Official Report 612KB pdf
Our next item of business is an update from the cabinet secretary on the progress of Prestwick airport following the Scottish Government’s acquisition of it last year.
I welcome again Nicola Sturgeon, Cabinet Secretary for Infrastructure, Investment and Cities. I also welcome from Transport Scotland Sharon Fairweather, director of finance, and John Nicholls, director of aviation, maritime, freight and canals.
Cabinet secretary, would you like to make any opening remarks?
I would, convener.
I appreciate the opportunity to be here to give the committee an update. I wrote to the committee on 31 January, since when there have been some further developments. This is a good opportunity to bring the committee up to date.
It is important to stress that this is a period of transition for the airport while we further develop the options for its long-term development and its intended return to profitability. Although I am able to give an interim report on progress, I will continue to keep the committee updated as things progress. It is obviously up to the committee whether it wants to invite me, but I suggest that it would be useful for me to come back to the committee in around three months’ time, by which time we will be able to give more detail on our intended way forward.
It is also worth remembering that if we had not acquired the airport it would have closed—the choice was that stark. We were not prepared to see that happen. We believed then—we still believe now—that the airport can have a positive future. The business case and business plan that we prepared to inform and underpin the decision to acquire the airport demonstrated that our ownership would be undertaken on a commercial basis and satisfied the market economy investor principle. In other words, we are making an investment in the airport but we expect to generate a long-term return on taxpayers’ money.
In my letter of 31 January, I indicated that we had provided Glasgow Prestwick airport with £3 million of working capital and that we would provide additional capital as and when that was appropriate. We have since provided an additional £2 million of working capital, some of which will be for operations in the next financial year. Approval has also been given to the carrying out of limited—at this stage—but, nevertheless, strategically important capital investment in the airport to upgrade the central security search area, which will allow passengers to move more quickly through the airport, and to upgrade the mezzanine level. Ayrshire Chamber of Commerce and Industry is going to lease part of that space when it is upgraded, which will ensure a commercial return on our investment. It will also make that part of the airport property a more attractive proposition for other commercial tenants that might use the space.
The other significant development since I wrote my letter—in which the matter was flagged up—is that, on 11 February, we appointed a senior adviser. Romain Py will do some work over a three-month period to inform the holding company board and ministers about the longer-term options for the future business development of the airport. He will be required to make recommendations on the strategic business development options for repositioning the airport, building on the commercial opportunities that were identified during the acquisition process. He will develop a structural plan as well, which will identify the options for ownership and longer-term management arrangements and will recommend the optimum operating structure that is required to take the airport forward.
I do not want to lay too much stress on what I am about to say. Nevertheless, it is important that I advise the committee that, in the 11 months to 6 February this year, we have seen a 4 per cent increase in passenger numbers, compared with the numbers in the 11 months up to February 2013, and a 3 per cent increase in freight volumes. Those increases are undoubtedly a reflection of economic recovery. There is a long way to go, but we are pleased to be able to report that positive progress.
The senior adviser will consider and develop options for how best to market the airport to attract interest from outside Scotland and from the wider investment community. That work will be absolutely crucial in enabling us to develop the stage 2 business plan by fleshing out the earlier work that we did for the acquisition, and it will enable us to set out the details of the plan for the next three to five years. As I indicated at the outset, when we get to that stage, in about three months or so, it will be appropriate for me to come back to the committee and go into more detail, on the basis of the work that Romain Py will have done to flesh out our medium to long-term plans for the airport.
I apologise for taking a wee bit of time to outline where we are, but I thought that it would be useful to give an update.
We stress that the airport is open for business as usual. As I have said, a couple of improvements to the airport have been authorised, very much to send the signal that we are starting the process—perhaps a long process—of turning the airport around and ensuring that the investment that is required to do that is made.
My final point is directed at our other airports. We will take care to ensure that any investment that we make has no impact on our team Scotland approach or on our on-going efforts to support all Scottish airports’ route development aspirations. It is important that we give the other airports the assurance that we will continue to operate in a neutral way when it comes to route development across Scotland.
I hope that that update is helpful. I am happy to answer any questions.
I will start. Can you explain why Scottish ministers considered it necessary to buy Prestwick airport? Were there no other buyers in the frame?
I set out some of that information in my statement to Parliament at the end of last year. Some private sector purchasers were interested, and the Scottish Government—along with Infratil, the then owners of the airport—worked closely behind the scenes with those potential purchasers and with the three Ayrshire councils to do everything possible to facilitate that option.
