By Keith Aitken in Edinburgh | 24 February 2015
Audit Scotland has endorsed the Scottish Government’s emergency takeover of the troubled Prestwick Airport, but warned ministers that they urgently need a clear and robust business plan for the future of the Ayrshire facility.
The Scottish Government bought the airport for just £1 in November 2013 to prevent its closure. Passenger services at the airport, which once held Scotland’s long-haul monopoly, have dwindled steadily, though some 1,810 jobs remain, in an area of high unemployment, in fields like freight handling and engine repairs and overhauls.
Ministers have allocated £25.2m in loan finance up to March 2016, and have so far paid out £9m. Audit Scotland estimates that the eventual funding need could reach £39.6m by 2021/22, but puts the airport’s positive contribution to the Scottish economy at £61.6m.
In a report published today, Audit Scotland notes that the government bought the airport to protect jobs and safeguard what it considered to be a strategic infrastructure asset.
‘Its purchase process was reasonable, given the tight timescale,’ the report concludes, though it says that the six-week deadline prevented modelling and impact assessment of some key risks, including a pull-out by the airport’s one scheduled passenger carrier, Ryanair.
‘The purchase business plan showed a positive financial return for the Scottish Government’s investment, although its predictions for future passenger growth were optimistic,’ the report says. Audit Scotland has now recalculated this, using less optimistic assumptions, and says that the possibility remains of a positive return on investment.
But ministers should make sure that a ‘clear vision and strategy’ is developed, based on robust short-, medium- and long-term business and financial planning, accompanied by a full risk evaluation that includes loan repayment capabilities and an up-to-date exit strategy. It provides a checklist of factors against which future investment decisions should be measured.
Auditor General Caroline Gardner said: ‘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.’
