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A Review of Air Services in the Highlands & Islands

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A Review of Air Services in the Highlands & Islands A Review of Air Services In the Highlands & Islands For HITRANS and ZetTrans By Mott MacDonald Ltd FINAL REPORT February 2010 Mott MacDonald House 8-10 Sydenham Road Croydon CR0 2EE UK www.mottmac.com Review of Air Services in the Highlands and Islands Issue and revision record Revision Date Originator Checker Approver Description 01 04.01.10 ACUC CJC LNP Draft Final Report 02 09.02.10 ACUC CJC LNP Final Report This document is issued for the party which commissioned We accept no responsibility for the consequences of this it and for specific purposes connected with the above- document being relied upon by any other party, or being captioned project only. It should not be relied upon by any used for any other purpose, or containing any error or other party or used for any other purpose. omission which is due to an error or omission in data supplied to us by other parties This document contains confidential information and proprietary intellectual property. It should not be shown to other parties without consent from us and from the party which commissioned it. February 2010 2 Final Report Review of Air Services in the Highlands and Islands Table of Contents A Executive Summary 5 B Introduction 12 C Objectives for Aviation in the Highlands and Islands 14 1 Introduction 14 2 The Government Economic Strategy (GES), November 2007 14 3 National Planning Framework Scotland 2 (NPF2), June 2009 17 4 Scotland’s National Transport Strategy (NTS), December 2006 20 5 HITRANS – Regional Transport Strategy for Highlands & Islands, March 2007 22 6 ZetTrans: Shetland Transport Strategy, April 2008 23 7 Highlands and Islands Enterprise – Operating Plan 2009/12 24 8 Proposed strategic outcomes 26 D Recent History 28 1 Airport throughput 28 2 Airports and airport opening hours 31 3 Airlines 32 4 Aircraft and utilisation rates 33 5 Scheduled routes operated 34 6 Air fares 39 7 Schedules on key routes 39 8 Route subsidies – PSOs, ADS, RDF, RET 41 9 The economic background 42 10 The environmental background 42 E Current Problems 43 1 Introduction 43 2 Aircraft problems 44 3 Airport problems 55 4 Airline problems 68 5 Routes, frequencies and capacity 70 6 Fares, rates and charges problems 73 7 Competing with ferries 79 F Options and Assessment 83 1 Introduction 83 2 Options that could require major capital investment – airports and aircraft 83 3 Increasing assistance to HIAL airports 83 4 Potential capital investment in Barra 84 5 Potential capital investment in Skye 87 6 Potential capital investment in minor airstrips 88 7 Public ownership of aircraft 92 8 Other financial assistance to airports, airlines and users 93 9 Financial assistance to airports 94 10 Financial assistance to airlines 99 11 Financial assistance to users – PSO routes 100 12 Financial assistance to users – ADS routes 103 13 Other non-financial assistance 105 G Summary of initial consultant recommendations 108 H Analysis of stakeholder comments on consultant recommendations 112 1 Introduction 112 2 Stakeholder comments and amended recommendations 112 J Recommendations assessed against Scottish Government objectives 126 1 Introduction 126 2 Key economic sectors by area 127 3 Categorisation of communities 129 4 Evaluation of recommendations 131 February 2010 3 Final Report Review of Air Services in the Highlands and Islands Appendices: 1 Terminal Passengers at all Airports in the Highlands and Islands 2000-2008 136 2 Terminal Passengers at all Airports in the Highlands and Islands 2008-2009 137 3 Air Freight (tonnes) at all Airports in the Highlands and Islands 2000-2008 138 4 Air Mail (tonnes) at all Airports in the Highlands and Islands 2000-2008 139 5 Air Transport Movements at all Airports in the Highlands and Islands 2000-08 140 6 Facilities and opening hours at the major airports of the region, 2009 141 7 Routes operated to, from and within the Highlands and Islands, September 09 144 8 Loganair and Eastern Airways aircraft utilisation rates 145 9 Scheduled domestic routes operated between 2000 and 2008 146 10 Air Fares on major routes to, from and within the Highlands and Islands 147 11 Contribution to Strategic Outcomes of each recommendation 148 February 2010 4 Final Report Review of Air Services in the Highlands and Islands A. Executive Summary HITRANS and ZetTrans, the two Regional Transport Partnerships covering the Highlands and Islands Region, requested a study to assist them in putting forward proposals for initiatives, policy priorities and capital expenditure on aviation for the next round of Scottish Government spending, covering the decade 2013 to 2022. The report would complement others covering alternative transport modes to enable the RTPs to seek to obtain maximum value overall from the limited funds expected to be made available for transport. The five objectives of the Review were: to study the needs for air services and associated infrastructure through to 2022 to provide input into the Scottish Government’s next spending review to see how changes since 2003 have met