I was quite open in my statement to Parliament, as I will be today. Our preferred option was a private sector sale, but it became clear that it would not be possible to achieve such a sale in the timescale that Infratil had set out. To be fair, the company had been patient and the airport had been on the market for a considerable time, but a clear end point in the process was reached. We were faced with a pretty stark choice: we could step in to acquire the airport or it would close—there is no doubt in my mind that Infratil would have chosen to take that step.
We chose to acquire the airport to keep it open because of its strategic importance to the local, regional and national economies. It is worth repeating the figures in my statement to Parliament. The total gross value added that is associated with the airport is just short of £50 million in an Ayrshire context, and just over £60 million in a Scottish context. Between 300 and 400 jobs depend directly on the airport, and approximately 1,400 are indirectly dependent on it. When we add in the aerospace cluster around the airport—the cluster does not depend directly on the airport but there is no doubt that having an operational airport there is an advantage to it—we are talking about even greater numbers of jobs. We believe that it was important to secure the airport for those reasons.
Even given those reasons, however, it would not have made sense for the Scottish Government to acquire the airport unless we believed that it had a positive future and could be returned to profitability, and that—at some point in the future—it could go back into private sector ownership. For those reasons, we decided after careful consideration that acquisition was the appropriate move for us to make.
Given that no private sector operator was willing to take over the airport in the short term, do you sincerely believe that Scottish ministers can successfully operate the airport commercially and bring it into a position in which it may be returned to the private sector?
Yes, I do, and I say genuinely that I would not be sitting here saying so if I did not believe that to be the case. I am not suggesting that it will be easy, and I have taken great care to make it plain to people that the process will take a lot of time, effort and investment. We are in this potentially for the long haul, if that is not too unfortunate a pun given the subject matter.
As I pointed out in my first answer, a number of private sector organisations had an interest in acquiring the airport. Obviously, I cannot go into detail about the identity of any particular organisation, but one bid reached a very advanced stage and, with more time, might well have materialised into a private sector acquisition. However, it was not possible to complete the process within the timescale that Infratil set in the latter stages of the airport being on the market.
As part of the confirmatory due diligence process, we compiled a business plan that indicated that the business can produce a return on the investment that we will make. We acknowledge that the process will be challenging and will take a number of years, but—as I said in my opening remarks—we require to operate the airport on a commercial basis. The market economy investor principle means that we must make a judgment. We can make an investment if there is an expectation of return and we come to the conclusion that a reasonable private sector investor would have made the same judgment. Those tests are fulfilled and, despite all the challenges that I have identified, I believe that we can operate the airport on a commercial basis and that making a concerted effort to do so is a better alternative than simply allowing the airport to close.
Can you explain the governance arrangements for the airport and the role of Transport Scotland and ministers in its management?
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The airport’s senior management continues to have day-to-day responsibility for the business’s commercial operation. The management team reports to the board of Prestwick HoldCo Ltd, which was the holding company that we established for the purchase, and that company’s three board members are senior Transport Scotland officials, two of whom are with me this morning. I stress that this is an interim measure pending the outcome of the work of our senior adviser, who in addition to looking at the airport’s commercial positioning will advise us on what the best governance model will be. In the longer term, I expect that at the very least we will look to appoint board members with a commercial background.
As for ministerial roles, I have principal ministerial responsibility for this issue and oversee the whole picture with regard to the developing plans around Prestwick. When I visited the airport two weeks ago today, I talked to senior management and met on site the senior adviser, Romain Py. Like many committee members, I have used the airport as a passenger many times, but guided by the management team I was able to see the situation, consider the investment requirements and start to get some picture of how we might take things forward.
In short, there is close ministerial oversight but the management team is responsible for day-to-day operations and reports formally to the holding company, the membership board of which at this stage comprises Transport Scotland staff pending a longer-term arrangement.
So the management structure already duplicates what might be described as a private sector model. In other words, you have not created a structure that would be difficult to transfer back into the private sector.
Indeed. The management team is as it previously was, but, of course, that is all pending the recommendations that we get on the way forward. As I said in my statement to Parliament, we envisage bringing in at a later stage a private sector operator to run the airport. For a variety of reasons, that continues to be the preferred option but I would rather wait for some considered recommendations before deciding whether we do that to begin with or whether we wait for a period of time until we have started to turn the airport around. Once we get Romain Py’s recommendations, I will be able to talk more expansively on the matter, but it certainly remains a longer-term option. Nevertheless, you are right to suggest that as far as the governance arrangements and the model are concerned, we are operating like a private sector outfit.
