City of Derry Airport has a “positive future” and despite the current economic difficulties, is continuing to “punch well above its weight,” according to Sharon O’Connor, Town Clerk and chief executive of Derry City Council, the airport’s owners.
Roy Devine,
Ms O’Connor was speaking after Roy Devine, chairperson of CODA (Operations) Ltd Board, airport director Damien Tierney, and Clive Coleman, contracts director at Regional and City Airports Management, provided the Council’s Environmental Services Committee with an update on the performance and “industry outlook” for the airport.
Yesterday’s meeting, held as part of normal shareholder communication between CODA (Operations) Ltd and the Council, heard the airport’s subvention had reduced annually by £1m and was told by Mr Devine that “sound” commercial and financial “building blocks” were being put in place to see it through the current economic environment to deliver an airport that was “fit for purpose.
Councillors were advised of the “very challenging” conditions in the aviation marketplace especially issues around Air Passenger Duty (APD), the economic downturn and current risk aversion by airline decision makers.
The committee was told all of these factors were affecting aviation across the UK regions but they were particularly detrimental in Northern Ireland because of the reliance here on air transport and proximity to another EU jurisdiction with a much better aviation taxation regime.
Despite these challenging market conditions, councillors were told City of Derry Airport had fared well in relation to other comparator airports across the UK regions.
Since 2007, comparative UK regional airports have had an average reduction in passenger numbers of 34% with some regional airports losing more than 50 % of their passengers.
Over the same period, City of Derry Airport experienced only had a 5% reduction.
When CODA (Operations) Ltd took over the operation of the airport in 2010 the annual revenue subvention was £3.1m and in each subsequent year the subvention was reduced by around £1m with annual subvention now running at around £2m per annum.
That is a cumulative saving of £3m over three years. And despite the very challenging business environment the airport has agreed a budget for 2014/15 which will see subvention retained at £2m per annum.
While Derry’ year as City of Culture was undoubtedly a major success for the city and region last year, the majority of events were targeted at audiences from the city, Northern Ireland and the Republic of Ireland, the airport saw some direct benefits especially during the largest events such as the All-Ireland Fleadh and the Radio One Big Weekend.
Corporate aviation, in particular, saw a significant increase.
However, councillors were told the main benefit of City of Culture lay in the raising of the profile of the city which was now seen as a “real destination” for short breaks and cultural events which would lead to long term benefits for the airport and the city.
Gross Value Added (GVA) – i.e. the contribution the airport makes to the economy through employment – showed that in 2012 the airport generated more than £14m into the regional economy with almost £7m of that benefitting the local economy of the city.
When “netted off” the annual cost of the airport, it showed that it makes a net contribution to local economy of more than £4.5m each year.
In an assessment of the “business outlook” for 2014/15, the committee heard that despite a reduction in the number of weekly flights the airport would continue to meet its budgetary target and subvention would be maintained at around £2m per annum.
This would involve “tailoring” operational hours to meet the revised schedule and continuing to lower the airport’s cost base.
Mr Devine said the discrepancy in aviation taxation between Northern Ireland and the Republic had to be addressed in order to provide a level playing field for the aviation market in Northern Ireland.
He added: “Despite very challenging market conditions this report clearly shows that the board and the management team are putting sound commercial and financial building blocks in place to enable the airport to navigate through the current economic environment and are delivering an airport that is fit for purpose and able to move back to growth as soon as the market conditions improve.”
Sharon O’Connor, Town Clerk and Chief Executive, said the annual reduction of the City of Derry Airport’s subvention by £1m was significant in helping to put the airport in a positive position for the future.
She added: “The airport is a hugely important regional asset which greatly helped us during our year as City of Culture 2013 to raise the profile of our city and attract new visitors to the region to attend large scale events such as the All Ireland Fleadh Cheoil na hEireann and the BBC Radio One Big Weekend.
“The city has now firmly placed itself on the map as a cultural destination and we are confident this will have long-term benefits for the city as a whole, including the airport.
“Derry City Council, as a key stakeholder, will continue to work in partnership with the airport to assist with putting in place strong foundations that will see a continued reduction in the annual subvention that will assist in developing this important regional asset well into the future.”
She concluded: “City of Derry Airport, despite the current economic difficulties, is continuing to punch well above its weight and we are very positive about the facility for the future.”
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