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Under agenda item 3, we will hear again from the cabinet secretary, this time on Prestwick airport. The cabinet secretary offered to give us this update when she previously gave evidence on the matter in June.
I welcome, from the Scottish Government: Nicola Sturgeon, Cabinet Secretary for Infrastructure, Investment and Cities; Sharon Fairweather, director of finance; and John Nicholls, director of aviation, maritime, freight and canals at Transport Scotland. I also welcome to the meeting Chic Brodie, James Kelly and John Scott, who are attending for this item. I will take questions from committee members first, but if you want to come in on the back of another question, you should catch my eye instead of waiting until the end to ask a question. That would be preferable.
Cabinet secretary, would you like to make an opening statement?
Yes, convener, and thank you for giving me the opportunity to come back to update the committee.
Progress continues to be made in the work to return Prestwick airport to profitability. I have always said that this would be a long-term project, but progress is under way. What I want to do today is give the committee an update on this work and an overview of what comes next.
As you have said, convener, I am accompanied today by Sharon Fairweather and John Nicholls, who, as you have indicated, are part of the senior management team at Transport Scotland. Perhaps more pertinently for today’s business, they are also board members of TS Prestwick HoldCo Ltd, which was the company that was established for the purposes of the Government’s acquisition of Prestwick airport.
Since I gave evidence to the committee in June, there have been a number of developments. Some are covered in my letter to the committee of 16 October, but I want to give further updates in addition to those issues.
First, I want to update the committee on the arrangements for corporate governance. As I have previously indicated, we have established a two-tier board structure, with a holding company board, which will be responsible for the long-term strategy for developing the airport and will give the Government important oversight of the airport’s strategic development. Secondly, we have established an operations company board, which will empower management to deliver the strategy. I will no doubt stress many times during the course of our discussions the point that responsibility for running the airport now lies with the airport’s management team. It will be run on a commercial basis at arm’s length from the Government.
Following an open recruitment process, I am able to advise the committee that I am appointing Andrew Miller as the non-executive chair of TS Prestwick HoldCo Ltd and the operating subsidiary. Andrew has, among his many other posts, a wealth of experience in business development across the aviation sector, and he is a former chief operating officer of the global aviation business at Air New Zealand. I will provide the committee with details of his CV, which will give an insight into why I think he is an excellent appointment as chair. His job now will be to work closely with the management team to take forward the proposals in the vision statement, which was published on 31 October.
I will now update the committee on our arrangements for local authority representation on the holdco board, which I know has been an issue of particular interest to John Scott. Further to the work that we are undertaking with South Ayrshire Council on the newly created stakeholder groups that will be chaired by the council leader and which will focus initially on supporting the airport spaceport submission, I can advise the committee that we have agreed that membership of the holdco board will include the council’s chief executive in an observer capacity. The council has also proposed—and I have agreed—that the holdco chair will become a member of the wider stakeholder group. That will enable close integration of the airport’s development and the wider economic strategy and development of South Ayrshire.
11:30The membership of the two boards will be completed by the recruitment, through an open procedure, of a number of non-executive directors to the board of the operating company. The non-executive chair and non-executive directors will oversee the airport’s operation, support the senior management team in repositioning the airport and provide appropriate and robust corporate governance of all its activities. As I have said, the airport will operate at arm’s length from the Government, and the new structure will help to reinforce that.
The airport’s strategic vision, which was published at the end of October, includes plans for investment and business development and the optimum operating structure that is deemed to be required to take the airport forward, and I think that it is worth briefly highlighting some of the key actions that are detailed in the vision document and which have been taken forward in recent months. They include investment in infrastructure; adjustments to the airport’s operating cost base, in particular to align it with changes to the winter schedule; and improvements to the passenger experience, which have been reflected in passenger surveys. The airport also recently hosted the re-established Scottish air show. It has delivered new offices for Ayrshire Chamber of Commerce and Industry within the terminal, and the long-term future of search and rescue has been secured at the airport.
I say this with a degree of caution because we have to take a long-term view of these things, but it is worth pointing out that freight tonnage is up by 38 per cent in this financial year compared with the previous financial year. In an environment that remains very challenging, there are signs of growth in certain aspects of the airport’s business.
The strategic vision builds upon the stage 2 business plan that was developed by the senior adviser and includes as much of his work as possible without impinging on commercial confidentiality and the airport’s ability to operate commercially. That is a point that I unapologetically stress today. If we expect the airport to operate commercially—which we do—we have to allow it the space to operate commercially. As a result, it requires a degree of commercial confidentiality to plan for a return to profitability. However, we recognise that the airport is right now in receipt of Government investment in the form of loan funding, and it is, in my view, appropriate that I or any of my successors report regularly to this committee on progress in turning the airport around.
As the strategic vision details, the overall aim is to operate the airport in a safe, cost-effective and efficient manner and to develop and enhance its variety of business interests in order to return it to profitability, with the long-term intention of returning it to the private sector. The senior management team at the airport has been tasked with delivering the vision statement, taking account of the winter 2014-15 and summer 2015 flight schedules. The team also has to take advantage of new opportunities. For reasons that we all understand, the spaceport is attracting a lot of attention, but a whole range of opportunities has been identified for growth at the airport and it is the responsibility of the team to advance them all.
After touching on route development and air passenger duty, I will give the committee a brief update on investment before I stop to take questions. On route development, when I last appeared before the committee, I said that we would commission work in two areas: the new European Union rules on support to airports, and air passenger duty. We have reviewed the new aviation guidelines, and we are aware of their constraints as well as the opportunities that they present. One of our key objectives is to increase the number of direct flights from Scotland to international destinations. Although over the past year we have had significant success working with all our airports to support our route development ambitions, there is still much work to be done to help airlines ensure that new routes are sustainable in the long term and to help us fill gaps in our international connectivity. As a Government, we will continue to help all our airports in that highly competitive market.
On air passenger duty, work that we published in October showed that cutting APD would lead to an increase in passenger numbers at Scottish airports, and Prestwick along with our other airports would benefit from that. One of the biggest things that can be done right now to help route development at all our airports and at Prestwick in particular is the devolution of APD. I know that Scotland’s airports—and, indeed, a number of airlines—support that, and I very much welcome the recent submission that was published by three of our airports. The aviation industry repeatedly cites APD as one of the major obstacles when it comes to securing new routes and maintaining existing routes. We must be absolutely firm that getting control of and being able to do something about APD would be very beneficial particularly but not just for Prestwick as we go forward.
