Exclusive:Doncaster Sheffield Airport: Council's controversial £105m plan for reopening site revealed

The authority has told The Yorkshire Post a private operator will then “work alongside the council” under the plan.

It is still hoped a previous timetable for reopening the airport in spring 2026 can be met.

A newly-published report by the Government’s Subsidy Advice Unit (SAU) said the subsidy is required “to enable a sufficiently attractive internal rate of return to be achieved to a private investor”.

The council intends to provide taxpayer-funded £105.2m low-interest loans to the FlyDoncaster company. The report states that the low rate of the loans equates to an effective grant to the new company of £89.7m.

It is intended there would be two loans – one of £60.6m for “start-up and other costs” repayable over 50 years and a further £44.6m for rent deferral paid back over 25 years.

The council argues that reopening the airport will be worth billions to the local economy, create over 4,000 direct jobs and be a catalyst for the regeneration of the surrounding area.

The SAU’s report is non-binding but has identified six areas for improvement in the council’s assessment of compliance with subsidy rules.

One of the points states: “The assessment should explain why the council chose to create a new special purpose vehicle to reopen and operate the airport, rather than other options, such as delivery by a private operator.”

Concerns were also raised about the need for clearer explanations on passenger growth forecasts, the impact on competitors and potential negative consequences from the subsidy. It also calls for further explanation as to why the proposed deal involves no payment of rent on the site for 10 years.

Details about the new council-owned company to operate the airport have not previously been publicised by the local authority.

At a South Yorkshire Mayoral Combined Authority meeting in November, a paper discussing reopening the airport did note “the potential need for public subsidy of c. £105m” but did not go into further detail about establishing a company. The same report gave December as the timeline for “conclusion of commercial negotiation with preferred bidder”.

But the new SAU report states: “The council and a potential private operator tried to secure external private investment to reduce the size of the subsidy, but these efforts were unsuccessful."

The report stated while two proposals by commercial operators had reached a final tender stage “neither was considered viable”; leading to the need for the subsidy.

The report also reveals that rival airport operators, including Leeds Bradford Airport, have raised concerns about the “proportionality” of the intended funding and questioned whether more public cash would be needed.

The SAU report said: "Leeds Bradford Airport submitted a report which said that achieving passenger volumes at or above previous levels seen by the airport would be difficult, and that the level of the proposed subsidy was unlikely to lead to a viable airport over the longer term.”

It added that Regional & City Airports, which operates flights from sites including Coventry and Norwich, said that “additional subsidy is likely to be required given the airport’s historical financial performance”.

A City of Doncaster Council spokesperson said: "The submission of the proposed subsidy to the Government’s Subsidy Advice Unit to support the reopening of the former Doncaster Sheffield Airport is another key milestone reached. The overall tone of the report is a positive one and acknowledges that the council has considered options for reopening the airport in Spring 2026 and why public funding is an appropriate mechanism to consider.

“We recognise that there are some points raised in the SAU report for further consideration which will be responded to as part of our ongoing planning. This will be subject to further reports by the council in due course.

"We have established a limited company, FlyDoncaster which is wholly owned by the council, to manage the airport which will partner with an airport operator after we finalise the required contractual and legal matters. We will announce further details of this arrangement in the near future.”