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Chamber and committees

Meeting date: Thursday, February 22, 2018

Meeting of the Parliament 22 February 2018

Agenda: General Question Time, First Minister’s Question Time, Scottish Stone Group, Prestwick Airport, Population Needs and Migration Policy, Financial Guidance and Claims Bill, Decision Time


Contents


Prestwick Airport

The Presiding Officer (Ken Macintosh)

Good afternoon. The next item of business is a statement by the cabinet secretary, Keith Brown, on Prestwick airport. Mr Brown will take questions at the end of his statement, and I encourage anyone who wishes to ask a question to press their request-to-speak button now.

14:30  

The Cabinet Secretary for Economy, Jobs and Fair Work (Keith Brown)

I am pleased to have this opportunity to provide an update on Glasgow Prestwick airport.

Members will, of course, recall the circumstances that led to the Scottish Government buying the airport at the end of 2013. The previous owners were ready to close it down and walk away. In our view, that would have delivered a devastating blow to the local economy, and our decision to buy Prestwick was taken in the knowledge that, with time, perseverance and innovative thinking, Prestwick could be a great success. Moreover, according to various estimates, up to 300 direct and nearly 3,000 indirect jobs were hanging on the airport’s future.

Since 2013, we have been clear that the business must operate at arm’s length from the Scottish Government and ministers. Appropriate governance arrangements are in place under which the chief executive officer and his team, overseen by the operating company board, are responsible for progressing and agreeing specific commercial deals. There is no role for ministers in specific commercial discussions, and they do not sanction specific deals or agreements between the business and any of its customers. However, as the sole shareholder, ministers are supportive of the business’s overall strategic direction.

A five-year strategic plan for 2017 to 2022, which was published by the airport in April 2017 and is available on its website, sets out how the team will grow all aspects of the business and seek out new revenue streams. I expect Prestwick’s senior management team to actively seek out all potential business opportunities in order to maximise the use of the airport’s assets, reduce its reliance on loan funding and, ultimately, return it to the private sector. As the strategic plan sets out, the efforts include growing passenger numbers; developing freight handling; enhancing maintenance, repair and overhaul facilities; increasing traffic through fixed-base operations; raising income from property rental; and progressing the airport’s spaceport aspirations. Winning that business, especially in relation to passenger numbers, is not easy in a highly competitive aviation market, but the airport team continues to build Prestwick’s reputation and the brand. It is also continuing to build relationships with customers and potential customers to secure the new business needed for success.

I think that we are all aware that Prestwick is not a typical airport. Success is not predicated on passenger traffic or any one business area alone, and specialist operations are an essential part of its wider offering. One such opportunity that is being progressed with energy and great enthusiasm is a proposal to offer spaceport facilities. Prestwick will be very well placed to become the United Kingdom’s first spaceport for horizontal launch once the UK Government has put in place the required regulatory framework. Indeed, not only Prestwick but Scotland itself will stand to benefit from having a world-class facility on our own doorstep to launch Scottish-built satellites into space, and we will provide support to any area of Scotland looking to benefit from that.

Prestwick is also renowned for its freight operation, with the ability to accommodate heavy, awkward and outsized loads. Although handling dedicated freighters is a highly competitive market, the airport will continue to develop its business in that area. The cargo team has a great can-do attitude, putting the customer first and working in a flexible way that enhances the reputation of the business. Moreover, Prestwick is a prime contender as the Scottish logistics hub for the expansion of Heathrow airport to support the prefabrication and consolidation of components. That is another specialist operation that fits well with Prestwick’s wider offering.

Recently, the airport has seen significant improvement from handling aircraft though its fixed-base operations. It is a highly competitive environment, and airports in Ireland and Northern Ireland compete with Scotland to handle military and private flights that require fuel stops while transiting UK airspace. Although military movements in 2016-17 were down compared with 2013-14, when the Scottish Government took over the ownership of Prestwick—indeed, they were just over a third of the number of military movements in 2000—fixed-base operations continue to be an important part of Prestwick airport’s offering and form part of the strategic plan.

There is a great deal of interest in the handling of military flights and a desire for more information from some members. The chief executive of Transport Scotland and I have suggested recently to the Rural Economy and Connectivity Committee and the Public Audit and Post-legislative Scrutiny Committee that members should visit Prestwick to find out more about the airport’s operations and plans for the future. I repeat that offer today. The senior team at the airport, which operates at arm’s length from Government, will be happy to discuss those matters in an open and transparent way, although they must, of course, respect the need to avoid providing information that would be damaging to Prestwick’s commercial interests or would give a competitive advantage to other airports.