The final area that I want to cover is investment. The picture here has not changed since my previous update to the committee. To date, we have advanced a total of £7.5 million in loan funding to Prestwick; £4.5 million of that was given in the financial year 2013-14, and £3 million has been given in 2014-15 so far. We expect to provide a further £7 million in 2014-15, but that will not change the totals that I outlined to the committee at my previous appearance. As members will be aware following our previous evidence session on budget scrutiny, we have included provision for £10 million of loan funding for Prestwick in next year’s draft budget. I repeat that all of our investment in Prestwick is in the form of loan funding and that we require to make a return on that investment for the taxpayer. That will continue to be our objective.
My final point about investment is that it is worth putting it into context. We should remember—and I think that the convener raised this point at our previous meeting—that Prestwick airport was estimated in the last year for which we have figures to have contributed nearly £50 million a year in gross value added to the Ayrshire economy. Just to remind everybody why we are where we are on this issue, I point out that if the Government had not acquired Prestwick airport, it would be closed right now—that is the stark reality. We acquired it because we think that it is important to the Ayrshire economy as well as to the wider Scottish economy. Having done so, we recognise the challenges that we face in turning it around, but we think that that can be done. However, everybody who agrees with us that Prestwick is important and that it was not the right thing to allow it to close now has to get behind us—and, more important, the airport—as we do the hard work that will be required to make it a success.
Thank you for that, cabinet secretary, and for making available the strategic vision report as soon as possible. There is a lot to get through in it.
You said that the Government’s aim is to return Prestwick airport to profitability and to private ownership. That will be welcomed by other airports, especially Glasgow airport. Whenever I attend a meeting at which representatives of Glasgow airport are present, they always mention Prestwick airport as a threat rather than anything else, particularly because it is in public ownership. Does the Government have a target date for when it would like to return the airport to private ownership?
I am neither prepared nor able to put a date on that at the moment. The most important thing for me to do not just on this but on all occasions is to be frank with the committee. I believe that the airport can be returned to profit. If the Government did not believe that, not only would we not have acquired it but we could not have acquired it, given the terms of the European state aid rules under which we are required to operate. I believe that the airport can be returned to profit and that that will happen, but we must be patient and recognise that there is no quick fix.
As the aviation market is not only competitive but highly changing, Prestwick airport must have a range of options at its disposal and must seek not only to increase its business but to expand it across the spectrum of what it does. That is going to take time. If anybody thinks that there is a quick fix, I will be very happy for them to tell me what it is. We need to be patient to achieve all the things in the strategic vision, and I believe that, if we are, the airport can be returned to profit. As time passes and we start to see some of the work that has been done bear fruit, the ministers who will come before the committee on a regular basis over the next few years might be able to give a more definite prediction of when the airport will be returned to private ownership. At the moment, it is important that we back the airport management, so that it can do the work that it has to do.
As for your comment about Glasgow airport, I think that Prestwick can flourish in the market that we have, and, as a Glasgow MSP, I want Glasgow airport, too, to flourish. All I will say is that I know how hard all of our airports have to work to win and sustain routes and to win business, and I do not for a second underestimate that work. Given the success that Glasgow has had, even in the years since we acquired Glasgow Prestwick airport, I suggest that, with or without Prestwick, Glasgow is a good proposition and its management team is doing an excellent job in growing the airport. It is important to put that on the record.
You mentioned the loan funding that Prestwick has had and will get over the next few years. Are the loans reducing operating losses? Is the operation getting on to a sounder footing? When will you begin to see a return on the loans?
The loan funding that we provide is doing a mixture of things, and two things in particular. It is enabling the airport to operate and pay the bills that keep it running; it is also enabling capital investment, so that much-needed maintenance at the airport can be undertaken—I think that I went into that in some detail when I last appeared before the committee. The airport has been neglected for a long time. The fabric of the airport has been neglected and, to be frank, so has the leadership vision for the airport. We are trying to bring a lot of that back to where it should be.
Some of the funding is for what we describe as capital repositioning, so it is not the capital spend that is essential to keeping the airport running but the capital spend that it is considered will help to increase revenues, for example by making the duty free area more conducive to spending and improving the customer desks. Such things will help with the objectives of growing passenger numbers and business at the airport.
I think that the last time I spoke to the committee about this I said that we think that the capital investment will peak this year and next year. In next year’s budget we have set out the £10 million that I spoke about. You asked when Government support can start to reduce. That is tied up closely with how successful the management team is in growing business and reducing the losses at the airport. The team is absolutely focused on that.
The repayment of the loans will flow from our judgment of when the airport starts to move back into profit. I cannot give a definitive timescale for returning the airport to the private sector, nor can I give a definitive timescale for repayment of the loans—because these things are tied up. However, I remind the committee that, overall, we must make a return on taxpayer investment, so repayment of loans, with a return, is essential and underpins everything that we are doing.
Thank you.
A great disappointment over the past year—for Prestwick, anyway—was the announcement that Ryanair would begin services from Glasgow. Can you assess the impact of that on Ryanair’s future plans at Prestwick? Does it put a question mark over the viability of passenger services?
I am glad that you said that it was a disappointment for Prestwick. I do not think that Glasgow airport would describe Ryanair’s decision as a disappointment; it is a good-news story for Glasgow.
Ryanair is hugely important to Prestwick, of course. The company has made clear that it retains an on-going commitment to Prestwick airport, which I very much welcome. I know that you are aware that the importance of Ryanair is not just to do with passenger services in and out of the airport, because the company’s maintenance and repair facility is at Prestwick. The airport is important for Ryanair and Ryanair is important for Prestwick.
I have had discussions with senior management at Ryanair and I think that they are committed to the airport. In return, they have been very clear with me that they think that APD is the significant constraint on passenger growth at Prestwick and that if APD were to be removed, it would change, perhaps substantially, their ability to put new routes and services into the airport. They have been very frank about that.
11:45Obviously, there are other issues to do with how Ryanair wants to position itself as a business. Anybody who has travelled with Ryanair recently, as I have—from Prestwick, I have to say—will know that it is going after more of the business market and consequently is locating itself more at mainstream airports, as opposed to subsidiary ones. We do not work separately from that overall operating environment, but I am satisfied that Ryanair remains committed to Prestwick. It is now for the management team to work with Ryanair and prospective customers to grow that part of the business over time.
The cabinet secretary spoke at some length earlier, and again in her last answer, about the devolution and eventual removal of air passenger duty. That is a subject on which I might even be willing to join her on the barricades at some point in the future. Will she explain to us how the removal of APD would particularly benefit Prestwick airport, given the danger that, if it is abolished in Scotland as a whole, the spare capacity at other airports would be taken up before new services arrived at Prestwick?
