A new airport.... South Yorkshire Airport City?

[pug]

https://doncaster.moderngov.co.uk/documents/g4600/Public%20reports%20pack%2020th-Sep-2023%2010.00%20Cabinet.pdf?T=10

As believed - CDC envisage they will need to shoulder significant costs to reduce risk placed on an appointed operator.

 

[Snackbar]

Who on earth are the consultants advising the Council? Industry consensus is an airport needs around 3m pxs to be profitable. A growth aspiration of 2m pxs after 10 years of operation would incur significant year on year losses. That’s of course assuming the airport can actually attract airlines to use it in the first place given EMA, LBA and MAN will have all expanded significantly in the meantime and have the economic & volume clout to put bid DSA in any commercials.

Glad I’m not a local tax payer in SY!

 

[pug]

Who on earth are the consultants advising the Council? Industry consensus is an airport needs around 3m pxs to be profitable. A growth aspiration of 2m pxs after 10 years of operation would incur significant year on year losses. That’s of course assuming the airport can actually attract airlines to use it in the first place given EMA, LBA and MAN will have all expanded significantly in the meantime and have the economic & volume clout to put bid DSA in any commercials.

Glad I’m not a local tax payer in SY!

Guess it’s what happens when you commission someone to tell you what you want to hear (with fancy graphs and all), do wonder who these interested operators are. Of course costs are subject to commercial sensitivity and haven’t been entered into the document, I’d be surprised if initial start up costs are anything less than £50million.

Looks like we might hear more in February if they manage to agree a lease deal with Peel and appoint an operator. They will be keen to crack on with this now ahead of any local elections, Oliver Coppard has his cheque book ready whereas I expect his successor may not be so supportive.

They reckon it would be profitable by year 5 in all scenarios, not sure how they have modelled growth as their predicted 2mppa is not until year 10 with no mention of the in between.

Judicial Review required.

 

[Finger66]

Hoping to attract pax from Esholt, Walford, Chester, West Derby in Liverpool and Kings Oak! Sure they have reached a Crossroads here with all this!

 

[Stagman]

Reading the report gives the Council a number of outs before any deals are made. Could be a case once elections are done in May next year they turn around and say costs are too much so can't go forward with it.
But if they reopen they say they will give operator two years free rent. So that will be a significant cost straight away plus on top for reinstatement as well. That is going to be significant.

Making profit and return on investment in year 5 is a bit far reached if you ask me.
Also what incentives are they going to offer airlines. They are going to have to offer something significant. As from the outset they are going to need to have based aircraft if it is to have a significant impact. What airlines are going to want to base from a zero passenger start, hence incentives are going to be required to get them in.
Just up the road at Teesside it is a case of operators operating aircraft in from other bases to provide the services. With services being well received a case of adding more for the following season. So will this be the case for a reopened Doncaster if base incentives aren't forthcoming.

Would TUI move back to base at Doncaster after being scattered last year.
Only way I could possibly see it work would be if early rumours of it becoming a Northern Hub for Middle Eastern airlines plus a TUI base and a low cost airline operating. In that scenario it could possibly work, but not building much hope. It is going to be very hard.

What I don't get is they say a £1.5bn total boost to the local economy over the next 30 years with the airport reopening. I find that figure time frame hard to believe, I would have expected that figure to have been passed much much sooner. So that would throw the rest of the calculations out the window.

#SaveDSA

 

[White Heather]

All these fantasies are based on attracting carriers. I hope the advisors are pointing out the possible alternative scenarios such as spend millions on a lease, and appointing an operator, re-opening /re-equipping and recruiting, and then airlines dont go in, or do, then leave again, as as happened plenty in the past , leaving mounting losses for the operator on top of the original outlay. I'm not sure who would be more reckless, the Council or the 'experienced operator' .

My opinion can be summed up in one word. Madness.

 

[pug]

It’s fanciful bordering on the absurd.