On that point, I have reviewed the information that we have not been able to release in response to a large number of freedom of information requests. I am confident that the information that has been redacted is commercially confidential, but if the party representatives in the chamber today want to visit and speak to the operations company, I am happy to ask it to facilitate that and to provide as much information as possible.

The company’s annual report, which was published in December, shows that the airport is moving in the right direction. In the previous financial year, passenger numbers were up 8 per cent, aircraft movements were also up 8 per cent, turnover increased by £2.1 million to £13.6 million and, at the same time, operating losses decreased from £8.7 million to £7.8 million.

There is a great deal of support for Prestwick airport and a desire to see it succeed. It benefits from a dedicated and passionate workforce; from being flexible, responsive and available 24/7; and from a supportive local council and supportive local MPs and MSPs.

We have always acknowledged that there is no quick fix, but I am certain that Prestwick can have a positive future and make an even greater contribution to the Ayrshire economy. Although there is still much progress to be made, the business is definitely showing signs of improvement, and the team, with a renewed sense of purpose and ambition, will continue to pursue every opportunity to grow.

The Presiding Officer

Thank you, cabinet secretary. As I am sure that you will appreciate, there is quite a lot of interest from members who want to ask questions.

Jamie Greene (West Scotland) (Con)

I thank the cabinet secretary for updating Parliament on the progress that Prestwick is making. As a member of the Rural Economy and Connectivity Committee, I am happy to take up the offer to visit Prestwick and meet the new senior management team for an update. I hope to do that as soon as I can.

There is no doubt about Prestwick airport’s importance to Ayrshire’s economy, but there is no denying that the airport is still making substantial and significant losses. To date, it has accumulated more than £40 million of taxpayers’ investment. What key performance indicators is the management team at Prestwick airport working towards with regard to turning around the fortunes of the airport?

Will the cabinet secretary give a further indication of when we might expect the airport to be returned to the private sector? I have been a member of this Parliament for two years and we have asked that question a number of times. The answer tends to be the same, which is that the airport will be sold back to the private sector when it is ready for that to happen and when there is a buyer who is ready to pay. How many more years of continuous public investment will there be before the Government comes to a decision that the time is right to hand the airport back to the private sector? It is only right that, on behalf of taxpayers, the Parliament asks such questions of the Government.

Keith Brown

I have no problem with such questions being asked. Jamie Greene and other members have asked those questions and, each time, we have said that we cannot say when we will get the airport back into the private sector. We also said that when we took ownership of the airport—we said that it would be a long-term prospectus for us to achieve that. Obviously, the airport has to become an attractive proposition for the private sector.

Jamie Greene quite rightly said that there have been contributions of £40 million up to the end of March 2018. I am not sure how long he has been familiar with the airport, but if he was aware of its condition when it was bought by the Scottish Government, he would know that there was a great deal of work to be done, as investment in the airport at the required level had not been made for a number of years. By and large, that is what that money has gone towards.

The issue of the KPIs that the airport management team is working to is perhaps a good basis for the discussion that Jamie Greene can have with people at the operations company when he meets them. We have seen the annual report, which I mentioned in my statement, and we have said that the operations company has to concentrate on a wide-ranging portfolio of different potential business opportunities. Passenger traffic is an extremely competitive market and it is sometimes expensive to attract new business. That is why the operations company is focusing and concentrating on the fixed-base operations, on freight—which has been quite successful—and on transiting aircraft.

We cannot give a date for when we expect the airport to transfer back to the private sector, but we are talking to anybody who shows interest in that. Things are moving in the right direction, with the increase in turnover and the reduction in losses, but it will take time for us to achieve that.

Jackie Baillie (Dumbarton) (Lab)

Unlike at other Scottish airports, the trend at Prestwick is that passenger numbers and cargo numbers are going down—the only things that are going up are the number of military flights and the amount that taxpayers are having to pay, because the airport continues to lose money. The SNP Government has increased loan funding for Prestwick airport to £48 million, which is more than double the £21 million that ministers originally said would be needed to return the airport to profit, but it is still losing money. Scottish Enterprise has also provided at least £650,000 directly to Ryanair, which is the only passenger service left at the airport, and there are heavily subsidised landing charges. Is the cabinet secretary sure that that does not amount to state aid? Given the recent decision on Charleroi airport in Belgium by the European Court of Justice, has he taken legal advice on state aid or spoken to the European Commission about Prestwick?