Just to be clear, I am not saying that the removal of APD will particularly, or solely, advantage Prestwick. Getting rid of APD in Scotland, or substantially reducing it, would benefit all our airports. That is our starting position. It would benefit Prestwick as one of those airports.
Michael O’Leary, of Ryanair, put it quite starkly last month when he was talking about the effect in Scotland of scrapping APD. He said that it would lead to Ryanair doubling in size in Scotland, going from 3.5 million to 7 million passengers in two years, with 1.5 million more passengers at Edinburgh and 1 million more shared between Glasgow and Prestwick. If we consider the current situation at Prestwick, that kind of increase in passenger numbers—even if Glasgow and Edinburgh benefited as well—would make a substantial difference to the revenue and profitability of the airport.
The committee should not read into what I am saying that APD abolition is somehow a particular benefit for Prestwick. However, there is no doubt that APD abolition will benefit Prestwick. The other side of that is that APD is a significant constraint on what the airport’s management is trying to do to increase passenger traffic.
In your opening statement, you also spoke about route development. Over many years now, I, and others in my party, have suggested the reintroduction of the route development fund as the way forward. You have said that you wish to support route development. Does the new advice that you mentioned earlier rule out any return of the route development fund in a recognisable form?
It does not enable us to return to the kind of route development fund that was in place before the 2005 rules came into place. To remind members of the background to this, the European Union’s 2005 aviation guidelines effectively forced the discontinuation of the route development fund as it was. The aviation guidelines that were published earlier this year, which update the 2005 guidelines, do not materially change that situation.
However, although we cannot have a national route development fund, within those guidelines, we can and do work with our airports to support route development. That is done as part of our team Scotland approach, in which we offer marketing support to new routes. That support can be offered to Prestwick, just as it is to other airports.
Because Prestwick has fewer than 3 million passengers a year, there is the possibility of more direct help on airport charges. The airport itself can offer deals to airlines on airport charges, within certain rules. Local authorities do not operate within quite the same constraints as the Government, and I know that South Ayrshire Council is looking at options on route development. No doubt, it will give its views on that in the fullness of time.
There are things that we do with all our airports, there are things that we can do with Prestwick and there are things that the local authority can do. However, we cannot reinstitute a national route development fund along the lines of the previous one.
How effective do you think that the co-ordinated marketing strategy will be in attracting additional routes and services to Prestwick?
It has the potential to be effective. Without having a go at the previous owners of the airport, I think that that is one of the things that just did not happen in the way that it should have. The airport needs a co-ordinated marketing strategy that looks at existing routes from the airport and how to get more passengers on to them. It must also be about marketing Prestwick and the Ayrshire economy—part of the approach will be to work with VisitScotland to market the area as a destination of choice. The third component is actively marketing the airport with airlines so that, over time and with all the caveats on APD that I have inserted, we encourage new routes and new airlines to operate out of the airport. That is the strategy that the airport needs to take forward and which it has not been implementing for a long time—I do not know how long it is since it operated a proper approach like that.
That will not deliver new routes and new airlines at the airport overnight. Nobody should be under any illusion that that is going to happen. However, over time, the approach can start to drive growth in passenger numbers, which are one of the elements of the revenue base of the airport that we want to increase, although not the only one.
On the comment that was made regarding Glasgow, there are two elephants in the room—a big elephant and a baby elephant. The big elephant is what will happen in London and the south-east with the investment not just in the airport but in the infrastructure around it. I was down there two weeks ago, and I saw that there is a problem. The baby elephant is about recognising the unique capabilities of Prestwick and getting support from the other airports in Scotland. That involves the maintenance, repair and overhaul capabilities and the ability to handle big jets. How can we get overall acceptance of a Scottish aviation strategy that involves all the airports working together and recognises their capabilities?
We must be realistic and recognise that our airports are in competition. That is why the Government has to take an airport-neutral stance when we offer route development, for example, and why our marketing approach will be offered to whichever airport wins a particular route and will not be tied to a particular airport. However, I am sure that there are other issues on which we can take a more strategic approach. Getting Prestwick to be focused on where it sits in the scheme of things is the first thing to do to enable that to happen. One thing that has been lacking at Prestwick is its own strategic approach to developing its business, never mind where it sits in the overall strategy.
As I said when I discussed the issue with the committee previously, less than half of the airport’s revenue comes directly from aviation. I immediately qualify that by saying that the airport would not get some of the other half of the revenue unless it had aviation. For example, unless there are passengers, there will be nobody buying perfume in the duty free shop. All those matters are integrally connected. However, there are other aspects of the airport’s business. Some of the facilities at the airport such as the long runway, as well as the weather conditions, add up to making it an airport with a diverse range of possibilities, and we need the management team to focus on developing all those possibilities. That is why the strategic vision document has a range of options. The last thing that Prestwick should do right now is to narrow its focus, because one of its strengths is the diversity of what it can develop.
They will love me for this, but I am about to offer up the management team to the committee. Of course, it is entirely up to the committee to decide its own business but, as well as having regular visits by ministers, I think that it might be worth while getting the team in, and I know that they would welcome the committee if it wanted to visit the airport. Not long after the airport’s acquisition, I had a proper in-depth tour around it, and I think that such visits give an insight into some of the challenges that it faces as well as some of the opportunities. I am sure that, if the committee was minded to undertake such a visit, the management team would welcome it.
We will probably take you up on that offer. Mark Griffin will now ask some questions about freight.
Before I do so, I want to ask a supplementary about the marketing strategy and attracting additional services. I read in the newspapers that, on Friday, Donald Trump will be making an announcement with the chief executive of Prestwick airport. Are you able to comment on any additional services that might come to Prestwick as a result of that announcement?
The very idea that I am able to sit here and speak for Donald Trump is interesting. No, I am not able to comment on such matters—and, indeed, that underlines my point that the airport is in charge. I am sure that any announcements will be greeted with interest, and the committee can ask whatever follow-up questions that it wishes on the matter, but I am not able to go into detail about that today.
You mentioned that freight at Prestwick was up 38 per cent, and the vision document certainly puts a lot of focus on that market, referring in particular to an
“ambitious ... plan to strengthen the airport’s position as ... Scotland’s premier cargo airport”.
Can you give us any figures for Prestwick’s market share to show how it is establishing itself as “Scotland’s premier cargo airport”? The figures seemed to be in steady decline and, indeed, the airport has in recent years been overtaken by Edinburgh. What progress is the airport making in re-establishing that market share?
The vision document contains figures for that, but I am happy to provide the committee with figures on not just Prestwick’s freight operation but, as you have rightly asked about, where it fits within the overall market.
