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Wednesday, October 09, 2013

Prestwick Airport Purchase

       The Scottish government are purchasing Prestwick Airport, essentially because the current owner has had it up for sale for a year, it is losing £2 million a year and because they aren't carrying out routine maintenance, it is going downhill.

"The Scottish government has confirmed that it plans to take Glasgow Prestwick Airport into public ownership.

The step was confirmed in a statement by Deputy First Minister Nicola Sturgeon in the Scottish Parliament.

The airport, which was put up for sale last March by New Zealand-based owners Infratil, has been running annual losses of £2m.

Ryanair, which operates 27 routes from Prestwick, has welcomed the government takeover.

Ministers will now enter detailed negotiations with Infratil on the terms of sale.

Ms Sturgeon told MSPs some private investors had expressed an interest in the airport but it had become clear none was able to commit to buying Prestwick on a timescale that was acceptable to Infratil.

She said the Infratil board had been considering its options, one of which was to seek commercial discussions with a view to public sector ownership and the other being to close the airport."

    Unmentioned by anybody is how much we are going to pay for it. The local MP says it should be for nothing but the owner, a year ago, said they had a valuation "which now values Prestwick at about £14.3m and Kent at £7.6m" but clearly the market disagrees and with still declining sales and infrastructure I think the MP's assessment must be closer.

    In theory I should be in favour of letting the market work and having it close if that is what it says. After all Glasgow already has an airport and how many cities have more than one. On the other hand its failure seems to be largely because of the government caused economic collapse since 2008 plus, previous to that, government introducing all sorts of airport taxes to stop the common people flying.

"Prestwick Airport saw a drop of nearly 20% in passenger numbers in July 2011, compared with the same month last year.

The Ayrshire airport's owners said there were 37,800 fewer passengers during the crucial first month of the school summer holidays.

New Zealand-based Infratil said the July passenger numbers fell from 194,500 in 2010 to 156,700 last year.

In recent years, the number of passengers at Prestwick topped 230,000 during the month in both 2007 and 2008."

    So in theory the SNP should be enthusiastic for closing it.

    In practice there is good evidence that government investment in transport infrastructure is the best, perhaps the only, place where government investment in tangibles benefits society.

    On balance taking it over and maintaining it is probably worthwhile. However I do not think Nicola Sturgeon or the SNP are the sort of innovative entrepreneurial types likely to turn it round.

    So they should be willing to auction it off as quickly as possible to anybody willing to undertake to invest in it. That will lose the government money but less than they would by keeping funding it over the long term and more importantly is much more likely to turn it into a real success.

    A couple of other things I have previously suggested could help:

1 - The Scottish government have long had a proposal to build an automated link to Paisley station for £20 million. One advantage this has is that Paisley station is on the same line as Prestwick. Which means that the 2 could easily together operate as a hub.

2 - Back in 2001 I made a proposal at the LibDem conference that the government could take on 100% of the running costs of Highland and Island airports. The cost of this would not have been much more than the subsidy at the time and as it turned out, considerably less than a mire restricted and bureaucratic system that the LD minister ultimately put in place. The advantage of this is that it would have meant zero landing charges at these airports (landing charges per passenger being higher than Heathrow because there are fewer passengers). Thus costs fares would have been drastically reduced and usage massively increased. The natural mainland end of most of these flights would, assuming Paisley International Airport (ok Glasgow #1) is close to capacity, would be Prestwick.

     Not magic solutions but a help.

     However there must be serious local circumstances which we aren't being told about because though passenger numbers have fallen severely general UK passenger numbers have gone up 10% since 2008 in the UK - and by about 1/3rd worldwide. Though, to be fair most of the EU would be happy to reach 10%.

     Which suggests to me that the ultimate reason for the failure of Prestwick must not so much the relative success of the Luddites running Britain but the even more extreme anti-technology policies of the Scottish government and the SNP. Funny old world isn't it.

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