Reopened Doncaster Sheffield Airport 'will need more public cash after £90m grant', Government warned
A reopened Doncaster Sheffield Airport will run at a loss “for the foreseeable future” and more public money beyond an initial £90m grant will be required to keep it open, the Government has been warned.
Doncaster Council intends to use its share of devolution funding to provide £105m in loans to a council-owned company to help reopen the airport next year, with their low levels of interest equating to an effective public grant of £89.7m.
It is hoped the reopening of the airport next year will be the springboard for wider regeneration work around the site involving new homes and employment land which it has been argued could create 5,000 jobs and be worth £9 to Doncaster for every £1 spent.
Earlier this week, Chancellor Rachel Reeves said the Government will support local efforts to reopen the airport, which shut in 2022.
But The Yorkshire Post has seen a report submitted to the Government’s Subsidy Advice Unit by consultancy York Aviation on behalf of Leeds Bradford Airport which warns much more public money is likely to be required given the airport’s losses while under private ownership between 2005 and 2022.
Companies House figures for Doncaster Sheffield Airport Limited analysed by The Yorkshire Post show it made operating losses in every year of private operation, collectively adding up to almost £180m. More than £140m of this was prior to 2020 and Covid affecting airport revenues globally due to pandemic travel restrictions.
The York Aviation report states: “On any reasonable projection of the future operation, DSA would be expected to remain loss making for the foreseeable future.
"On the face of it, it is difficult to see how the proposed subsidy of £105.2 million could secure a future operation over the period to 2050 nor is it clear how there would be sufficient revenue generated to pay down the loans over time to achieve a net subsidy equivalent to £89.7m.
"DSA is unlikely to attain a position where its operation could be sustained without further subsidy from the public sector.”
Doncaster Council failed to respond to multiple requests for comment on whether it anticipates the airport will run at a loss and if it anticipates more public money will be required. The Treasury did not respond to request for comment.
The report of the Subsidy Advice Unit said the council had argued in its submission the loan size planned will be "sufficient to develop a sustainable business model that will not require a further subsidy”. But the SAU’s recently published report said the council needs to provide further information about how the airport’s operation can be sustained.
After the airport closed in 2022, a report to Companies House by Doncaster Sheffield Airport Limited said shareholders had invested around £250m in fixed costs and to cover losses from its opening in 2005. It said despite the investment, “DSA never managed to generate sufficient revenue to cover costs”.
The full business case for the airport’s reopening has yet to be published but a recent report to Mayor Oliver Coppard discussing it said it “has been prepared on a broader basis than solely the return of aviation activity” and will be a catalyst for wider economic growth.
Mark Chadwick, leader of the SaveDSA campaign group, said the reopening of the airport will ultimately prove a good investment for Doncaster.
"No large takeover of a business or in reality a start up business will return a profit in the first few years no matter what industry it is,” he said.
“This area probably still hasn’t got over the closure of the pits and all the supply industries that went with that closure. Doncaster has also lost a lot of its manufacturing industry.
“This area needs something to support and nurture employment and economic growth for a better future for us our children and our children’s children.”