You are absolutely right. In the few years before we acquired the airport, no aspect of its business was—if I can put it as bluntly as this—going in the right direction, and that includes freight. That said, it is important to point out that, over a fairly short period of time, there has been quite a substantial increase in freight. I am not complacent about that—that has to be maintained—but I think that it demonstrates that, with the right approach, the right leadership and the right grip on things, it is possible to start to grow aspects of the business. The ambition that has been set out in the vision document for Prestwick’s place as the premier freight operator is, I think, the right one. It will be down to the management team to achieve that ambition, but I think that they have been right to set it.
Are the management team at Prestwick doing anything in particular that you can detail for us to increase the number of freight services that are using the airport?
They are working and will continue to work with the two operators that currently operate from Prestwick, which are Cargolux and Air France, and will not only grow their business but look at other possible operators.
I do not want to close down any lines of questioning, but I must point out that this is a commercial airport. On any given day, the management team will be pursuing, investigating and exploring a whole host of commercial opportunities. However, as with any commercial business, they will not always want to talk about those opportunities, because their competitors might hear and trump them—if you will pardon the pun. [Laughter.]
I want to stress this point: you should—and, if I know the committee, you will—hold the Government to account for the airport’s overall progress over a period of time, the trends in all of this and our predictions for getting that return on taxpayers’ investment. However, with regard to the airport’s day-to-day operation, which is what will matter in turning things around, we have to trust the management team and give them the space and the ability to do this. I will not sit here and go into great detail on all the different commercial opportunities that they are pursuing, because if I did so, that would undermine their chances of success in them.
12:00
I am going to press you a little bit in that area. Obviously, because of commercial confidentiality, the vision document does not really go into detail on revenue-generating initiatives, but can you give us a broad overview of how Prestwick airport intends to increase revenues on the aviation side and the commercial side?
Prestwick airport intends to do that in a whole range of ways. It intends to do it by increasing its passenger numbers over time and by increasing the freight load. We have talked about how that is probably the area of the business in which it is having most early success at this stage.
Some of the capital spend that I have talked about is designed to raise revenues in some of what I will describe as the subsidiary parts of the business, although that is probably not the correct terminology. Whether there are increased numbers of passengers or just the numbers of passengers that there currently are, the question is whether the airport is maximising the revenue from them in the period in which they are in the airport. I flew from the airport a few weeks ago, and I think that the answer to that question is that it could do a lot more through the duty-free retail outlet and the food and drink offer. It is looking at that. Some of the capital investment is about to make all of that more attractive and conducive to raising revenue.
There is work to look at car parking and how the revenue from it is maximised—within reason, obviously.
More widely, it is a matter of looking at the property portfolio and coming up with a strategic approach. We have talked about that before. The airport holds a lot of land, some of which will undoubtedly be needed for longer-term ambitions around the airport, but some of it is probably surplus to requirements. Can the airport maximise the value of that land?
Right across the business, there is a focus on raising the revenue—incrementally in some cases—as well as on keeping the costs as low as possible and ensuring that they do not get out of sync with the passenger numbers and so on.
Those are the immediate short-term things that the airport has to do to position itself properly.
Okay. Thanks for that answer.
I want to ask a question about a more specific issue. A key success factor for the airport’s future is identified in the vision document. It says:
“An integrated partnership approach to business development and marketing”
should be adopted with the airport
“working cooperatively with the local tourism and aviation related industries.”
In that context, I do not understand the rationale behind the termination of the leases of the two specialist ground-handling companies, Greer Aviation—which I have visited and which I know colleagues have visited—and Landmark Aviation, which have operated successfully at the airport for several years. Can you give us an understanding of the rationale behind that?
I will certainly do that, but will preface that with what I have just said. The airport management has taken an operational decision. If we second-guess every operational decision that the airport takes, it will not be able to operate successfully as a commercial enterprise. We have to be very mindful of that. We cannot expect a management team to return an airport to profitability and then tell it what it is and is not allowed to do in the interests of moving the airport forward commercially.
I pay tribute to both companies for what they have done, but the judgment of the airport management is that it can provide those services to a higher quality by bringing them in house, that doing so will be more cost effective, which relates to my point about ensuring that the airport’s operating cost base is kept as low as possible, and that that will position the airport better to grow that part of its business.
The fixed-base operations obviously relate to ground handling. Prestwick already provides ground-handling services to scheduled passenger and cargo flights. The two companies provide services to military, corporate jet and ad hoc aviation services. That is a part of the business that the management team wants to and thinks that it can grow, and it thinks that it will be more able to do that if it has those services in house because it will be able to deliver them to a higher quality and integrate them better with the other services, which will enable the airport to attract more business.
The airport will be held to account in the fullness of time on whether it is right about that, but that is the operational judgment that it is making. Without going into detail on the figures, I note that it estimates that that will result in significant cost savings as well as leading to potentially significant revenue generation. If that is the judgment of the people who are charged with running the airport, they have to be trusted to make that judgment and implement it.
The last point that I make in relation to the two companies is that we are talking about people and their jobs, and that is always hugely important. The airport will require to employ people to carry out the functions in house, so it is likely that many if not all of the numbers that are employed by the companies will continue to be employed by the airport. All Transfer of Undertakings (Protection of Employment) Regulations obligations will be adhered to. The airport has its own legal advice on that, but discussions are on-going about employment and transfer of employees, and it is important to allow them to take place.
Of course I understand how both companies will feel about the decision, and I make no criticism of them at all. I know how anxious their employees will feel, and that is why the last bit of my answer—on the discussions about transfer of employment—is so important. However, whether it is a decision about fixed-base operations or a decision about any other part of the business, if we are asking a management team to operate an airport commercially at arm’s length from Government, it has to be given the ability to do that and to make decisions that it deems will further our objective of returning the airport to profitability.
Thank you for responding with the airport management’s rationale. I certainly look forward to having the airport management in front of us at a future meeting. It is only fair to point out the view of the affected companies. There is no doubt that the airport can handle the technical aspects of the business that they operate, such as refuelling and looking after the crews of private and military aircraft that come to the airport. It is the handling of the customer relationship that the businesses have specialist skills in, and those skills are likely to be lost.
The US-owned company, for example, intends to transfer its operation to another, competitor airport, and the senior management at Greer Aviation will not involve itself at Prestwick. There is potentially a significant loss of business from the activity being taken in house. In my judgment, which is obviously not the judgment of the airport management, the move is a bad idea. It also sends the wrong signal to potential private sector investors that an airport management can unilaterally take over business that companies have been operating successfully.