To repeat an earlier question, four years on from buying the airport for £1, can the cabinet secretary tell us when the taxpayers’ £48 million will be repaid? Would he at least consider selling 50 per cent of the airport to start the process of returning it to the private sector?

Keith Brown

I will first correct Jackie Baillie: the number of military aircraft movements is not going up. As I mentioned, in 2000—when I think Jackie Baillie was a minister—there were nearly 9,000 military aircraft movements and the figure is now just over 3,500, so it is substantially down from 2000 and it has come down over the past couple of years.

We were clear that there has to be a long-term engagement. At the time, I thought that we had support from the Labour Party for trying to save the jobs at the airport, but that support is not evident from the 32 parliamentary questions that Jackie Baillie has asked before this year or the eight more this year, the endless freedom of information requests and the letters to the airport and me. I am happy to answer all those questions and to be as open as we can be, but it is not obvious to me that we have the level of support that we thought we had from the Labour Party for saving those jobs.

On the point about state aid, of course we take advice. I cannot confirm or otherwise whether we have taken legal advice but, when we bought the airport, we of course checked the legal position of the airport and we always make sure that we are compliant with state-aid regulations.

This is the first time that I have heard the suggestion that we should sell a 50 per cent share in the airport, but I have to give the same response as I gave to Jamie Greene. For that to be viable, somebody would have to be interested in it. That is why the investment that we have made in the airport, as well as the improving situation in which we are seeing a reduction in losses and an increase in turnover, need to be given time to work through to make the airport an attractive proposition for the private sector.

The Presiding Officer

The parties have had their opening questions, so I ask the 10 remaining questioners to be short and sharp, and the cabinet secretary similarly so.

Kenneth Gibson (Cunninghame North) (SNP)

I welcome the cabinet secretary’s statement. Prestwick has always been in the shadow of Glasgow, and being named Glasgow Prestwick airport has not helped. Thousands of people supported a petition calling for Prestwick to be renamed Robert Burns international airport, and 18 members of the Scottish Parliament signed a motion to that effect that I submitted last month. Does the cabinet secretary agree that, as with John Lennon, George Best and Louis Armstrong airports, naming an airport after a renowned individual can boost its identity and thus help to attract investment, passengers and jobs?

Mike Rumbles (North East Scotland) (LD)

Call it the Kenny Gibson airport.

Keith Brown

I hear a suggestion from the side that we should call it the Kenneth Gibson airport. Who knows? The sky would truly be the limit if that were to happen.

The name of the airport is an issue for the airport itself—it would take such decisions. As Kenny Gibson well knows, that change has been canvassed over the years. The really important thing is that we have continued to invest in the airport. The easy option was to walk away and leave 300 people without jobs, with a huge impact on the economy, and it seems to be implicit in some of the questions that we should have done that. I know from Kenneth Gibson’s question now and at general question time earlier that he is very concerned about the health of the local economy, and that perhaps underlies the suggestion about renaming the airport. As I said, that decision would be taken by the airport. The member might want to write to the management team—the operations board of the airport—or even to take up the offer that I have made and visit them to have that discussion with them.

John Scott (Ayr) (Con)

I, too, thank the cabinet secretary for providing an advance copy of his statement and for the positive tone of it. I have been and remain supportive of the Government’s action thus far and I welcome its support for a spaceport, unlike Jackie Baillie and the Labour Party.

However, I also note the management team’s difficulty in attracting more air passenger traffic to Prestwick. I wonder whether a change of emphasis in the development of the airport is required to create jobs for Ayrshire. I know of a company that is keen to expand its maintenance, repair and overhaul facilities and to create training capabilities for engineers, but more hangar space would be required in order to deliver those and other new opportunities and more jobs in the sector. How supportive can Scottish Enterprise, the management team and the cabinet secretary be about the building of new hangar space at Prestwick airport, where an unmet demand for hangar space exists?

Keith Brown

I thank John Scott for his constructive suggestion. He will know as well as I do that we have seen moves from the airport in that direction, particularly from Chevron, the company that opened an impressive maintenance, repair and overhaul facility on the airfield in 2017. Even before it had taken ownership of the hangar, that company, which comes from the north of England, was able to guarantee that it could fill it right away, so demand is there for such facilities. The company’s facility has been extremely successful and, as the member has said, it provides vital revenue for the airport.

