Doncaster Sheffield Airport: Council promises to 'robustly defend' any legal challenge to £128m loan
Any legal challenge to the use of more than £100m in public money to reopen Doncaster Sheffield Airport will be "robustly defended", council bosses have said.
Doncaster Council intends to loan more than £128m to a newly-formed council-owned company called FlyDoncaster at low interest rates.
Other regional airports have previously expressed concerns about the subsidy plan while the office of South Yorkshire mayor Oliver Coppard has warned a legal challenge could lead to a “significant delay” to the reopening project.
A report was published in January by the Government’s Subsidy Advice Unit (SAU) at a point when the council’s plans was to lend £105m to FlyDoncaster at rates which meant the money would equate to an effective £89.7m grant. The SAU said both Leeds Bradford Airport and the Regional & City Airports, which owns airports in Exeter, Norwich and Bournemouth, had questioned the “proportionality” of the planned subsidy.
A new council report has revealed it is now planning to loan £128.3m to Fly Doncaster over a decade, with the precise terms yet to be finalised.
Should councillors vote in favour of the council’s funding plan later this month, the council has to publish details of its planned subsidy within three months, with interested parties then having a further month to decide whether to seek a legal review by the Competition Appeals Tribunal (CAT).
The council’s report said it has received legal advice from an experienced KC and external solicitors to “minimise the risks of a successful challenge in relation to subsidy”.
It added: “Further decision-making will be required prior to the making of any potential subsidy and any challenge received robustly defended.”
The council’s report highlighted that the rules on such grants are governed by the Subsidy Control Act 2023, recently introduced by the Government after Brexit and that there have only been “a limited number of challenges made under the new regime”.
The report added that the tribunal could potential quash the subsidy decision or prevent the council from making further such payments should it rule against the plan.
The overall cost to Doncaster Council of reopening the airport is now estimated at £193m, including an additional £57m of borrowing the council is seeking.
The majority of the money is due to come from devolution funding controlled by Mr Coppard’s office. It said in September that providing such funding falls within its powers to promote economic development and regeneration.
Earlier this month, former Don Valley MP Nick Fletcher warned using taxpayer money specifically to entice airlines to DSA would be likely to spark a legal challenge from rival airports.
Doncaster Council has already signed up to a 125-year lease for the airport land and it is intended this would be subleased to FlyDoncaster.
A consortium has said it is offering a £100m deal to the council as an alternative to the public funding plan. It is seeking to buy FlyDoncaster and take over the sublease and says one of the advantages of its offer would be to remove the risk of a potential legal challenge.
It 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.