I am pleased to hear about your ambition to bring in a private sector operator at some stage, but the next stage would be to return the airport itself to private ownership. Is that one of your objectives?
When I made the statement to Parliament, the committee convener questioned me on potential alternatives. In Wales, for example, Cardiff airport is owned by the Welsh Government, and the Government already owns a number of relatively small regional airports. I do not think that we should close our minds to potential future models that we might want for the airport, but my working assumption remains that we will seek to return it to the private sector. I have said that that is my preferred option, and I will not depart from that view this morning.
Of course, that will not happen in the short term; it will be possible only when the airport becomes a viable proposition for a private sector operator to take over. Once we get through this transition period, I might be able to sit before you and put a timescale on when that might be possible, but I can say that it will still be our aim at the appropriate time.
Can you tell us anything else about the conditions that would have to exist before the airport could be transferred back to the private sector?
I should say—indeed, I have said—that private sector operators were interested in the airport before the Government stepped in, and on the same basis that the Government acquired it. They wanted to take on a loss-making airport because they believed that they could turn it around. That turned out not to be possible on the timescales, but I do not rule out our getting to a point where a private sector operator is prepared to take on the airport on the same basis.
However, now that the Scottish Government owns the airport, we will be looking to return it to profitability. After all, we have to ensure that we get a return on the taxpayer investment that we are putting in, and we will therefore be looking to return the airport to the private sector when we have optimised the return to the taxpayer. It is not possible today to put specific timescales on that, but we are talking about a number of years. Once we have the senior adviser’s report, I may be able to go a little bit further on predicting what that timeframe might look like.
I want to flesh out how long it would take to return the airport to profitability and, following that, to private ownership. For how long is the Scottish Government prepared to run Prestwick airport as a loss-making operation? What might happen if the airport cannot be returned to profitability?
I am not sure that I can go much further in answering that than I did in my response to Alex Johnstone. It may be that, as we develop our transitionary work, I will be able to say more.
We do not want to run the airport as a loss-making operation any longer than we absolutely must. That is a statement of the blindingly obvious. We are very focused on what we need to do to return the operation to profitability as quickly as possible. Once we have the stage 2 business plan completed on the basis of Romain Py’s recommendations, we will be better able to make detailed judgments about when that might be.
As I mentioned, the aim of the improvement work that is under way is to make the operation more profitable. Central to the profitability of an airport are not only the passenger numbers and the freight volumes, but the attractiveness of the retail offering and the facility for passengers. It is also about how the land available is maximised. A lot of the land around Prestwick airport is underutilised or, in some respects, not utilised at all. All those things are in the mix to increase and maximise the airport’s revenue in order to return it to profitability. That is absolutely the objective. The return on our investment is a longer-term proposition.
Two weeks ago, when I visited the airport, I was asked that question when I spoke to staff. As I said then, I will not put a guillotine on the timing. We acquired the airport to save it for the long term. However, you will appreciate that we must undertake very detailed work before I can sit here and tell you that in three, four or five years, Prestwick airport would be back in a profitable position. We must first do the things that will enable me to say with confidence that in X number of years the airport will be a profitable enterprise again.
Reports have put the loss experienced by Prestwick airport in 2012-13 at £9.7 million. Will you comment on that figure? Will the projected loss for 2014-15 be on a similar level or will it reduce?
I need to double-check the figures to which you are referring. Where did you say that they came from?
The figures were reported in the press.
I do not want to comment on figures that I do not have in front of me. In my statement to Parliament—I have a copy of the Official Report but I will probably be unable to find the specific reference quickly enough—I think that I gave a figure of around £7 million as regards the airport’s losses. From memory, that figure is a mixture of capital and revenue, but that is the ballpark figure that we are talking about.
Our objective is to minimise that loss. I have given you figures today but I do not wish to overstate them. We are starting to see—not, I hasten to add, because of the Scottish Government’s acquisition; I am not claiming credit for this—a bit of recovery in passenger numbers and freight volumes. The work that I mentioned to refurbish the airport’s mezzanine level is about trying to attract tenants into the unused space in the airport and consideration is being given to how we make the retail offering around the airport more attractive. It may take us a period to return the airport to profitability but, as we travel on that journey, we are reducing the losses that it is making. As I said, our objective is to maximise the revenue and reduce the losses. We are working to ensure that we do that.
