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Doncaster Sheffield Airport Strategic Review Announcement​

Forums4airports discusses the latest press release from Doncaster Sheffield airport where the airport questions the future of the airport. The owners of the airport, the Peel Group have announced they are looking at their options as the group has decided the airport is no longer viable as an operational airport. Here's the press release:

"The Board of Doncaster Sheffield Airport (DSA) has begun a review of strategic options for the Airport. This review follows lengthy deliberations by the Board of DSA which has reluctantly concluded that aviation activity on the site may no longer be commercially viable.

DSA’s owner, the Peel Group, as the Airport’s principal funder, has reviewed the conclusions of the Board of DSA and commissioned external independent advice in order to evaluate and test the conclusions drawn, which concurs with the Board’s initial findings.

Since the Peel Group acquired the Airport site in 1999 and converted it into an international commercial airport, which opened in 2005, significant amounts have been invested in the terminal, the airfield and its operations, both in relation to the original conversion and subsequently to improve the facilities and infrastructure on offer to create an award winning airport.

However, despite growth in passenger numbers, DSA has never achieved the critical mass required to become profitable and this fundamental issue of a shortfall in passenger numbers is exacerbated by the announcement on 10 June 2022 of the unilateral withdrawal of the Wizz Air based aircraft, leaving the Airport with only one base carrier, namely TUI.

This challenge has been increased by other changes in the aviation market, the well-publicised impact of the COVID-19 pandemic and increasingly important environmental considerations. It has therefore been concluded that aviation activity may no longer be the use for the site which delivers the maximum economic and environmental benefit to the region. Against this backdrop, DSA and the Peel Group, will initiate a consultation and engagement programme with stakeholders on the future of the site and how best to maximise and capitalise on future economic growth opportunities for Doncaster and the wider Sheffield City Region.

The wider Peel Group is already delivering significant development and business opportunities on its adjoining GatewayEast development including the recent deal for over 400,000 sq ft logistics and advanced manufacturing development on site, creating hundreds of new jobs and delivering further economic investment in the region.

Robert Hough, Chairman of Peel Airports Group, which includes Doncaster Sheffield Airport, said: “It is a critical time for aviation globally. Despite pandemic related travel restrictions slowly drawing to a close, we are still facing ongoing obstacles and dynamic long-term threats to the future of the aviation industry. The actions by Wizz to sacrifice its base at Doncaster to shore up its business opportunities at other bases in the South of England are a significant blow for the Airport.

Now is the right time to review how DSA can best create future growth opportunities for Doncaster and for South Yorkshire. The Peel Group remains committed to delivering economic growth, job opportunities and prosperity for Doncaster and the wider region.”

DSA and the Peel Group pride themselves on being forward-thinking whilst prioritising the welfare of staff and customers alike. As such, no further public comments will be made whilst they undertake this engagement period with all stakeholders.
During the Strategic Review, the Airport will operate as normal. Therefore passengers who are due to travel to the airport, please arrive and check in as normal. If there are any disruptions with your flight, you will be contacted by your airline in good time.
For all press enquiries, please contact Charlotte Leach at [email protected]."

"Not great news for DSA or the region"

Should the government or local council foot the bill and provide a financial subsidy to keep the airport open, thoughts...?

 

‘Heathrow of the North’ has a familiar ring to it. How did that work out last time?

What a set of clueless clowns

 

Clowns are funny, these people aren't.

 

The Airport Consultative Committee chair says hebwill do all comms through the mechanic's group. He does realise Reform councillors were all kicked out?

The lease says Peel are due 20% of all revenues including grants

 

The Airport Consultative Committee chair says hebwill do all comms through the mechanic's group. He does realise Reform councillors were all kicked out?

The lease says Peel are due 20% of all revenues including grants.

That will cause some concern amongst the ranks if the YP get hold of that - which I'm sure they will!!

 

That will cause some concern amongst the ranks if the YP get hold of that - which I'm sure they will!!

To be honest the ACC is irrelevant, they can use Chadwick’s site as the outlet if they want but they’ll probably need to publish the minutes elsewhere too in order to enable full free access to anyone who needs to see it. All it is there for is to engage with the local community and allay any concerns on environmental/noise issues. It doesn’t have any power of influence in the business direction of the airport.

