Investors have to be the right fit for Doncaster Sheffield Airport - Ismail Mulla
If anyone was under any doubt as to how high the stakes are in reopening Doncaster Sheffield Airport (DSA), then they need only look at the cost to taxpayers of reopening DSA rocketing yet again.
The reopening cost has significantly increased since February, when Doncaster Council said it would cost taxpayers £145m. As it stands, £193m of taxpayer money is to be spent on the local authority reopening the airport via a council-run company called Fly Doncaster.
Leaders of City of Doncaster Council voted to accept £175m in grant funding from the South Yorkshire Mayoral Combined Authority (SYMCA) last week.
All of this public money being thrown at an airport will raise red flags amongst sceptics and rival airports are likely to take umbrage.
However, reopening an airport was never going to be cheap and the project is expected to bring 5,000 new jobs to the area by 2050. No one can accuse local leaders of not rolling the dice.
It was interesting to see Nick Fletcher, who represented Don Valley when DSA closed in 2022, resurface. The former Tory MP says other airports “will not tolerate” taxpayer money being used to entice airlines. He believes that the airport will need private investment to get airlines anywhere near the airport.
Given that the Tories were able to deliver nothing more than hot air on DSA, some might be minded to ignore what Mr Fletcher has to say but he may well have a point. The last thing the airport needs is to get caught up in multiple legal wrangles. And getting airlines operating out of DSA is a vital piece of the puzzle.
A few days later an international consortium pops up with a £100m offer to council bosses to takeover DSA and the 126 acres of surrounding development land.
I’m all for private investment and taking away some of the risk from the taxpayer. However, on such a project, where the local leaders have put so much already into the project, caution needs to be exercised.
The majority of people, especially those who live in the area, want to see DSA reopen. In order to achieve that, any investment partners or even outright purchasers need to give cast iron guarantees that they will fulfill that ambition.
As it stands, we know too little about this consortium to get excited about the offer that they are supposedly making.
The consortium did tell The Yorkshire Post last month it was willing to invest “vast sums” into the development of the reopened airport site.
Now it has released a statement saying it is led by Marbella-based Labyrinth International Investments and is in partnership with Monaco-based Castlepines Global Equity, which lists mining, energy projects, real estate and shipping among its key investment areas.
A representative of the investor consortium said it also includes “strategic partners from the United Arab Emirates who bring extensive experience in large scale aviation and infrastructure projects” and that Castlepines’ funding model “is collaborative with major pension funds from the US, Canada and Europe, supported and structured by some of the world’s leading investment banks”.
It all sounds exciting and some may urge local leaders to take the money and run given the risk involved. However, the consortium is going to have to do much more to convince people that it is suited to taking over DSA. Firstly, there needs to be a face to the project.
Besides, the prize for staying at the table for local leaders is huge. Private investor interest in DSA once the reopened site is turning a profit is expected to be substantial.
Doncaster Council chief executive Damian Allen highlighted a recent takeover of Scottish airports - a deal which saw a Canadian pension fund buy Glasgow, Aberdeen and Southampton airports for £1.53bn.
The only issue is that the airport is not expected to turn a profit over until the mid-2030s. Losses of £81.1m are expected in the first nine years of DSA operating, with projected profits of £230m across the 15 years after that.
Local leaders are doing the right thing in at least talking to this consortium of private investors. Doncaster Council has previously confirmed it has been engaging with the investor group and The office of South Yorkshire mayor Oliver Coppard, which controls the majority of the public money due to be spent on the project, confirmed it has met with the investor group
Even if it doesn’t lead anywhere, it sends out a message to investors that they are serious about bringing investment into the airport. However, investors have to be the right fit for the airport.