I have already mentioned the annual plan. Given Chevron’s success, the airport operations company is aware of those opportunities. We expect it to take forward such matters. We do not intervene in commercial decisions and discussions, but if Scottish Enterprise has a role to play, we can make sure that that happens. However, if more can be done—whether in terms of hangar space, other fixed-base operations or freight—we want to encourage that to happen.

Willie Coffey (Kilmarnock and Irvine Valley) (SNP)

It is no wonder that there are no Labour MSPs left in Ayrshire, given the level of support coming from the Labour Party today.

Does the cabinet secretary agree that Prestwick airport has huge potential for development? Does he agree that it is important that the airport management team are able to pursue viable opportunities that allow the airport to fulfil that potential—including for a spaceport, because Prestwick is surely the stand-out location in that regard?

Keith Brown

Willie Coffey is exactly right to say that the airport has huge potential. The point has previously been made about the competitive environment in Scotland, as Glasgow, Edinburgh and Aberdeen are doing exceptionally well in terms of passenger traffic.

As I have tried to set out, our different airports can often offer different things. There are huge facilities at Prestwick; there are unique facilities at Prestwick. It has a track record of reliability for weather, which most of us will have known about for many years. As I say, the airport has huge potential. The management team should be as inventive and innovative as possible in looking for new business, and we should be supportive of that endeavour.

I have talked about the importance of the people who work at the airport, whose livelihoods, and those of their families, depend on the work there and on the work of those companies associated with the airport. It is vital that we not only keep, but grow the airport, and that is where our efforts and those of the management team have been directed.

Ross Greer (West Scotland) (Green)

In response to concerns about US military operations at Prestwick, the Scottish Government has suggested that no one should be surprised about that, given that it has gone on since the time of Elvis Presley’s visit. However, the difference is that the airport was not owned by the Scottish public through the Government until recently. Despite what the cabinet secretary said about Prestwick airport’s arm’s-length relationship with the Government, he told a committee that he had been talking to the airport about specific commercial opportunities. Furthermore, the First Minister told the Parliament earlier this month that, if it was not happy with what the airport was doing, the Government would ask serious questions.

Given that we know that front-line US military operations are operating out of the airport and given the First Minister’s comments, will the cabinet secretary confirm whether the Scottish National Party Scottish Government is happy to support US military operations in Iraq, Syria and elsewhere using Scottish public property?

Keith Brown

First of all, it is not just the case that this activity goes back to the time of Elvis Presley coming on a military flight from Germany en route back to the US; the same planning framework has applied for decades at Prestwick. As I have said to Jackie Baillie, it is not the case that there has been an increase in military movements. In 2000, there were about 9,000 military aircraft movements; currently, there are about 3,600.

Any question about questionable military activities in airspace is completely reserved to the UK Government, whether that be about aerospace, defence or security. Such aircraft movements are a legitimate part of the business of the airport, which the airport has sought.

I accept that the member has a concern about the issue, so I repeat the offer that I made in my opening statement—I made the same offer to the Public Audit and Post-legislative Scrutiny Committee, as did the chief executive of Transport Scotland. If he wants to, he can visit the airport and ask the management team specifically what they are able to say, within the limits of commercial confidentiality, about the military activity that is going on—I make that plea to the management team as well. However, that activity is a vital part of what the airport does. It has done it for decades and it will continue to do it in future.

Mike Rumbles (North East Scotland) (LD)

Last year, when its management team appeared before the Rural Economy and Connectivity Committee, we heard that Prestwick airport was not viable without Ryanair, that passenger numbers and movements had fallen and that freight handling had plummeted. The management team told us that they would be able to pay the £40 million loan back to the taxpayer by 2032. With Prestwick still losing £8 million every year, does the cabinet secretary really believe that that is an achievable date by which to return taxpayers’ money?

Keith Brown

Not only do I believe that that is an achievable date, I think that it is perfectly possible that that can be done earlier. However, I reiterate what I have said, and what the First Minister and others have said since we took over the airport, which is that the money is a long-term investment by the Scottish Government. The reason for that, as I have mentioned, is that the previous owners, Infratil, did not make the required investment. Anybody who has been to the airport will know that there has not been investment made in its physical infrastructure. However, such investment is necessary in order for it to gain new business.