 

To be honest the ACC is irrelevant, they can use Chadwick’s site as the outlet if they want but they’ll probably need to publish the minutes elsewhere too in order to enable full free access to anyone who needs to see it. All it is there for is to engage with the local community and allay any concerns on environmental/noise issues. It doesn’t have any power of influence in the business direction of the airport.

I was meaning the 20% of revenue and grants mentioned by @Egyption King.
Agree it's irrelevant if they are using the campaign site to publish ACC communications.

As I wrote the above post, an update from the Mayor appeared on my phone whereby she is defending not making the lease public - but now offering to allow Councillors to have a 'signed-for' copy. Unless redacted the details alluded to regarding the 20% revenue accruing to Peel should be in there which I suspect will be spectacularly unpopular!
I guess she has been forced to do this as a reaction to the YP story and perhaps pre-empt and take the flak before the journalists get their teeth into it.
On the face of it the lease appears very onerous to CDC and would appear to make it even less likely that DSA will be able to survive without ever greater subsidy!

 

I was meaning the 20% of revenue and grants mentioned by @Egyption King.
Agree it's irrelevant if they are using the campaign site to publish ACC communications.

As I wrote the above post, an update from the Mayor appeared on my phone whereby she is defending not making the lease public - but now offering to allow Councillors to have a 'signed-for' copy. Unless redacted the details alluded to regarding the 20% revenue accruing to Peel should be in there which I suspect will be spectacularly unpopular!
I guess she has been forced to do this as a reaction to the YP story and perhaps pre-empt and take the flak before the journalists get their teeth into it.
On the face of it the lease appears very onerous to CDC and would appear to make it even less likely that DSA will be able to survive without ever greater subsidy!

It is on the 3 Yorkshire Post articles released this evening, she is surely in trouble read it @GolfFox abd @pug

 

‘Heathrow of the North’ has a familiar ring to it. How did that work out last time?

Heathrow of the North. Perhaps they could build a statue next to the M18!

 

Heathrow of the North. Perhaps they could build a statue next to the M18!

If they want a Heathrow they should probably think about building a London next to the M18.

 

It is on the 3 Yorkshire Post articles released this evening, she is surely in trouble read it @GolfFox abd @pug

Some big hurdles from this:
“That is why South Yorkshire Mayoral Combined Authority (SYMCA) is right to hold back the release of £160m of taxpayer funding until the terms of the lease are changed” - come on Oliver coppard, you must have seen the lease before?

“The fact that under the existing lease, 20 per cent of DSA’s annual turnover is to be paid towards the owner of the land will send a shiver down the spine of taxpayers.” - I wonder if this included in the business plan?

“And the break clauses, which could be triggered unless passenger numbers well above even the most optimistic forecasts for what the reopened site will achieve are delivered, are also a source of grave concern.” - this is something that had been discussed here many times before.

Will be interesting to see the reaction within the council now this is public. Ros Jones must have known this would have got out at some point?

In the commercial sector no one in their right mind would sign up to this. I’ve gotta say, well played Peel, you really have got them in a pickle here. If I was an employee of Peel, I would have been happy to give that lease over also in fact I would be waiting for a nice Christmas bonus from my boss for deal of the year!!

 

Some big hurdles from this:
“That is why South Yorkshire Mayoral Combined Authority (SYMCA) is right to hold back the release of £160m of taxpayer funding until the terms of the lease are changed” - come on Oliver coppard, you must have seen the lease before?

“The fact that under the existing lease, 20 per cent of DSA’s annual turnover is to be paid towards the owner of the land will send a shiver down the spine of taxpayers.” - I wonder if this included in the business plan?

“And the break clauses, which could be triggered unless passenger numbers well above even the most optimistic forecasts for what the reopened site will achieve are delivered, are also a source of grave concern.” - this is something that had been discussed here many times before.

Will be interesting to see the reaction within the council now this is public. Ros Jones must have known this would have got out at some point?