Can the decision be revisited? You mentioned that a new chair has been appointed. Is the decision not something that he can review?
I will not revisit the decision, because it is not my decision to make. I am not going to get into the space of micromanaging the airport’s operation. If we go down that road, we will not succeed in turning round the airport. I am pretty hard and robust in my view on that.
You have cited a perspective on the part of the businesses that are offering the services. I am not saying that Greer Aviation and Landmark Aviation are wrong—indeed, I am not able to judge whether they are right or wrong—but, given that they are the ones operating the services, it would be surprising if their view were not that they are best placed to continue to do so.
The airport management has taken a judgment that it can deliver the services to a higher standard and in a way that positions the airport to win more business. It is empowered to make that judgment. You are perfectly free to quiz and query the airport management about that, as I am sure you have. It can answer for itself on that matter.
To round off my answer, if we had let the airport close, there would be no jobs at the airport or in any of the businesses that operate there. That is where we were. Having decided that we did not want to let the airport close, we acquired it. There is a long road ahead in turning round the airport. It can be done, but that long road will not be easy all the time. On occasion, it will involve taking tough decisions that some people may disagree with. However, if we are to turn round the airport, we must have a management team that is empowered and equipped to have a hard focus on the commercial realities when making decisions. That is the space into which the decision on the businesses falls.
I understand the businesses’ perspective, I absolutely understand employees’ anxiety and I stress again the importance of on-going discussions to give them the certainty that they deserve, given that we are talking about their jobs. However, I will not sit around a committee table or anywhere else and presume that I am better placed than the airport management to make decisions about fixed-base operations and whether they are better delivered in house or by external companies.
Mark Griffin, James Kelly, Chic Brodie and John Scott want to come in on the back of this discussion. I ask that the questions be as brief as possible, and the answers, too, cabinet secretary.
I agree with pretty much all that Adam Ingram said. I question the rationale around losing the rental income from two companies from the outset and the potential business, as the companies take their customer lists elsewhere.
The approach conflicts with the vision document, which sets out the constraints under which Prestwick operates. One constraint is the high operating cost base. Unlike other airports, Prestwick manages a lot of its services in house, so it has a higher operating cost base than other airports. The decision taken will only compound that by increasing the operating cost base.
I want to ask about the affected companies’ contracts. The competitive tenders were won against and in direct competition with the company that Prestwick owns. However, the company that lost out in a competitive tendering exercise has now taken over a contract as a result of terminating the other companies’ property rights. Are you confident that Prestwick and, in effect, the taxpayer, will not be liable for any legal action as a result of anti-competition law?
First, I assume that the member is aware of the changed legal environment governing Prestwick in terms of European law.
Perhaps you could expand on that.
When the third parties were brought in, business at Prestwick was covered by the EU ground handling directive, because of the airport’s volumes of passenger and cargo freight at that time. That directive requires an open market at airports for ground-handling services. It was not possible for Prestwick to operate those services in house because the directive applied.
However, that directive applies to airports that have more than 2 million passengers or 50,000 tonnes of freight per annum, and Prestwick is now unfortunately below those thresholds, so the directive does not apply, and that opens a different approach to Prestwick. That is the legal environment and, presumably, members are aware of the contractual point. The members of Prestwick’s management team must satisfy themselves that they are operating on a sound legal basis with contracts, and they have given notice to terminate those contracts under the terms of the contractual arrangements that apply to them.
12:15I hear what you are saying. You think that the judgment is wrong. I am not going to sit here as a politician and presume that I have enough knowledge of aviation to be able to look airport management in the eye and say that it is getting it wrong, because it is telling me that its cost base will be improved by taking such services in house and integrating them with scheduled passenger and cargo services, and that that will mean delivery of a better service. I do not have the expertise to say that the management is wrong about that. The airport will be judged on whether what the management says is right and whether it enables the airport to reduce its costs and grow the business. If the people who are running the airport have made that judgment, they have to be trusted to make it. It would be a strange operating environment for any commercial entity if it had a politician telling it that it has to make a different decision.
I have a specific question about revenue overview, but I would just like to cover the issue of profitability. When the Government took over the airport, losses were running at £800,000 a month. What is the current position?
The accounts for 2013-14 will be published shortly. The board will sign them off in the next wee while. The annual loss for 2013-14 will be in the region of £5 million. That is not an absolute figure; it is a broad figure. The accurate and specific figure will be in the accounts and you will be able to study them when they are published to see what the monthly figure is. The airport is running at a loss. The revenue support that we are providing through loan funding is commensurate with that scale of loss. The focus is now on trying to reduce those losses and move the airport into profitability.
The figures that you have provided indicate that the airport continues to run at a loss of at least £800,000 a month. That means that there must be a strong focus on increasing revenue.
Page 27 of the vision document deals with a revenue overview. Why are no financial data or analysis included in that revenue overview?
Within the bounds of the commercial confidentiality under which the airport has to operate, I am happy to provide any additional information to the committee that it wants to request. The committee might request information that I cannot provide for the reasons that I have set out.
I am not in the business here of trying to cover up the scale of the challenge facing us. I come back to the central point that we took the decision to acquire the airport because we thought that it was wrong to let it close. If people think that that was the wrong decision, that is a legitimate point of view; I do not agree with it but it is legitimate. If people think that it is wrong for us to have acquired the airport and it is wrong to support it while we try to take it back to profitability, they should have the courage to say that up front. If that is not their position, they have to get behind the airport as we try to do the job. It will be a long hard slog, it will have its ups and downs, but we will get there. However, we cannot constrain the airport by second-guessing the operational decisions that it is taking or forcing it to put into the public domain information that its competitor airports would not.
I will provide whatever information the committee wants. If you tell me the range of information that you want but which you think is not available, I will look at that and, if it is possible to provide it, we will provide it.
Do you not accept that in order to get right behind the case for the airport we need more information? You are making a substantial investment of more than £20 million of public funds. You put great stay in the vision document, but it has no financial data or financial analysis.
Do you not accept that, if public funds are being invested in the airport, politicians and taxpayers have a right to more information than just simple headlines about what the main revenue streams are? We require to see the numbers.
At the outset, no, I believe that what the public want to know is that we have in place at the airport a management team that is focused on doing the things that are required.
Going back to the first question that the convener asked me, as we move through the period ahead and these actions are implemented by the airport and start to bear fruit or not, the information that we can share about the airport’s projections of when it can come back to profitability will become more developed and potentially more detailed.