Mike Rumbles is right, to the extent that there has been a reduction in passenger traffic—in particular, he mentioned Ryanair—but that was happening previously and has been exacerbated by the hiatus in ownership. The passenger side is perhaps the most competitive and difficult area that the airport area is involved in. The other parts of the business, however, are turning around. The loss was not quite £8 million; it was £7.8 million. However, we are seeing an increase in turnover and a reduction in losses.

I had hoped that the Liberal Democrats would not follow the path of the Labour Party with regard to Prestwick airport, and instead continue to support the airport. Of course they can ask questions, but I hope that they can continue at least to make it obvious to the people in Prestwick and Ayrshire that the Liberal Democrats are supportive of the support that is being provided by the Scottish Government for the future success of the airport.

Emma Harper (South Scotland) (SNP)

Does the cabinet secretary agree that Prestwick airport could be an important staging point for tourists to enter the region and explore the south-west of Scotland, including the coastal and inland route that I am working with local stakeholders to promote, and that that would benefit the south-west’s world-class food and drink industry?

Keith Brown

The kind of innovation that Emma Harper has shown in her question about getting the benefits of travel to the south-west is exactly what we want to see at the airport. Of course, what she says is true. I remember in the 1980s being on a flight from Canada that stopped at Prestwick, but we were not allowed to get off there and had to go down to London to get off.

There is no doubt that we have attractions in the south-west of Scotland and the west of Scotland more generally, and that we have seen a huge increase in tourism in Scotland. Just this week, the numbers increased to a record level. That situation must form part of the future of a successful Prestwick airport, with the sustainability of more tourist traffic coming to the area and enjoying the benefits of visiting Scotland.

Colin Smyth (South Scotland) (Lab)

It is important for the local economy that Prestwick airport’s performance be turned around. Investment in the A76, for example, might help to boost tourist numbers.

However, Prestwick airport cannot be turned around on the basis of military flights. In opposition, the Scottish National Party criticised the use of the airport for such flights, condemned military action by the USA and criticised Donald Trump. Is it not, therefore, a bit hypocritical for the cabinet secretary now to turn a blind eye and to stay silent, when he is fully aware of the extent to which Prestwick airport is being earmarked to take more United States Air Force military flights in the future, and when there are reports that his Transport Scotland officials are lobbying for Prestwick to do more business with the Trump Organization and the US Air Force? Can the cabinet secretary tell us specifically whether Prestwick airport has been used for either rendition flights or live missions to Syria by the US Air Force?

Keith Brown

First, Colin Smyth is wrong if he is suggesting that there has been an increase in military flights. I go back to the point that 9,000 military aircraft movements were made in 2000, and 3,600 movements were made in the year just past. It is as legitimate now as it has been over the decades that not just Prestwick, but virtually every airport in the UK, accommodates military flights and provides fuel for them. It is not easy to see in the comments that have been made by Colin Smyth and Jackie Baillie one iota of support for Prestwick airport, the employees who work there and the airport’s continued success in the future. Perhaps if they were to express support just once in a while, when asking legitimate questions, people in Prestwick might take some comfort from that.

The Presiding Officer

I am conscious that five more members wish to ask questions, but we just do not have enough time this afternoon.

Patrick Harvie (Glasgow) (Green)

On a point of order, Presiding Officer. I am afraid that the minister’s position is still directly contradictory, and our opportunity to question him has not given us a chance to resolve that. He tells us today that there is no role for ministers in specific commercial discussions, but he told us last year:

“In the past two or three weeks, I have been talking to management about specific commercial opportunities.”—[Official Report, Rural Economy and Connectivity Committee, 8 March 2017: c 15.]

What chance do our standing orders give us to require the minister to resolve that direct contradiction? A visit to the airport will not answer this: he must answer it.

The Presiding Officer

I appreciate Mr Harvie’s frustration and that of other members, because there is a lot of interest in asking questions. However, he will know, as a member of the Parliamentary Bureau, the restrictions on our time. He will be aware, for example, that we have already trimmed minutes off every single member’s time in the next debate, and are currently eating into the time that has been allocated for that debate on immigration, which is of importance to everybody.

I am aware of the level of interest, but it is up to Mr Harvie to raise the matter, as a member of the Parliamentary Bureau, or for any other member to raise it with their business manager, in order to pencil in other time. There are other opportunities and ways to ask questions of the minister—written questions, letters, raising the issue in committee, and so on. Mr Harvie is free to bring the matter back to the Parliamentary Bureau for discussion at a future date. However, we have no more time this afternoon.