"Concerned": Leeds Bradford Airport boss responds to £160m Doncaster Sheffield Airport reopening decision
Leeds Bradford Airport says it remains concerned about “unfair competition” after £160m of taxpayer funding was approved this week to reopen Doncaster Sheffield Airport under public ownership.
South Yorkshire’s political leaders have backed the release of £160m of devolution funding controlled by the office of South Yorkshire mayor Oliver Coppard for the project, in addition to £16m already provided by the mayor’s office.
Doncaster Council will now press ahead with plans to reopen DSA via a council-owned company called Fly Doncaster.
Leeds Bradford and other privately-run airports raised concerns about the plan earlier this year with the Government, at a point when it was intended £105m in loans would be provided to Fly Doncaster by the council with the low rates of interests equating to an effective grant of £89.7m.
A final report produced by the Government’s Subsidy Advice Unit was issued to Doncaster Council in January and made several non-binding recommendations for improvements to its plan demonstrating compliance with subsidy rules.
The need for clearer explanations on passenger growth forecasts, the impact on competitors and potential negative consequences from the subsidy were highlighted. It also called for further explanation as to why the proposed deal involves no payment of rent on the site for 10 years.
Mayor of Doncaster Ros Jones said at the time that the points raised in the SAU report “will be responded to as part of our ongoing planning”.
A report by Mr Coppard’s office recommending the release of the funding has highlighted a potential legal challenge around the planned subsidy as a “critical risk” to the DSA project.
When asked by The Yorkshire Post whether it is now considering a legal challenge, LBA provided a statement from chief executive Vincent Hodder which did not address the point directly.
Mr Hodder did reiterate the airport’s concerns about the subsidy and said it was “vital” that action is taken on areas highlighted for improvement.
He said: “Whilst we wholeheartedly support the sustainable growth of aviation in Yorkshire, and the reopening of DSA, we remained concerned about the introduction of distortive public subsidies creating unfair competition in our market.
“We previously submitted a comprehensive report to the CMA’s Subsidy Advice Unit which considered the distortive effects on competition such a use of public funds could have as well the viability and costs of reopening DSA considering its commercial failure in November 2022.
“We remain convinced there are potentially less market-distorting investments to be made that could deliver the same or greater levels of benefits for the region.
“In order to facilitate future regional growth in industry and avoid anti-competitive and detrimental effects, it’s vital that all the partners involved take action on the areas highlighted for improvement and engage with others to ensure sufficient safeguards are in place as to how these public funds are used.”
Speaking prior to Mr Hodder’s remarks, Mr Coppard said of the prospect of a legal challenge: “We are confident in our decision otherwise we wouldn’t have got this far. Other people have to take a view on their own position but we are confident in our position.”
Since the publication of the SAU report in January, the amount of public funding involved has increased and the business case for the project been altered with the projected economic benefit revised from £9 for every £1 spent to £2 for every £1 spent.
It is for Doncaster Council to determine whether or not to seek a new report from the SAU. Because the policy aims and recipients have not changed, it is not expected a new report will be required.
Doncaster councillors are due to decide on whether to go ahead with the release of funding at a meeting in November, with Reform and Tory councillors calling for “proper scrutiny”. Multiple documents relating to the reopening decision, including the full business plan, have not been made public.
Doncaster Council did not wish to comment in response to questions about Mr Hodder’s remarks and what steps have been taken to address the SAU findings. A spokesperson said Mayor Jones would be making a statement at a full council meeting next week.
The release of the devolution funding falls within the Mayoral Combined Authority’s powers to promote economic development and regeneration within its area.
Funding passed from Doncaster Council to the airport operator will constitute a subsidy and the council will be required to publish details of the figures within three months of a decision to grant money.
There will then be a further month for any interested party to apply to the Competition Appeal Tribunal (CAT) for a review of the subsidy.
The DSA reopening decision comes against the backdrop of an ongoing challenge to the CAT by the privately-owned Bristol Airport over plans by the Welsh government to provide a further £205m subsidy to Cardiff Airport.
It follows almost £180m being provided to Cardiff Airport by the Welsh government since it took over the operation in 2013.