Cornwall’s links with London but also offers excellent connectivity around the world into the future.

While connectivity is vital, we must seek to minimise the impact of air travel on the environment. The Council has worked with all parties to ensure that the environmental impact of the air route is kept to a minimum by selecting aircraft which have lower emissions and lower noise impacts, as well as aligning schedules to ensure capacity meets demand.

Aviation forms part of the Department for Transport’s commitment to decarbonise transport by 2050, which includes a number of initiatives and commitments to enable domestic aviation to achieve net zero.

Minister for Transport Graeme Dey said:

I welcome the extension of this contract which will continue to provide important connectivity for Dundee.

This service will benefit business travellers and offer visitors a direct route to experience the tourism offering in the city and surrounding area.

The Scottish Government is committed to continuing to support the service both through our direct contribution to the cost of the flights and our ongoing subsidy of Dundee Airport.

Richard Hill, Chief Commercial Officer at London City Airport, said:

Connecting all parts of the UK to London has always been core to our business and we are delighted that the service to Dundee has been extended for another 2 years. Working alongside Loganair and partners at both ends of the route, our ambition is for this service to develop and grow business and tourist travel between both cities.

This all ties into the government’s wider work to levelling up and close regional inequalities through the UK with stronger transport links.

The PSO keeps this vital link open connecting the UK.

https://www.gov.uk/government/news/government-boosts-regional-air-connectivity-with-43-million-to-fund-flights-to-london-from-dundee-and-newquay

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See earlier:

British Airways have the PSO contract (since Flybe’s demise) for taxpayer subsidised flights between Heathrow and Newquay

The government agreed in 2018 to subsidise flights from Newquay to Heathrow. These were initially to be by Flybe. Flybe then collapsed in March 2020. The subsidy is through a Public Service Obligation (PSO) intended to give financial assistance to unprofitable routes, which are deemed “vital” for an area.  The cost to the taxpayer was expected to be £3,4 million, over the 4 years of the PSO, till 2022.  That would be £1.7 million from the DfT and £1.7 million from Cornwall Council.  It appears that since Flybe collapsed, the PSO was put out to tender again. British Airways is now being paid £125,000 per month to operate these flights. The website Simple Flying says “under the emergency order, the  [Cornwall] council will be paying British Airways £877,596 excluding VAT, to operate services to Newquay for 7 months …. According to details on the European Union’s Tenders Electronic Daily, the 7-month contract was issued as a result of the collapse of Flybe. Only one compliant bid, that of British Airways, was received in the 48 hours that the proposal was open.”  No passengers used Newquay airport in May 2020. The first flight date shown is 3rd September 2020.

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Flybe’s Newquay link with Heathrow takes off courtesy of taxpayer PSO subsidy (£6.2m over 8 years)

From next weekend people flying between Newquay and Heathrow will get a £5 subsidy each, from UK taxpayers. There will be 4 flights per day both ways. Newquay airport is not particularly near anywhere – other than surfing beaches. The service will be Heathrow’s only subsidised service, run under a public service obligation (PSO).  PSOs are defined under European aviation regulations as “scheduled air services on routes which are vital for the economic development of the region they serve”.   That means for routes where there is not enough demand to even half fill a small regional aircraft and that to attract a commercial operator to fly the route, the government has to provide a financial incentive. The cost to the taxpayer over 4 years for this will be £3.4 million. (For 180,000 pax per year that works out at £5 each. But there were only <93,000 pax in 2013). The pendulum is swinging back to Heathrow, however.Heathrow has set aside a £10 million fund to incentivise domestic airline route development – needed to persuade regional MPs to back the runway.

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