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Dundee Airport 8 RTP/14/13 TAYSIDE AND CENTRAL SCOTLAND TRANSPORT PARTNERSHIP 17JUNE 2014 DUNDEE AIRPORT REPORT BY PROJECTS MANAGER This report outlines the content and recommendations of the Transport Scotland research study “Scoping Study into Potential Development Opportunities for Dundee Airport” and informs the Partnership of Tactran Officer participation in an associated Steering Group. 1 RECOMMENDATIONS 1.1 That the Partnership :- (i) notes and comments on the contents and recommendations of the Transport Scotland research study “Scoping Study into Potential Development Opportunities for Dundee Airport”, as outlined within this report; and (ii) notes Tactran Officer participation in the Steering Group and agrees to receive a further update at a future meeting. 2 BACKGROUND 2.1 Tactran’s Regional Transport Strategy (RTS) recognises the strategic and economic importance of direct regional air connections to key UK and onward international destinations from Dundee Airport and states that Tactran will seek to enhance the economic prosperity of the region by working with airport authorities and others to promote and improve flights and facilities at Dundee Airport. 2.2 Recognising the importance attached to Dundee Airport within the RTS, the Partnership has on a number of occasions allocated funding to promoting and maintaining air services. At its meeting on 14 December 2010 the Partnership agreed to allocate £50,000 as a contribution to maintaining air services between Dundee and London (Report RTP/10/42 refers). At its meeting on 11 September 2012 the Partnership endorsed the allocation of £5,000 as a contribution towards a marketing campaign aimed at promoting Dundee Airport and improving the viability of air services and connections that operate from the airport (Report RTP/12/22 refers). 2.3 In early December 2013 Transport Scotland published the report “Scoping Study into Potential Development Opportunities for Dundee Airport”. In late December 2013 CityJet announced it was withdrawing its London City service at end of March 2014. During February 2014 the Executive Committee approved a revised 2013/14 RTS Revenue Programme that included a £22,000 allocation as a contribution to subsidy requirements for an interim Dundee to London Stansted air service and a £6,000 allocation as a contribution to a marketing campaign to promote this service (Report RTP/14/01 refers). The interim service is in place while a more permanent Public Sector Obligation (PSO) air service to London is achieved by Summer 2014. 1 2.4 At its meeting on 11 March 2014 the Partnership noted the revised 2013/14 RTS Revenue Programme as approved by the Executive Committee during February 2014 (RTP/14/05 refers) and it was agreed that a substantive report on Dundee Airport based on Transport Scotland’s Scoping Study be submitted to the Partnership meeting on 17 June 2014. 3 DISCUSSION 3.1 Dundee Airport is situated on the south side of the city on the shore of the River Tay overlooking the Tay Rail Bridge. Dundee Airport first opened in the Riverside area in 1963 with a grass runway, which has been improved over the years to now provide a 1,400m tarmac runway. The Airport itself has had various owners; Dundee Corporation, Tayside Regional Council and Dundee City Council, until December 2007 when Dundee Airport Limited was established as a wholly owned subsidiary of Highland and Islands Airport Limited (HIAL) and HIAL is now responsible for its operation. HIAL is a public corporation owned by Scottish Ministers and while Dundee City Council retains ownership of the land, it has granted a long lease at peppercorn rent to HIAL for airport use. 3.2 The principal economic function of an airport is to provide connectivity that enables businesses in its catchment area to access domestic, European and wider global markets, suppliers and external expertise quickly and efficiently, whilst also enabling and encouraging inward investment. An airport serves the role of being an international gateway for the economies of the “city region” and has an important role in helping to optimise the competitiveness and wider benefits derived from established markets and new planned investment in its catchment area. 3.3 The Dundee city region has a number of mature markets associated with traditional economic sectors such as manufacturing, financial services (e.g. Alliance Trust, RBS, Aviva), public sector back office activity, Universities and tourism, and is seeking to establish itself in a number of new business sectors (e.g. life sciences, creative industries, digital media and renewable energy servicing) – all of which have above average propensity to fly. The investment being made in the £1 billion Waterfront project, including V&A at Dundee, as well as existing and expanding tourism markets such as golf tourism have potential to generate significant new visitor markets as well as providing new business opportunities. 