In the commercial sector no one in their right mind would sign up to this. I’ve gotta say, well played Peel, you really have got them in a pickle here. If I was an employee of Peel, I would have been happy to give that lease over also in fact I would be waiting for a nice Christmas bonus from my boss for deal of the year!!

I don’t think much of this has come as a surprise, but I certainly didn’t expect the 20% of turnover to be paid to Peel! Seems that this is the contentious clause that Coppard is hoping/needing to see negotiated down/removed before the money can be released. I think he also wanted to remove the 2031 passenger and freight target, so I assume to him the target passenger and freight figures for 2036 (2.3 million passengers per year and 25,000 tonnes of freight) are achievable? Well according to the below article, but employing ‘best practice’ they are more than achievable.

Doncaster Sheffield Airport leak reveals shock taxpayer payment clause in lease

Shock details of the agreement at the heart of plans to reopen Doncaster Sheffield Airport have been revealed by a leak as negotiations continue on changing their terms. Chris Burn reports.

www.yorkshirepost.co.uk

This is where airports like LBA and organisations like York Aviation might wince a little!

 

I don’t think much of this has come as a surprise, but I certainly didn’t expect the 20% of turnover to be paid to Peel! Seems that this is the contentious clause that Coppard is hoping/needing to see negotiated down/removed before the money can be released. I think he also wanted to remove the 2031 passenger and freight target, so I assume to him the target passenger and freight figures for 2036 (2.3 million passengers per year and 25,000 tonnes of freight) are achievable? Well according to the below article, but employing ‘best practice’ they are more than achievable.

Doncaster Sheffield Airport leak reveals shock taxpayer payment clause in lease

Shock details of the agreement at the heart of plans to reopen Doncaster Sheffield Airport have been revealed by a leak as negotiations continue on changing their terms. Chris Burn reports.

www.yorkshirepost.co.uk

This is where airports like LBA and organisations like York Aviation might wince a little!

I suspect that if at least the framework of those lease terms were known to private investors when conducting their due diligence it’s easy to see why they all walked citing significant commercial risk.
That is an astonishing amount of revenue to be paying out given none of the competition has the same drag on profitability.
If they sign up to that there is zero chance this airport will ever get out of public ownership.
As to the passengers numbers - as they say the “best predictor of future performance is past performance” given Fly Doncaster are offering little, or nothing new over what Peel did we know where this will end!
I too think this may be the end of the road for the Mayor - this constant drip feed of bad news from the YP does nothing for her credibility or her per project. Only some members of CDC and the YP know what else is to come out…

 

I suspect that if at least the framework of those lease terms were known to private investors when conducting their due diligence it’s easy to see why they all walked citing significant commercial risk.
That is an astonishing amount of revenue to be paying out given none of the competition has the same drag on profitability.
If they sign up to that there is zero chance this airport will ever get out of public ownership.
As to the passengers numbers - as they say the “best predictor of future performance is past performance” given Fly Doncaster are offering little, or nothing new over what Peel did we know where this will end!

Perhaps, but the council admit they couldn’t purchase the freehold. They say ‘Peel wouldn’t sell’ but we know that everyone has their price and Peel sold Teesside so they were amenable to reasonable offers.

I think this lease was Peel knowing it won’t work and using a high bar as a deterrence that the council have been unable to refuse, it’s easier to negotiate down once the outline agreement has been signed. So I don’t necessarily suggest that the council have been played a blinder, but what would be stupid is continuing with the current terms! However it looks like that isn’t happening as Coppards office has stood firm that the money won’t be released until those clauses are negotiated down or away. It almost felt like they were distancing themselves a bit from the Doncaster Council in that statement, at least to me it did anyway. Anyone else?

 

Perhaps, but the council admit they couldn’t purchase the freehold. They say ‘Peel wouldn’t sell’ but we know that everyone has their price and Peel sold Teesside so they were amenable to reasonable offers.

I think this lease was Peel knowing it won’t work and using a high bar as a deterrence that the council have been unable to refuse, it’s easier to negotiate down once the outline agreement has been signed. So I don’t necessarily suggest that the council have been played a blinder, but what would be stupid is continuing with the current terms! However it looks like that isn’t happening as Coppards office has stood firm that the money won’t be released until those clauses are negotiated down or away. It almost felt like they were distancing themselves a bit from the Doncaster Council in that statement, at least to me it did anyway. Anyone else?