We will give you a breakdown of the number in the press that you were talking about, but part of it involves the write-down of the value of assets to the end of March 2013, before we acquired the business. It is not a true operating loss that was incurred.
You have outlined the costs to date—the £1.08 million for advice and due diligence and the £3 million and £2 million figures for working capital. Are those the entire costs to the taxpayer to date? Which budget line did they come from?
All the funding for that comes from Transport Scotland’s budget. The figures that you have quoted are the figures that were given in my letter of 31 January, which detailed the costs of due diligence around acquisition, which was £1.08 million, excluding VAT.
We purchased some due diligence from one of the private sector operators that had been looking to buy the airport, in order to cut down on the cost and time involved for the Scottish Government, so some of the cost is down to that.
The £3 million in working capital was what we had given the airport at the time that I wrote that letter. I updated that in my opening remarks to say that we have given a further £2 million, which will take the airport into the next financial year and help to support some of the early refurbishment work that I have talked about.
In the initial business plan, we had identified a total initial repositioning capital investment of £2.25 million, which is about modernising the terminal facilities and generally starting to make the airport a more attractive proposition. However, that expenditure is anticipated to be incurred not in this financial year but in the financial year that we are about to go into—2014-15. That is the extent of the Scottish Government’s investment to date.
Finally, do European state aid rules restrict Scottish Government investment in Prestwick airport? If so, can you outline any of those restrictions?
Yes, they do, and I have taken care to outline what those restrictions are, both in my statement to Parliament and in some of my correspondence with the committee. Again, I have alluded to some of that today.
We have to operate within European state aid rules, which means that we have to run the airport on a commercial basis. We are bound by the same restrictions but we also have the same opportunities as other public sector airport owners anywhere in the European Union.
I mentioned Cardiff airport, which was acquired by the Welsh Government. I am not saying that there are exact parallels with Prestwick—there are significant differences in the positions of Cardiff and Prestwick, not least Prestwick’s proximity to other major airports—but Cardiff airport has reported a 9 per cent increase in passenger numbers since the Welsh Government acquired it in March last year.
If the European Commission was looking at whether funding constituted state aid, it would look at whether, in similar circumstances—leaving aside all the social and regional policy sectoral considerations—a private sector operator having regard to the foreseeability of obtaining a return would take the same decisions and be granted the same funding. That is the market economy investor principle that I spoke about and it is the principle on which our acquisition and our running of the airport will be based. We need to do this on a commercial basis and in a way that will secure a return on taxpayers’ money. Those are the constraints within which we have to operate. We believe that we are operating within them, but we will continue to ensure that that is the case.
Cabinet secretary, you indicated in your opening remarks that you do not want to impact on other airport operators’ businesses. However, given that one way in which airports can attract additional airlines is by reducing landing fees, what assurances can you offer Edinburgh and Glasgow airports that Scottish Government ownership of Prestwick airport will not have an undue detrimental impact on the development of their business?
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I am very keen that we should give Glasgow and Edinburgh in particular—because of their geography and their proximity to Prestwick, particularly Glasgow—definite assurances. I have met representatives of Glasgow and Edinburgh airports since we acquired Prestwick and I intend to do so again once we have the recommendations from Romain Py.
In broad terms, we are determined to separate our involvement in operating Prestwick airport on a day-to-day basis—whatever that is going to be—from our team Scotland involvement whereby we as a Government look to provide, where we can, appropriate assistance to encourage airlines to develop routes in and out of Scotland. It is important that we separate those. Basically, we offer the support on an airport-neutral basis, and it is then for the airlines to decide whether they want to go to Glasgow, Edinburgh, Prestwick, Aberdeen or wherever. We will continue to do that on a neutral basis. There will be no special treatment for Prestwick airport when it comes to the support that we give through the team Scotland approach. We are taking care to ensure that in the way in which the Government operates, there is a clear separation of responsibility and no conflict of interest between those two separate functions.
I can understand the anxiety that Glasgow and Edinburgh airports have about the issue. That is why the onus is on us to go to great lengths to reassure them that, in our team Scotland capacity, we will continue to operate on an airport-neutral basis.