National and Regional Transport Strategies to review options for improving air service provision; and to recommend strategy changes, interventions and co-ordinated actions Having set out the background to the report in Chapter B, the study starts (in Chapter C) by examining the relevant National and Regional transport strategy documents in order to determine a list of agreed priorities, both for transport as a whole, and specifically for aviation. The main documents analysed were: The (Scottish) Government Economic Strategy, June 2007 (GES) The National Planning Framework Scotland 2, published in June 2009 Scotland’s National Transport Strategy, December 2006 HITRANS – Regional Transport Strategy for the Highlands and Islands, March 2007 ZetTrans: Shetland Transport Strategy, April 2008 Highlands and Islands Enterprise: Operating Plan 2009/12 From the GES, five strategic outcomes were determined: 1. Sustainable economic growth at national / regional level 2. Population and economic growth in the most challenged / disadvantaged communities 3. Reduced carbon emissions 4. Improved affordability of airports and air services to Government and users 5. A safe and secure air transport system Chapter D analyses the recent history of civil aviation in the region, looking at and analysing data for the period 2000 to 2008 for: airport passengers, cargo and movements February 2010 5 Final Report Review of Air Services in the Highlands and Islands airport facilities and opening hours airlines aircraft scheduled routes air fares, and a sample of schedules on key routes Generally, aviation in this region has fared reasonably well during the first decade of this century and no new problems have surfaced in this period. In addition, developments in revenue support for routes are summarised, while developments in the economy and in environmental concerns are also noted. Chapter E analyses the very broad range of problems and opportunities for civil aviation in the region, based on detailed background knowledge of the region, and supplemented by a range of bespoke questionnaires sent initially to 55 involved stakeholders. In addition, day-long consultations were held in each of the five local councils, at which the views of more than 100 residents, councillors and officials were carefully noted. Further questionnaires were distributed following those meetings. In all 17 completed questionnaires were received. Six main groups of problems are identified and analysed in detail, covering: aircraft, including new types and ownership options airports, including possible re-structuring of their management and organisation airlines, including the possibilities of introducing competition routes, frequencies and capacities, including possibilities for additional PSO routes fares, rates and charges, and competition from ferries Chapter F takes the most important of these problems, and discusses a range of options for solving them, coming to conclusions and making initial recommendations. The problems are grouped into three main categories: Those which could involve substantial capital expenditure Those which could involve substantial on-going revenue support Those for which other, non-financial, assistance could be undertaken by the Scottish Government to achieve better economic performance of the aviation industry and/or improved economic performance in the Highlands and Islands region For each major problem identified, a range of possible options was studied, including a ‘do-nothing’ scenario; and detailed recommendations made for each one by the consultants. Chapter G lists these initial recommendations by the consultants and each is scored for each of three major aspects - ‘importance’, ‘cost’ and ‘timescale’: February 2010 6 Final Report Review of Air Services in the Highlands and Islands For ‘importance’, recommendations rated ***** are considered ‘vital’ for the region by the consultants, while * refers to projects which would be ‘nice to have’ For ‘cost’, recommendations rated 5 would involve the greatest amount of financial support, while those rated 1 would require little if any financial support For ‘timescale’, recommendations rated A would be completed at the earliest possible time, while projects rated E might easily be deferred to the end of the period The recommendations are grouped according to the three categories of assistance as laid out in Chapter F, but are in no order of priority. Chapter H reports on the second stage of consultation, where the consultant’s initial recommendations outlined in G above were distributed to each of those who had been involved in the earlier part of the consultation. Each was asked to score the recommendations according to their own assessment of ‘importance’ and ‘timescale’, to make additional comments regarding the recommendations, and to suggest any other recommendations that they believed should be added to the list. Each was given access to Chapters B through to G of the draft report issued in October 2009, so as to be able to understand the logic behind each recommendation. Although the number of responses was limited, the quality of response was generally high.
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