My judgment of public opinion on Prestwick is that the public want the airport to remain open and want to see a return on taxpayer investment, but they want the airport management now to be able to get on with the job that will return it to profitability.
I do not know anymore whether you agree that we are doing the right thing in trying to save Prestwick or whether you think that that is the wrong decision. If you think that it is the wrong decision, that is fine—we can have an honest disagreement about that—but at least you should make it clear that your position is that we should not have rescued the airport.
I made clear at the start of the process that I supported the Government in taking over the airport.
It is easy to say that.
What I am saying now is that you have indicated that the losses are continuing at least at the level that they were at when you took over the airport, that substantial money is being invested, and that we want to get behind the initiative to save the airport and the jobs, but that it is difficult to understand how it is being taken forward when you have produced a document that lacks detail and has no financial data or analysis to back up your case.
Please be very brief, cabinet secretary, because this is going over the same information again.
The vision document is the strategy for taking forward the airport. In either my first answer to you or my answer to Mark Griffin, I said that in a fairly short period the airport’s annual accounts, which will give very detailed information about the airport’s financial position, will be published. It is simply not the case that the information will not be available for people to scrutinise.
In the interests of trying to build some consensus between us, I would say that you are absolutely right: public investment is involved, so people—parliamentarians in particular—want to know in detail what the airport management is going to do. I repeat: get down there and speak to them. I will not name names, but a number of people around this table regularly make very constructive suggestions to me, which are then passed to airport management as things that the managers could look at doing. The people involved will know that it is not possible for all those suggestions to be taken forward—some do not come to fruition—but a lot of people around this table are actively engaged with that level of detail.
If you want to raise things directly with the airport management, do it. If you want to bring things to me, do it. Get in and about the annual accounts when they are published. If you have questions off the back of that, fine—that is all part of your responsibility as a parliamentarian.
It is easy to say that you are behind this until it comes to the difficult decisions. If we are all behind it, we must all really be behind it and we need to accept that it will not be easy. If all of us can on this issue, even if on no other issue, try to put short-term party-political bickering to one side and accept that we are trying to save one of our country’s important strategic assets, and if we all get behind the initiative and support the airport management as it carries it out, that would be better than the attempts—that we can all be guilty of—to score political points.
The cabinet secretary talked about the involvement of politicians, so I am going to take off my political hat and put on my business one. If I were Andrew Miller, the new chairman, I would be very upset if I were told, “Here’s the business plan—you’d better go out and achieve it.” Clearly he has to lead and I hope that, once the strategic document has been absorbed, we will see the business plan that goes along with it, which will include all the financials, the funding and so on.
I received a letter, which has been distributed to everyone, about the two companies that were asked to terminate their business with the airport. Immediately after speaking to Greer Aviation, I went to the airport management to ask about and understand the rationale behind its decision. It did not handle the dissemination of information well—indeed, when I went through the information, it was clear that there was no indication that TUPE considerations would be taken on board or that there would be jobs for some of the people affected—but I think that at the back of everything is the customer-centric approach, which I believe we previously lost and which Prestwick certainly lost over the past few years.
As soon as I realised that, a light went on and I understood that the airport management made the right decision. There are consequences of such decisions—and, indeed, there will be more to come—but it is rather unfortunate that instead of running to the airport management to discuss the matter and look at the logic people ran to the newspapers. However, as I have said, I believe that, this time, the airport management made the right decision.
I preface my remarks by welcoming the Government’s continuing commitment to Prestwick airport, and I very much take the Deputy First Minister’s point that the closure of the airport would have meant a loss of around £50 million to Ayrshire and the wider Scottish economy.
That said, I identify myself absolutely with Adam Ingram’s remarks about Greer Aviation. I do not wish to be difficult about such matters—it is not really in my nature—but I think that there is a point of principle about Greer Aviation and Landmark. It would not be reasonable of me to disclose the figures, but I know that both companies have reasonably successfully been providing the airport with a good and proper income stream month in, month out for the past 15 years.
Also, there is the philosophical point: our intention might be to encourage new business development at the airport, but if, as in this set of circumstances, the airport sees its way forward as removing the competition and allowing it a clear field to compete for this business, it will actually discourage other small businesses from starting up at Prestwick, given that they, too, might be evicted from the airport when it copies their business model.
I understand very well your hands-off approach, Deputy First Minister, but the new board is going to have to grapple with that philosophical point very quickly, and I would be grateful if you could comment on it.
I am not going to repeat everything that I have said about this issue. I take your point, and you must trust me when I say that I absolutely appreciate where you and Adam Ingram are coming from. You are local MSPs with local businesses that have been affected by this decision. I am sure that, if I were in your shoes, I would be making representations just as strongly as you have done. As a result, you should not take what I am about to say as any criticism of the fact that you have made these points as strongly as you have; that is your job, and you both do it well.
The fact, however, is that this is an operational decision. You are right to say that the two businesses provide an income stream to the airport, but the airport’s judgment, which it must be entitled to make, is that it can increase that income stream by doing things differently.
I echo and agree with your comments that the airport must be careful not to give the impression that it is in any way hostile to business development at the airport. Therefore, it is worth stressing that the airport might have taken these decisions for reasons that it considers to be sound. Given what you and Chic Brodie have said, however, if the perception locally is that the decision was not handled well or that it sends the wrong message to business, I am sure that the airport board and, in particular, the new chair will want to reflect on that.
12:30
If they are not listening to the meeting live, they will certainly look at the Official Report of today’s deliberations and questioning.
I think that Jim Eadie has a short question on that point.
It is not on that point, convener. I have two questions, just for completeness. They relate to the maintenance backlog and radar.
Before we move on to that, Mark Griffin has a point about the staff who are involved.
The strategic vision document talks about reducing the operating cost base, and staff costs make up 50 per cent of that. Can you give staff an assurance that their employment and terms and conditions will be maintained? The vision document also says that the cost base has been adjusted
“in line with the revised winter passenger programme.”
Have there been any changes to staffing levels as a result?
As with any business, there will be changes to the staffing profile as the business develops. There have been no redundancies at the airport, if that is what you are asking. We are within the bounds of what I said previously about a management that is operating in a commercial environment, but we would not be discussing the issue now if the whole objective of the Government had not been to save jobs at Prestwick airport.
We are doing what we are doing to protect employment. The whole objective, or a big part of it, is to protect the jobs of the people who work at the airport. It would make no sense if the way in which we decide to take it forward undermines that. The management will have to have freedom to make decisions on staffing and deployment of staff as they see fit, but let us not forget that the whole object of the exercise is to protect the jobs that depend on the airport.