3.4 However, the airport faces a number of challenges, both financial and operational. The airport has operated at a financial loss of over £2m per annum over recent years and had just under 30,000 passengers using the London City service in 2012. At the time of writing, only one scheduled service – to London Stansted – operates from Dundee Airport. The size of the existing site constrains future expansion of air services and the airport runway is not sufficiently long to accommodate larger aircraft used by low-cost budget airlines. The airport also has to contend with passenger “leakage” to other larger airports, principally Edinburgh, Glasgow and Aberdeen, which are over an hour’s drive from Dundee. 3.5 With the above in mind and given the uncertainties of maintaining Dundee Airport, Transport Scotland commissioned consultants to undertake a Scoping Study into Potential Development Opportunities for Dundee Airport. The study was published in December 2013 and a copy is available in the Members’ area of www.tactran.gov.uk. This report draws on and summarises the Transport Scotland commissioned Study. 2 Scoping Study into Potential Opportunities for Dundee Airport 3.6 The core objective of the Study was to identify a range of short to medium term measures aimed at securing a financially sustainable airport operation that delivers sustained improvements in air connectivity for Dundee, Angus, Perth & Kinross and North East Fife and a platform for both existing and new aviation related businesses to support employment generation in Dundee and beyond. 3.7 The Study focuses on identifying a range of measures to improve the airport’s short to medium term prospects, rather than to seek to set out options for long term growth. It is considered that until a stable business outlook, making much more intensive use of the airport’s existing infrastructure is achieved, examining a range of options for long term growth requiring substantial additional capital investment is speculative and could distract from the immediate task of securing a financially stable airport operation. 3.8 The scope of the Study was to consider the current operation/infrastructure; undertake stakeholder engagement; consider other regional airport initiatives/models; develop, scope and sift options. The Study report is structured around these requirements. 3.9 It should be noted that during the course of the Study the scheduled services to Birmingham and Belfast were discontinued and immediately following the Study being published CityJet announced it was withdrawing its London City service in March 2014. Subsequently, an interim service to London Stansted is now in operation pending a more permanent London service being provided under a Public Service Obligation (PSO) agreement. A PSO agreement allows the payment of a public subsidy to an airline for a designated service. Current operations/infrastructure 3.10 Over the years scheduled services have operated to a number of destinations, with London, Manchester, Birmingham and Belfast being the most significant. The most recent permanent service being operated by CityJet/Suckling (Loganair) offering two flights daily to London City Airport. 3.11 However, the charges at London City Airport have dramatically increased over recent years and are now approximately three times higher than at other London airports, such as Stansted, resulting in high passenger fares. Between 2000 and 2009 passenger numbers on the London City service varied between 45,000 and 70,000 before dropping off, with CAA figures for 2012 anticipated to be below 40,000 for the first time since the 1990’s. 3.12 In addition to scheduled London Flights, Ramsey Word Travel continues to offer summer charter flights to Jersey. 3.13 However, General Aviation (GA), rather than public scheduled flights are much the largest component of overall air traffic movements from the airport. This comprises: . Business Aviation, with European destinations being in easy reach from Dundee. Rotary Activity with helicopter traffic routinely accepted at Dundee, but with no commercial helicopters currently based there. 3 . Ancillary Activities, such as fixed wing medical flight for nearby Ninewells Hospital; training flights and Aero Club departures from the airport, many taking form of commercial pilot training. 3.14 Tayside Aviation, the flight training and aircraft service company located at the airport, delivers high quality flight training from private pilot license level through to full airline commercial pilot’s license, as well as military cadet training on behalf of RAF. It operates a fleet of 16 aircraft
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