I thank the Deputy First Minister and the Scottish Government for riding to the rescue of Prestwick airport. As she rightly pointed out, the airport is a central feature of the local economy in Ayrshire, and it would have been a disaster if it had been allowed to fall out of economic use.
The Deputy First Minister spoke about the next financial year’s investment in the airport. Obviously, we are undertaking a makeover of the terminal and, thankfully, we have got rid of the “Pure dead brilliant” branding. We are sitting in the Burns room in the Parliament. Is there any chance of rebranding the airport as Robert Burns international? The Deputy First Minister, as an Ayrshire girl herself, will know that that has been a long-term ambition of local people.
This is probably the furthest that I have ever got into a discussion of Prestwick airport without that question being asked of me, so congratulations. [Laughter.]
As the member will know from his local knowledge, the “Pure dead brilliant” signage has gone. I was happy to see that when I visited a couple of weeks ago. On the rebranding, the further stages of our investment in, marketing of and positioning on the airport depend on the recommendations that come to us, and it is important that we do not pre-empt that detailed work, which we are doing for a good reason.
To put my cards on the table, I am a resident of and an MSP from the city of Glasgow, but I grew up in Ayrshire, so I am not unmoved by the representations on rebranding the airport as Robert Burns international. To be honest, I have heard different opinions on that. I hear the Ayrshire opinion that it would be the right thing to do because it would recognise the local importance of the airport. I have also heard the opposite opinion, which is that we need to market the airport to those outside Scotland and, although everybody across the world knows about Robert Burns, they might not necessarily know where in Scotland an airport called Robert Burns international is. There are differences of opinion on the name Glasgow Prestwick, but it clearly puts the airport in a geographical location and makes it easier for passengers or companies from outside Scotland to know where they are flying to. Those are the different opinions on that.
We have taken no decisions on the issue. It is right that we proceed carefully, as with every other decision on the future of the airport. Whatever my Ayrshire loyalties and sentiments, it is important that we do not take such decisions on the basis of sentiment. The decision has to be based on what we think gives the airport the best chance of growing its business and returning to profit. If that means calling it the Robert Burns international airport, and if we have evidence and recommendations that the name will help us to do that, that is fine. If, on the other hand, the view is that that might be a sentimental move that would make it harder to market the airport, we would have to listen to that. Therefore, at this stage, I am staying agnostic on where we might get to.
So you have not ruled that out.
We have not ruled it out.
Would a recommendation on the branding of the airport come through the second-stage business plan that you are currently working up?
That may well be something that Romain Py recommends. I will not commit him to making a recommendation. He is not Scottish and he may not want to go into the Ayrshire politics of recommending what the airport would be called. I am being slightly flippant, but I do not want to underestimate the importance of getting the branding of the airport right. That is absolutely vital, but we need to ensure that we think about the person who will potentially fly into Scotland and what would help them to recognise the identity and location of Prestwick airport. Those things require to be considered. Romain Py may well have something to say about that in his report.
You indicated that around £2.5 million is going into the airport in the next financial year to pay for the makeover of the terminal and other aspects of the mezzanine development to commercialise that particular part of the airport. Is that as much investment as you will make available? As you know, other investments are required. The airport has suffered from a lack of investment, particularly since 2008. I understand that a primary radar replacement is needed in the near future. When will you be in a position to make such decisions?
The £2.25 million that is mentioned in my letter relates to the assessment of the initial repositioning capital requirement. As I said, most of that would fall next year. Approval has already been given for the two capital investments that I spoke about to revamp the search area to help speed up the flow of passengers through the airport and the mezzanine. Other decisions about where we will prioritise capital investment will flow from the senior adviser’s report, which we expect in a couple of months’ time.
Adam Ingram has been assiduous in raising the radar system issue with me in his local capacity. All those things will have to be taken into account in the overall decisions.
We need a very clear sense of priority about what needs to be done. I visited the airport two weeks ago. Without putting too fine a point on it, you do not see many parts of the airport—from the railway station, which should be a big asset for the airport, through to the departure and retail facilities—about which you would not say, “That could do with some investment.” You look at all of it and think, “This really needs to be upgraded.”
We will not be able to do everything immediately, so it will be about prioritising the things that will give us the biggest bang for our buck. The two things that I have spoken about do not seem very significant when they are seen in isolation, but they will help us to bring more business into the airport. I know that there are thoughts about positioning the retail space in the airport to make it more attractive and make people more likely to buy things as they go through it. We need to be very focused on what will deliver the greatest return in the shortest space of time. In that sense, nothing is ruled out, but we need to be realistic.
