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Wednesday, February 15, 2006


Our transport minister, Nicol Stephen, has announced that the Executive are going to subsidise air tickets to people living in the Islands & Caithness by 40% although there will be no reduction for outsiders (ie tourists).

In 2004 I spoke at conference & later sent a copy to Mr Stephen saying
Currently we subsidise these airports by 2/3rds of their operating costs & have done so for years with no disapproval from the EU. The rest is raised from landing charges. Unfortunately traffic at these airports is so small that the landing charges per person are nonetheless prohibitive. I checked recently & found that a flight to Barra would cost £27 but it would cost £33 to land.

Much of the cost of these airports is because they have the same regulatory framework as larger airports. For example approximately 20% of running costs are for security. This, for example means £16.62 is spent per head on keeping bin Laden out of Tiree. Equally each airport is required to keep its own fire brigade. Firemen at Heathrow expect to go through their entire working lives without having to attend a fire – nonetheless when dealing with 30,000 people a day this is a necessary cost. I would argue that it is not when dealing with 5,000 people a year. There are other ways to save expense such as putting the management out to tender & putting runway maintenance in the lands of local authority roads depts. If we could reduce running expenses by 1/3rd these airports could be run with no landing charges at all

The Scottish Parliament has authority over this regulatory regime. The whole point about devolution is that from a nearer perspective it is possible to produce solutions which would not be apparent from London. This is a clear example & we should use it.

High landing charges are the main thing detering low cost airlines. In the example I gave earlier the total cost was £60. Were there to be no landing charges it would be £27. Were a no frills airline involved I expect it would roughly halve & were the number of passengers to skyrocket, as seems likely it could halve again.

One difference between the proposal & the current intention is that under the proposal costs would probably be reduced considerably further, at least if the effect of no-frills air was duplicated & that the reduction would apply to everybody thus having a real effect on the economy. The other is that, at roughly half of the subsidy already being made to Island airports the cost would be under £8 million whereas the current offer is costed at £11 million. The reason for the difference is that in my proposal the subsidy is applied at the earliestpossible point in the process, prior to landing charges, whereas this is applied at the end, ticket price, after all the middleman costs have gone through.

Why the less effective more expensive method was chosen I couldn't say.

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