As I said, I have two specific points, just for completeness. First, how confident are you that the maintenance backlog will be removed within a reasonable timescale? Secondly, the capital plan does not include the cost of replacing the existing primary radar, which is critical. Do you have any information from the management team on how the replacement of that will be financed and what the likely timescale for the work will be?
On the backlog maintenance, the key aim is for the airport to operate in a safe, effective and efficient manner. The prioritisation of backlog maintenance is being done with those principles in mind.
Prestwick is operating in an evolving market and is trying to work itself back to profitability. Therefore, beyond that safety requirement, decisions on capital works will be taken on the basis of what is projected to improve the airport’s overall standing and revenue generation. There will be a long-term requirement for capital investment in the airport. The focus of the investment now is on the aspects that have fallen into most disrepair and which require work to be done for safety reasons, and on starting to reposition the airport. It would be wrong to suggest that, in the next couple of years, we will get to a stage at which there is no more capital requirement at the airport. I am pretty sure that no airport operates on that basis.
The replacement of the primary radar is a particular issue that the airport faces and it will be considered as part of the overall programme of maintenance and repair. The investment that is required for that will be factored into the overall investment, and it will be given the priority that is deemed necessary. Adam Ingram is familiar with the work that is being done on a commercial opportunity to replace the radar. I will not go into the technicalities of that, but the radar might be replaced in a way that brings additional revenue into the business, as has been done with wind farm mitigation work. Overall, that will be part of the general maintenance and repair programme of capital investment.
My colleague Gil Paterson wished to ask a question, but he had to leave for another meeting. His question was about capturing the impact of the Government’s intervention to secure the jobs at Prestwick airport.
What positive impact has there been on the Ayrshire economy and the wider Scottish economy, particularly in terms of the number of supply chain jobs that are directly and indirectly dependent on Prestwick airport?
We have not yet done a specific exercise to assess that, but maybe we should consider doing so. I cited earlier the publicly available figures in terms of GVA impact and jobs impact. The figures suggest that, albeit that we are investing a significant sum of public money in the form of loan funding, when we put that in the context of the value of the airport to the local economy the investment is worth doing. However, on the more general point about assessing and evaluating that impact on an on-going basis, I am happy to take it away and look at how we could do that.
John Scott has a question, but is it on development and capital expenditure?
It is a development question about an element in the document that has not been touched on thus far. I hope that I am not treading on other members’ toes by asking a question about the development of a spaceport.
We will come on to that when we deal with the other opportunities—and, if no one has a question specifically on capital expenditure on the airport, we will do that now and consider the other opportunities such as the UK spaceport, the rail station, the land and property portfolio and the air show.
Adam, do you want to kick off on this?
Yes. John Scott referred to the very exciting prospect of Prestwick being the base for the UK’s spaceport, which I understand should be open by 2018. I also understand that the bidding competition will be determined by early 2015 and that eight sites are being considered, of which six are in Scotland. Should Prestwick airport not be the Scottish Government’s preferred bid for the location of the first UK spaceport?
Hear, hear.
There was a murmur of approval from the Ayrshire MSPs around the table. [Laughter.]
As Adam Ingram said, eight sites have been longlisted at the moment and six of them are in Scotland. The Government’s principal objective is to see the spaceport come to Scotland. At this stage of the bidding I think that we must retain more of a neutral position between the Scottish locations until we see what bids develop. Not all the locations might bid but, if at a future date one is clearly ahead, we will obviously have to make a decision at that time. Suffice it to say, Prestwick airport is in a very good position and will be able to put in a very strong bid. However, at this stage I do not think that it would be appropriate for the Government to have a preferred option.
Okay.
We will deal with the opportunities one by one. Does anybody else have a question on the spaceport?
Unsurprisingly, I endorse everything that Adam Ingram said about the spaceport. The spaceport idea is the one truly visionary element of the document and I therefore welcome it. The document is a little anodyne, but I do not know whether that is simply because of commercial confidentiality. I have huge respect for you, Deputy First Minister, so I am prepared to believe that that is the reason.
As I said, the spaceport is the one truly visionary element in the document. I believe that it is self-evident, certainly from evidence that I have seen, that Prestwick should be the location of choice in Scotland for the spaceport. As politicians, we should all get behind it but the Scottish Government in particular should do so, because that would carry much more weight. If we are unsuccessful in attracting the support of the Scottish Government or, indeed, the UK Government for Prestwick airport being the location of choice for the spaceport venture, what would the plan be? What would the contingency be for Prestwick in that case?
I feel as if I have spent most of this year answering questions about plan B. I thought that I had got beyond that. [Laughter.]
On the last part of Mr Scott’s question, the vision document sets out the airport’s range of opportunities. Those who wrote the vision document say that the spaceport will be “transformational”, and it would be. However, if—for whatever reason—the spaceport does not happen, that will not change the reality that there are other things that the airport has to do, so it is not a case of having a plan B. There is not a plan A and a plan B; there is a plan with lots of potential components, all of which have to be pursued and advanced for as long as they can be.
Mr Scott wondered whether the document was anodyne because of commercial confidentiality. I would put commercial confidentiality to one side. Common sense will tell you that any potential location that set out the detail of its bid in public at this stage, before bids have been submitted, would probably be undermining its own case. I say to the committee collectively—in particular to the Ayrshire MSPs—to get in there and talk to the airport directly about its bid, as I am sure you will, because I know that the airport intends to submit a very strong bid.
Again, with all that I have already said about Government neutrality at this stage, I think that the airport has every reason to feel very positive about going forward on this front.
I respect the Scottish Government’s neutrality—it has to be neutral, given the interests of Stornoway and the other Scottish airports.
I asked the chief executive of VisitScotland about the spaceport as, apart from a side comment about the need for visas, it clearly has other implications. I asked what the organisation’s involvement had been in the plan, which you have discussed several times with those who are involved in it.
Newquay in Cornwall has set up a team from the major agencies. Newquay has some major disadvantages, but I understand that the team has been across to NASA, Houston and so on. Would it be possible to secure a task force of the strategic forum of the enterprise agencies, VisitScotland and Transport Scotland to support the bid, wherever it comes from? Clearly, we hope that it will come from Prestwick. Would that not be possible?
We want to make sure that we are doing everything possible to secure Scotland as the winner of the bid, wherever in Scotland the spaceport may end up being. As regards Prestwick, I point to the work that the local council is doing through its stakeholder groups. The first priority that it has set is to support the airport as much as possible in its spaceport bid. There is an opportunity to bring in some of that other expertise through the work that the council is doing.
We may well get to a stage where the Government is not neutral—where not all the locations bid, or where there is clearly an outstanding bid. However, we are at an early stage of the process and it is important that we recognise that.