On developing the business, Prestwick airport has, certainly in the past few years, been very dependent on one airline that flies planes out of it: Ryanair. What discussions have you had with Transport Scotland, TS Prestwick Holdco Ltd and Ryanair about their future intentions for the use of Prestwick?
Ryanair is important to Prestwick and I envisage that it will continue to be extremely important to the airport’s future. There was ministerial contact with Ryanair management before we took the decision to acquire the airport. Transport Scotland is due to meet Ryanair senior management early in April, and the intention is that I will have further ministerial contact with Ryanair after that.
Ryanair operates passenger services at the airport and, as you know, its maintenance, repair and overhaul facilities are at the airport, so it is important in both respects. The company will celebrate 20 years of services to Prestwick later this year and we will look to ensure that it remains there for many years to come. Its summer 2014 schedule offers a reduction in weekly services—there will be between 71 and 84 weekly services, compared with 95 in summer 2013. However, that is not specifically to do with conditions at Prestwick; it relates to a combination of factors, including a reduction in the overall aircraft fleet. Ryanair has indicated that once it starts to get new aircraft, probably in 2015, there will be opportunities to increase the number of flights at Prestwick.
I make it clear that Ryanair is and will continue to be important to the airport’s future. That said, it is in the airport’s interests to attract new passenger and cargo airlines. The management team continues to consider how to win new business. It will attend the routes Europe 2014 conference in Marseille next month, which is an important opportunity to make contact with airlines and encourage business. We want to try to diversify in the years to come.
I note from our briefing that after a big downturn in airport activity across the board in 2008, in recent years growth has returned to Glasgow and Edinburgh airports but not to Prestwick. That is the case in relation to not just passenger numbers but freight, which is an area in which Prestwick used to do well. Are there particular reasons for the decline?
The decline in recent years has been down to the general economic situation and, not unrelated to that, increasing competition in the aviation sector—that is the general position for airports. For Prestwick, we can add into the mix the fact that there has not been investment in the business for a time, so the facility has deteriorated and has been less attractive to operators, passengers and commercial enterprises that might want to do business in and around Prestwick. I think that that explains why Prestwick has been particularly hard hit.
As I said, in the period to February this year there was a slight increase in passenger numbers and freight volumes. That is a good thing, which I suspect reflects improved economic conditions. The position with regard to freight remains challenging, but Cargolux recently announced that it is increasing its Prestwick schedule from four to six flights a week, from this month. The extra flights will bring significant extra revenue.
It is too early for anything that we have done to have effect at Prestwick, but we are seeing signs of a general uplift, which is associated with economic recovery. The challenge for us is to ensure that there is investment in the airport and that things that have not happened over a number of years happen, to allow the airport to be more competitive.
Prestwick does not have services to the major UK hub airports in London, which would provide access to onward long-haul flights. Do you have ambitions for Prestwick to offer such services in future?
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The restoration of a London service for Prestwick would be very welcome. I cannot give you any guarantees on the achievement of that at the moment, but there is no doubt that it would be significant for the airport and would open up other possibilities. Obviously, we will continue to work with airlines and local stakeholders to attract new business, but we do that with all Scottish airports. That goes back to my point in response to Gordon MacDonald, which is that we are neutral on where in Scotland airlines decide to base themselves and develop routes from, and we must remain neutral on that.
The other point that I would make, which you have heard the Government and I make often in the past, is around air passenger duty. APD is a significant constraint on our airports; for example, it is applied on both sectors of a Prestwick to London flight. APD is particularly significant for low-budget airline offerings such as the significant Ryanair one at Prestwick. If we were to get into a position one way or another—I will not go into how that might happen at the moment—of being able to do something about the crippling effect of APD at our airports, it would help all our airports but be particularly helpful for Prestwick in this period.
With your permission, convener, I want to ask a couple of brief questions on behalf of my colleague Chic Brodie, who has a specific interest in and passion for the future of Prestwick airport, although I hesitate to go beyond that and describe him as pure dead brilliant—but I just have.
He would like some clarification on the timescales for the structural plan. When does the cabinet secretary expect to receive it and be in a position to publish it?
