Prestwick Future Under Scrutiny

No timescale has been set out by the Scottish Government for returning Prestwick Airport back into private hands.

An Audit Scotland report has revealed that up to £40 million in public money will have been spent on the facility by 2022.

The airport was bought for £1 by ministers in 2013 due to falling passenger numbers.

Audit Scotland has concluded that the Scottish Government acted reasonably when buying the airport, given the tight timescale of six weeks in which it had to conclude the purchase. It established appropriate governance arrangements and identified the risks associated with the airport's ongoing commercial viability. 

However, the report highlights that the Scottish Government should have been clearer in some areas, including modelling the potential withdrawal of Ryanair and fully quantifying the economic benefits of the purchase. 

To January 2015, the Scottish Government has provided the airport with £9 million of loan funding, and is committed to a further £16.2 million to the end of March 2016, if required.

Caroline Gardner, Auditor General for Scotland, said: "Our report recognises that the purchase of Glasgow Prestwick Airport was carried out to a tight deadline and in uncommon circumstances. 

"The Scottish Government and Glasgow Prestwick Airport should now ensure that a clear strategy is put in place, which takes into account future development potential, and includes robust business and financial plans, full evaluation of potential risks, and a well-defined, regularly reviewed exit strategy."  

Cabinet Secretary for Infrastructure, Investment and Cities Keith Brown said: "Closure of Prestwick Airport would have been devastating for Ayrshire and the action taken by the Scottish Government has safeguarded 3200 jobs and secured a vital infrastructure asset that contributes more than £61million annually to the Scottish economy.

"Audit Scotland's report vindicates the action taken by the Scottish Government, it shows we made the right decision to step in and confirms that we followed the correct purchase process in a tight timescale, identifying and considering the risks before moving forward with the acquisition.

"We have been clear from the outset that our investment is on a commercial basis and will take the form of loan funding. This attracts a market rate of interest in line with state aid rules. The report confirms that the Scottish Government is highly likely to generate a return on this investment that is higher than the interest rate that we are currently charging the airport.

"We have never shied away from the fact that this is a long term investment. There is no quick fix to turn Prestwick Airport around, but there are real opportunities to improve in all areas of the business. It is a non-typical airport, where success is not predicated on passenger traffic or any one aspect alone. There are opportunities to capitalise on its other assets and related businesses, such as freight, maintenance repair and overhaul, fixed-base operations and property. The management team is working on a number of potential commercial opportunities at the moment which we hope will reach a positive conclusion. There is also the on-going process of the airport putting forward a bid for the UK Spaceport Programme, a game-changing prize we believe it’s in an excellent position to win.

"The service changes made by Ryanair are part of the normal revision process that airlines undertake to optimise their business. Ryanair has assured us of its continuing commitment to Glasgow Prestwick Airport and of its intention to actively consider growth options in the future. We look forward to working with them to make that happen.

"In respect to our future plans, the Audit Scotland report confirms that good governance arrangements are in place to monitor progress at the airport. The airport’s management team published their Strategic Vision document last year, outlining their plans and the development options to move the business forward. We have already given updates to Parliament through the Infrastructure and Capital Investment Committee and we will continue to do so as the business plan for the airport progresses.

"We are confident there is a place for Glasgow Prestwick Airport in the evolving and increasingly competitive Scottish aviation market, and are committed to making it the success we know it can be."

The Scottish Conservatives have urged the SNP to return the airport to private ownership as soon as possible.
 
Scottish Conservative transport spokesman Alex Johnstone said: "It's obvious to all that there is no long-term future in public ownership for Prestwick Airport.
 
"That's why we need to see a detailed plan from the Scottish Government on exactly how and when it plans to return it to private ownership.
 
"It's essential this is done at the earliest possible opportunity.
 
"The airport and all whose jobs depend on it will not benefit from a Scottish Government inflating the number of projected passengers.
 
"They need realism and a pragmatic approach which can hopefully lead to a bright and profitable future for the airport in private hands."
 
The Liberal Democrats also want the Scottish Government to explain why the costs of its investment in Prestwick Airport have soared

Jim Hume MSP said: "The cost of investing in Prestwick Airport to the taxpayer more than doubled but the SNP government kept that a secret. Meanwhile the forecast annual passenger growth rate has been nearly halved.
 
"Transparency from ministers over the business case is crucial to provide assurances about the airport's long term future. People will want to know why this long term cost to the taxpayer of £40m was covered up. We already know SNP ministers took their eye off the ball during their referendum campaign but this important information should have been fully disclosed.
 
"The future success of Prestwick airport is important to the local community, the workforce and to taxpayers, which is why the SNP’s plan must be correct. SNP ministers should heed Audit Scotland's calls and commit to regularly update parliament on this matter to ensure the highest possible level of public accountability."

Scottish Labour Infrastructure Spokesperson Mary Fee said: "The SNP's handling of Prestwick Airport has been a farce since day one. As the Minister in charge Nicola Sturgeon was repeatedly unable to answer the most basic financial questions about the airport and its future.
 
"Now we learn that the projected investment needed is nearly £40 million, but the SNP have never bothered to tell the Scottish Parliament or the Scottish people.
 
"The SNP Government in Edinburgh must explain when they knew this. The commissioned an independent expert to report on Prestwick last May. They kept the content of his report a secret.
 
"Scottish taxpayers have a right to know how their money is being invested, and workers in Ayrshire deserve full transparency about what is being done to secure the long term future of the airport which is vital to the west of Scotland economy.
 
"Scotland deserves better than this. The SNP Government need to come clean about what they knew about Prestwick."