I respect that, but I think that there is something missing in terms of an all-out attack.
If you listen to me carefully, which I think you always do, you will hear that I am agreeing with you, which I obviously always do.
We move to the airport’s assets—its land and property portfolio.
Do you have any more detail on the plans to exploit the airport’s land and property portfolio? I dare say that the fact that the press conference that Mark Griffin mentioned will be held in the 747 hangar on Friday, with Mr Trump and the airport management, might be indicative of developments in this area—or am I wrong?
Time will tell, Adam.
On the part of the question that I will answer, I do not have any more detail. The airport has to look strategically across its land holdings. Some of its land will be important if certain other developments come to fruition, the spaceport being one of those developments. It is probably difficult to see how other bits of the land holdings around the airport fit into any reasonable overview of the airport’s strategic development. However, the airport has to come to those decisions in its own way. I know that, among what it is investigating just now, it is looking very carefully at its land holdings.
The key thing is to put into place something that has not existed, which is a strategic plan for land management. With that plan, if the airport is holding on to land, it knows why that is, and if it wants to get rid of land, it knows why that is and can try to maximise value from doing so.
12:45
Are there any other revenue-raising opportunities likely to produce significant returns? You mentioned the air show, which successfully returned to Prestwick, and the railway station is obviously an investment opportunity.
The railway station is an important part of the picture, as it is one of the big selling points for the airport. It needs substantial capital investment. It is not included in the investment that I have talked about already, because the way that rail investments are funded is different—we covered that the last time I spoke to the committee. No decisions have been taken about the railway station yet; it is part of the on-going discussions about investment priorities, how investment might be delivered and what timescale it would take place over.
We have to have an entrepreneurial outlook when it comes to the airport. The air show was a success this year. I remember going to the air show at Prestwick airport when I was wee, so from that point of view it was nice to see it come back. The Gumball rally—and I am not going to tell you what that is—was another major event that the airport played a part in. Those events are important, although in and of themselves they are not going to turn the airport around.
That brings us back to the point that the airport has to do all it can—even the small things, if they are part of the bigger picture, will make a difference. All of those things are important. Bringing everything together in a strategic future for the airport is most important of all.
I remind the cabinet secretary of the strategic importance of the airport in terms of defence, other airport users and international strategic security elements. I know that I have laboured the point constantly, but I do not think that the strategic importance of Prestwick to UK and European defence can be overemphasised, particularly given the level of activity in the north-east North Sea and the Baltic Sea.
With the convener’s permission, I also want to ask a question that I wanted to ask earlier about loan funding. The cabinet secretary has said that loan funding was done on a commercial basis. The one question that was not asked was: is there a ceiling? Do you have a figure in your head at which the loan funding will stop, given the underlying asset base of the airport? Should we know?
There is not a figure. If I were to sit here and say that we will get to X million pounds and then stop loan funding, that would not give the airport a very certain position.
Equally, there is not a free-for-all. As I have spoken about before, the principle that we operate under is the market economy investor principle, which is required by the state aid rules. That means that we have to judge whether any taxpayer investment, at whatever level it ends up being, can generate a long-term return.
The discipline and restraint on Government comes from the fact that, if we ever get into a position where we think that we cannot generate a return, we will have to look at the investment again. It is not a case of there being only so much funding; it is a question of whether we can generate a return on the investment that we are making, at whatever level it rests. That is what we have to continue to assess.
I suppose I am seeking your reassurance that we are nowhere near that at the moment.
We could not be doing what we are doing if we did not think that we could generate a return, because we would not then meet the requirements that the state aid regulations set out.
We can move on to corporate governance. Mary Fee has a small question.
I will be brief.
Cabinet secretary, in your opening remarks, you answered many of the questions that I was going to ask you about corporate governance. Your explanation of the set-up of the boards and their operation—including the fact that the boards would operate at arm’s length from the Government and that the holding company chair would be part of the stakeholder group—was all very helpful.
Given that there is public funding for the airport, I am keen to hear what role the Scottish ministers will play in the development and management of the airport. Secondly, will there be a review of the boards’ operation? If so, who will do that and how will it be done?
Notwithstanding everything that I have said about the management team’s operational independence, the need to ensure that ministers, on behalf of the Parliament and taxpayers, have an oversight of the airport’s strategic direction, so that we can ensure that we are satisfying the requirements that we must satisfy, is the reason for putting in place the two-tier board.
A company normally has one board, but it would not be appropriate to have ministers or Transport Scotland officials in an operational board of the airport, trying to second-guess operational decisions. That is why we opted to have a strategic board, in which ministers’ interests will be represented, through Transport Scotland. That will give us a proper strategic overview of where the airport is going, without our interfering with day-to-day operational decisions.
The chair, whose identity I announced today, will chair both boards, which gives the structure overall coherence.
Are there plans to review how things operate?
Sorry, you asked me that second question. We will keep things under on-going review. At a much earlier stage I indicated that our preference was to look at having an outside operating company come in to run the airport. In the course of deliberations and discussions we decided that that was probably not the right thing to do, because in effect we would have had a fixed-price contract and we would not necessarily have been able to incentivise the management team to do what we needed it to do. We will obviously want to keep the situation under review.
Over time, as we look at the airport’s performance, the performance and structure of the management team and the governance arrangements will have to come into the equation. We will have to consider whether we are getting it right or need to do different things. Ultimately, ministers are responsible to the Parliament for the use of taxpayers’ funds, so we will always have to answer the Parliament’s questions about whether we are taking the right decisions on the strategic framework. As time passes, the airport’s performance will tell us whether we are getting things right or need to do things differently.
Yes, and Audit Scotland will publish a report in February.
Of course. Audit Scotland is currently undertaking a report into the acquisition of the airport. As with any issue that involves public funds, Audit Scotland will have an on-going role in reporting to the Parliament and the public.
Thank you.
If no one else has questions, this is a good point on which to end. I thank the cabinet secretary and her officials for coming. I am conscious that this is your last appearance, cabinet secretary—
In this capacity.
Yes, in your capacity as Cabinet Secretary for Infrastructure, Investment and Cities. Thank you for always being so honest, open, transparent and helpful in your answers. I am sure that all committee members join me in wishing you all the best as you go on to greater things.
Thank you. I thank the committee, too. It has been a pleasure to work with you, and we have always had a constructive relationship, which I hope will continue—albeit in another capacity.
That ends the public part of the meeting.
12:53 Meeting continued in private until 12:57.Previous
Draft Budget Scrutiny 2015-16