It is a matter of public record that we asked Romain Py to do his work within three months. He was appointed on 11 February, so we would now expect his report in just under two months. Like me, you will be aware that there is occasionally some slippage around these things, but I would not want that to be significant in any way. We want to get the report so that we can move on to the next stage of development of Prestwick airport as quickly as possible.
On when we will publish the plan, you will understand that there is a degree of commercial confidentiality around some of the plans underpinning the second-stage business plan. However, we will seek to be as open and transparent as possible around it, as you would expect us to be, given that Prestwick airport is a publicly owned facility at the moment. However, it is a publicly owned facility operating in a commercial environment, so we must all understand the constraints that will apply to the publication of business plans, et cetera.
Without pre-empting or prejudging the contents of the structural plan, are you or your officials in a position to give any kind of indication at this stage of where the balance of activity might be between maintenance, repair and overhaul, given that there is engineering expertise in Ayrshire and cargo/freight traffic and passenger traffic?
Given the work that we have commissioned and which is under way, it would be wrong of me to sit here and start to say where that balance lies. I will put it in layman’s terms for you: the balance of it should lie where we are best able to maximise the revenue and profits of the airport. We have asked an expert in the field to give us advice on how to best position the airport to do that.
One of the big advantages for the airport is the MRO presence there, which is Ryanair’s at the moment. However, there is a range of other things. Passenger and freight are core business for any airport, but as I said earlier the airport is not maximising its potential in its retail offering or its food and drink offering. There is masses of land around the airport that is not being utilised properly. We must take time to have proper oversight and consideration of all that. Ultimately, the plan will be about maximising the asset to maximise its revenue, reduce its losses and get it as quickly as possible into a profitable position.
Finally on behalf of Mr Brodie, are you able to clarify whether there are plans to sell off any part of the asset before a business plan is in place?
That is part of the business planning. Decisions may well be taken to dispose of some of the surplus land around the airport. I am certainly not ruling that out. However, we are not at the point yet of taking specific decisions around that. That will flow from the recommendations that we get in a couple of months’ time.
I will move on to my own question about the long-term viability and sustainability of Prestwick airport. I wrote to you on 13 February, on behalf of a constituent, Alan McKinney, who has for over 20 years harboured an ambition for Prestwick airport to play a role as a centre for disaster relief. At the moment, the budget that would be available to the Scottish Government through its external affairs strategy is fairly limited compared with what the Department for International Development would have available for humanitarian assistance and overseas aid. Nevertheless, Prestwick airport appears, at least on initial examination, to have a number of attractions as a hub and centre for disaster relief. For example, it is perfectly designed to accommodate large passenger and cargo planes; the runway can easily accommodate the type of aircraft that are used in relief operations; and the expertise, equipment and storage facilities that are available at Prestwick airport could provide relief efforts with the means to co-ordinate and deliver emergency aid within tight timescales.
Is there any way in which those ideas could be looked at as part of the development of the structural plan? They would require either a Scottish Government with a significant international aid budget or the involvement of the UK’s Department for International Development.
The short answer to your question is yes. We should look at all possible options for use of the airport. You have written to me and will receive a response fairly soon. Alan McKinney has also written to me directly. His idea certainly merits discussion and consideration, and I am happy to ensure that the senior adviser is aware of the proposal. For the reasons that you suggest, it may be a longer-term proposal rather than something that would feature heavily in our initial short-term plans for the airport. Nevertheless, it is worthy of consideration over the longer term.
As you say, the airport has a range of distinctive features, including two runways and particularly advantageous wind conditions. Those may make it attractive for a range of uses, but you have outlined why some of those attributes would potentially lend themselves to the kind of activity that you are talking about. I cannot say that it would definitely be feasible to factor that into our thinking for Prestwick airport, but I can give you an undertaking that I will ensure that the adviser and the local management team are aware of the proposition.
I very much welcome that commitment, Deputy First Minister. I encourage you, in pursuing the idea and in exploring to the maximum the possibilities that may exist, to open discussions with officials at the Department for International Development on the subject. There may also be a European dimension given that, at the moment, there is no purposely designed permanent hub for countries in Europe to use to efficiently organise and co-ordinate disaster relief.
I am happy to give consideration to all of that.
As members have no further questions, I thank the cabinet secretary and her officials for their evidence. We look forward to receiving further evidence as it becomes available, as you said, in about three months or so.
I suspend the meeting briefly to allow our witnesses to leave before we consider our final item.
12:23 Meeting suspended.