Who are the ‘Aviation Advisors’? As they will have built the projected passenger figures. My guess is there are based on the assumption that TUI and Wizzair will return (and reopen their base in the case of Wizz U.K.), short of being able to see the outline business case we can only speculate. What it does appear based on thought is that belief that Peel have mismanaged the airport, which is more likely wrong on a number of fronts.

Paragraph 2.8 in the document states ‘Given the historical trading position of DSA and the significant operating costs of reopening the airport it is unlikely that external debt financing will be accessible to any private investor.’

If risk is far too high public finance simply should not be an option.

 

[blotbuc1]

So profitable in 5 years and 2m pax within a decade they say?

Peel stated the airport needed 2.5m passengers a year just to break even. If that's the case how on Earth do they think they will be profitable in 5 years? Or even after a decade if they only have 2m passengers?

And what's happened to the claims it could handle 10m passengers? By when? 2050?

I still can't help but think that this will all end in tears and a public inquiry into the council's failure to look after the public funds of Doncaster . I still find it funny that down in Donny there's no howls of protest from environmentalist groups about the possible re-opening of an airport bringing all those nasty emissions at a time when we should all travel by bike, yet 35 miles up the road, LBA cant sneeze without an outcry from them, always encouraged by the BBC.

Yes, minimal mention of environmental issues and climate change in the report yet the report also states that the SYAC programme to reopen the airport is supported by all the local MPs one of whom is the Shadow Secretary of State for Climate Change and Net Zero!!!

 

[Statto]

If risk is far too high public finance simply should not be an option.

Thats kind of the whole reason the public sector gets involved though, surely ? To provide or subsidise services that the private sector will not otherwise provide. The council here are effectively planning to subsidise the start-up phase to get the airport operational again. After which point the private sector operator is bearing the commercial risk for the remaining duration of the lease. In principle, theres not really anything wrong with that. Local authorities have subsidised all sorts of businesses to start up in their area or to get infrastructure projects off the ground, e.g the council in Leeds funding the construction of the arena.

Whether DSA actually happens will depend on the size of the initial subsidy required and the terms of the lease. The worst case scenario for the council is that it needs a very high initial subsidy from them and an operator is only prepared to sign for, say, 5 years. On the flip side, a low subsidy and a deal that ties an operator in for 10-15 years will probably pass their tests. The subsidy is obviously something they are worried about, hence all the drama about the airspace. If that goes, its another cost the council has to carry to get it reinstated,

 

[radar]

The subsidy is obviously something they are worried about, hence all the drama about the airspace. If that goes, its another cost the council has to carry to get it reinstated,

The airspace problem isn’t just the financial cost to reestablish it if it goes (although that is substantial). The problem is that new airspace is only granted when there are sufficient air transport movements to justify it.

If the old DSA airspace does go, then it will take a substantial, established passenger operation to justify the (re)allocation of controlled airspace to the new airport by the CAA… and the catch 22 is that airlines want controlled airspace in place before they will operate. This is a huge impediment to establishing the kind of operation that CDC wants.

My feeling is that CDC is out of luck here, and the airspace will go. Leaving the airspace extant without a controlling ATC unit would be against the CAA’s rules and, even if the CAA did want to do CDC a favour, the other local airspace users (general aviation, gliders, paragliders etc.) would scream blue murder.

 

[pug]

Thats kind of the whole reason the public sector gets involved though, surely ? To provide or subsidise services that the private sector will not otherwise provide. The council here are effectively planning to subsidise the start-up phase to get the airport operational again. After which point the private sector operator is bearing the commercial risk for the remaining duration of the lease. In principle, theres not really anything wrong with that. Local authorities have subsidised all sorts of businesses to start up in their area or to get infrastructure projects off the ground, e.g the council in Leeds funding the construction of the arena.