Well given Coppard referenced the need to negotiate the lease back in September- a fact that CDC will have known months before then means CDC should well on with it now so they should be able put out a statement countering this risk without compromising commercial terms….
Knowing Peel and the fact that they are notorious land bankers and that they are already getting income from CDC for an asset that was always loss making for them I doubt they will roll over….I can’t see these terms completely negotiated away given they had other uses for that site which would most likely generate similar revenue to that which is in the lease.

Guess we will have to wait and see what CDC say on Monday….

 

Well given Coppard referenced the need to negotiate the lease back in September- a fact that CDC will have known months before then means CDC should well on with it now so they should be able put out a statement countering this risk without compromising commercial terms….
Knowing Peel and the fact that they are notorious land bankers and that they are already getting income from CDC for an asset that was always loss making for them I doubt they will roll over….I can’t see these terms completely negotiated away given they had other uses for that site which would most likely generate similar revenue to that which is in the lease.

Guess we will have to wait and see what CDC say on Monday….

Does the article not say they haven't agreed anything?

 

It is on the 3 Yorkshire Post articles released this evening, she is surely in trouble read it @GolfFox abd @pug

Yes indeed it would seem that she will be.

A post on Nick Fletcher's page from a regular DSA contributor WMY to a number of pages, sets out the issues and the Mayor's administration rightly get a real hammering! Very interestingly so does Mr Chadwick who is clearly part of the 'gang' for not challenging the lease details - the implication being he knew about them all the time. Be interesting how he wriggles out of that one!
The post is worth a read for anyone who hasn't seen it yet.

A post on Nick Fletcher's page from a regular DSA contributor WMY to a number of pages, sets out the issues and the Mayor's administration rightly get a real hammering! Very interestingly so does Mr Chadwick who is clearly part of the 'gang' for not challenging the lease details - the implication being he knew about them all the time. Be interesting how he wriggles out of that one!
The post is worth a read for anyone who hasn't seen it yet.

 

Well given Coppard referenced the need to negotiate the lease back in September- a fact that CDC will have known months before then means CDC should well on with it now so they should be able put out a statement countering this risk without compromising commercial terms….
Knowing Peel and the fact that they are notorious land bankers and that they are already getting income from CDC for an asset that was always loss making for them I doubt they will roll over….I can’t see these terms completely negotiated away given they had other uses for that site which would most likely generate similar revenue to that which is in the lease.

Guess we will have to wait and see what CDC say on Monday….

My concern would be, when full council were asked (instructed?) to vote in favour of the £57million to front load the scale up, where they all aware that these clauses existed or have they been asked to borrow against a pot of money that’s not even guaranteed to be awarded as it’s subject to suitable amendments to the lease agreement? I would suggest they weren’t fully aware*, so have blindly voted on something that’s actually not set in stone!

Sorry but anyone watching this who might have been interested in flying from there will be having even more doubts about it now. It was already a tough sell as confirmed by O’Leary and others!

*whilst they may not have had full sight of the terms in the lease agreement, they did know they were subject to renegotiation as Coppard made that point back in September in the hangar show. However I do wonder whether, having known the exact terms that are still over 5 months later subject to renegotiation, the loan would have got full backing in November. It’s quite clear now why the subsidy hasn’t been registered yet!

 

2.3 million passengers is awfully high for an airport that could scrap 1.5 million in 17 years! Absolutely crazy these politicians think they can do better!

 

2.3 million passengers is awfully high for an airport that could scrap 1.5 million in 17 years! Absolutely crazy these politicians think they can do better!

Well what will happen now is any airline that might have been looking at it will be asking for some exceptionally favourable terms and subsidies in order to de-risk sufficient to commit. However they will also be aware, assuming there are some lines in the sand with the discussions over the lease, that the owners could pull the plug at any time. This does not endear itself to confidence. I think they might actually be sealing their own fate on this.

 

CDC paying Peel 20% plus heavily heavily subsidising airlines to give it a go? Seriously is there much point? Is the final nail in the coffin?