Doncaster Sheffield Airport: Lease changes 'on hold' - as turnover rent sticking point revealed

While a series of changes to the lease have been agreed in principle, the issue of whether a ‘turnover rent’ clause applies to devolution funding due to support the project remains unresolved.

A new City of Doncaster Council (CDC) report says a deed of variation agreeing a series of other key changes to the lease “is currently on hold due to the current financial uncertainties, including the turnover considerations”.

South Yorkshire mayor Oliver Coppard and local council leaders voted through a £160m funding package for CDC to reopen DSA in September via a council-owned company called FlyDoncaster - but on the condition it would not be done until a number of changes were made to the 125-year lease between CDC and landowner Peel signed in March 2024.

A South Yorkshire Mayoral Combined Authority (SYMCA) report at the time said there was an ‘in-principle agreement’ in place with Peel - but The Yorkshire Post subsequently established the “agreement” only related to areas of discussions for potential amendments rather than actual changes themselves.

The Yorkshire Post revealed in January that the lease included a clause that 20 per cent of DSA's annual turnover above annual base rent payments would potentially be paid to Peel - including taxpayer-funded grants from local and national government.

Under the current lease, the turnover rent clause only applies to sums received by the council and not any third-party operator. However, the lease also prevents the council having any shareholding in the airport operator. At the moment, it has sole ownership of FlyDoncaster.

Officials have repeatedly attempted to downplay the turnover rent issue. But it has now been revealed that a sticking point for lease renegotiations is an attempt to ensure that money from Oliver Coppard's office is not deemed as turnover and also that the clause does not apply to FlyDoncaster.

A newly-published CDC report reveals that while agreements have been reached on other changes to the lease, discussions on this point are still "progressing". The report admitted the issue had been a "heavily debated point" but claimed discussions are progressing in a "positive and constructive manner".

The report states: “Schedule 5 of the Lease contains provisions relating to the turnover rent mechanism. The financial modelling assumes no turnover rent would be paid, and this is the basis which fed into the MCA board decision making in September 2025.

“To protect this position the MCA incorporated the following precedent funding condition ‘Turnover rent will not apply to any sub-lease to an operator controlled by CDC and confirmation that MCA funding to CDC will not be deemed as Turnover’.

“As part of developing the sublease to FlyDoncaster this matter has been a heavily debated point, in part to establish the legal interpretation and then to find a workable solution. At the point of report drafting these commercial discussions are progressing in a positive and constructive manner with SYMCA and the landowner.”

When asked about the issue in February, CDC chief executive Damian Allen said: “What we want to do is avoid any consequences of that in terms of any subsidy that comes in.

“If you are SYMCA, you are going to be very concerned about that because any grants that come through, you don’t want them being subject to turnover. The reality is the practicalities of that turnover rent clause aren’t going to happen.

“We’ve got to be in a position where we could be earning money off it first to get the uplift. Also if you are an operator, which is why we’ve gone down the wholly-owned commercial company route, you insulate yourself from the direct cost because it is a third party incurring those costs, not the council.”

Mr Allen said at the time he had “no regrets” over the lease deal – claiming the local authority faced a “binary choice” between agreeing to its terms or giving up on the airport reopening.

He said: “Any commercial organisation will press its commercial advantage. At that point in time, the commercial position was they were bound to want to put in more commercially-aggressive clauses. Every lease contains clauses for renegotiation. We knew at the time that the development would progress and we would have an opportunity to renegotiate. We are in a different place than we were then.”

In addition to potential taxpayer funding, the turnover rent clause also applies to 11 other revenue-generating areas, including income from airport operators, parking charges and landing fees. A project spokesperson has previously described the general arrangement as a “fair and equitable way of sharing profit going forward”.

In DSA’s last year of operation before Covid under Peel, it recorded turnover of £11.7m. Under the lease, base rent is currently £3.3m a year, rising to £5m in 2029 and becoming subject to inflation increases.

The wider report discusses the potential financial consequences of an attempt by opposition councillors to revoke £57m in planned borrowing for the project - money due to be used to frontload spending in advance of the £160m devolution funding being delivered in annual instalments.

Most of the funding is due to be released in instalments of around £5m a year but some elements could be released immediately should a deal be concluded.

The council report said that should a decision be made to cancel the planned borrowing and result in the reopening project being cancelled, it would result in costs of at least £48.6m for the council. The report said one possible mitigation could be “negotiation with the landlord for early surrender of the lease which may reduce lease and site management costs prior to 2031”.

A Peel Land spokesperson said: “We are aware of the report and will await the outcome of the relevant decisions in due course. We have no further comment at this stage.”

A SYMCA spokesperson said: “Positive progress has been made on a number of changes to the lease that SYMCA required as part of its conditions for the release of funding. Dialogue with the landowner on the remaining issues is ongoing. As these discussions are live, it would not be appropriate to comment further."

Mayor of Doncaster Ros Jones said this week: “The lease is very near complete but of course we need to get this funding through and guaranteed so we know where we are going.”

Passenger targets to be changed

Passenger and freight number targets which could trigger a break clause in the Doncaster Sheffield Airport lease in a decade are to be more than halved - with the clause for five years’ time removed entirely.

City of Doncaster Council has revealed an agreement has been made with landowner Peel to change minimum passenger and freight numbers continued in the original lease signed between the two parties in March 2024.

There had been concern about the ability for the reopened DSA to achieve the targets given some of them were above the most optimistic official estimates.

SYMCA said its investment may prove ‘abortive’ unless the terms were changed.

The lease, which was leaked to The Yorkshire Post in January, revealed that a break clause could have been triggered by Peel or the council in March 2031 if minimum figures of one million passengers a year and 13,000 tonnes of freight were not being hit.

A new council update says the 2031 clause has been removed entirely.

Meanwhile, a second break point in March 2036 put the minimum required figures at 2.3m passengers and at least 25,000 tonnes of freight. The numbers needed to be maintained to prevent break clauses being triggered in March 2039 and every five years thereafter.

But the 2036 figures are now due to be reduced to one million passengers and 13,000 tonnes of freight.

The new clauses set a target of 41,000 tonnes of freight by 2041 and in future years until 2056, while passenger numbers need to reach 1.4m by 2041 and eventually get to 2.3m by 2056.

‘High case’ official forecasts had previously said there would be 1.9m passengers by 2036 - 400,000 below the current break clause level.

South Yorkshire Mayoral Combined Authority has previously said the high case numbers need to be hit for the project to be affordable within its current funding envelope.

The new CDC report said “agreement has been reached” on the break clause changes - but the deed of variation remains “on hold” while the turnover rent issue remains outstanding.