Whether DSA actually happens will depend on the size of the initial subsidy required and the terms of the lease. The worst case scenario for the council is that it needs a very high initial subsidy from them and an operator is only prepared to sign for, say, 5 years. On the flip side, a low subsidy and a deal that ties an operator in for 10-15 years will probably pass their tests. The subsidy is obviously something they are worried about, hence all the drama about the airspace. If that goes, its another cost the council has to carry to get it reinstated,

That may well be the case for a fledgling business, or even had this been 20 years ago when RAF Finningley estate was purchased to be turned into an airport, which of course received large grants and subsidies from a number of public sector growth funds. The fact is that they are aiming to reopen an airport that has a proven lack of viability, as alluded to in the full paragraph 2.8, and spend large sums of public money once again to reopen it, whilst readily admitting it will divert funding from other priorities.

Commercially it is not viable, they may have appointed Ernst and Young to do the deep dive of any business proposal written by CDC and aided by an ‘Aviation Consultancy’, but they can only work with what they are told to work with by the people who commission them (££££) to do so, and in practical terms the airport has for 17 years been a perennial loss maker with an inability to grow to a critical mass that can sustain itself, how can you then argue that it is a reasonable use of significant sums of public money?

 

[Seasider]

".... how can you then argue that it is a reasonable use of significant sums of public money."

You can't.

 

[pug]

".... how can you then argue that it is a reasonable use of significant sums of public money."

You can't.

I’ve seen things posted elsewhere that has got me thinking more too. Obviously the Council briefing pack clearly states numerous times that the burden of risk will be largely upon them and not the opening company, but there is some train of thought that Global hedge fund/pension/private equity/Middle Eastern conglomerate Los may wish to invest in this. I do not to profess to be in any way an expert at these things but cannot for the life of me think of any reason why any investment organisation would want to risk investing in something with absolutely no tangible assets whatsoever. Let us not forget that Peel will continue to own the freehold so any capital expenditure for the required infrastructure will ultimately be owned by them (with absolutely mo financial input from themselves whatsoever).

CDC may argue that if they can turn it around then Peel may be more amenable to selling up down the road, but Peel themselves have already reached their conclusions. The SOBC and prospectus has been handed over to them for their scrutiny. What has been proposed now that wasn’t thought of before? I’ve searched for the Aviation Consultancy that CDC commissioned to assess the viability of the site and i don’t see the credentials of the people involved with that outfit as being quite as tuned in to the workings and market dynamics of a North of England Airport. York aviation have this in abundance.

So until we see who the tenders are and whether there is any buy in from them after the official process has been concluded, I remain doubtful that this will go anywhere. I expect Peel to rebuff the proposals by CDC as being fanciful, I also expect the ‘expressions of interest’ from the 15 interested investor/operators to be whittled down to very few if any unless there is some form of long term lease agreement on the table from Peel - say 99 years or something that is unbreakable.

Interested in others views particularly any that contradict my conclusions.

 

[pug]

Was sent a report yesterday by two aviation consultancy firms regarding the plans to reopen Manston Airport which made for interesting reading. In one section they made the argument that demand for air freight and passenger services would be negligible and that the proposed charges per Work Load Unit were far too high to be competitive. In it there is a comparison chart between their proposal and the charges per WLU of numerous other U.K. airports including EMA, LBA and DSA. All were the cheapest airports to operate into on the chart. Further confirmation then that the high charges thing is w complete fallacy.

 

[pug]

In advance of Doncaster Council cabinet meeting next wednesday I have had a number of e-mail enquiries in relation to the report, below is some information which covers off the most Frequently Asked Questions.

Why Lease and not CPO?
The priority is getting our airport reopened. CPO can only be used as a matter of last resort, there would be no guarantee of success and it would take up to 2 years of a costly legal proceedings. If we were to not fully explore a potential lease and go straight for CPO then it would likely be unsuccessful. The priority is to save our airport, we are in meaningful dialogue with the current landowners, and we believe we can reach a mutually agreed position on a lease.


How long would the lease be for?
This is still under negotiation, but it would be a long-term lease of between 100 – 250 years.


What is the status of the airspace?
I have today received a letter from Mark Harper the Secretary of State for Transport informing us that the Civil Aviation Authority has been informed by the Department for Transport that there will be a delay in responding to the call-in request. This delay will, of course, provide more time for the current discussions on the future of DSA to proceed before any decision on the future of DSA’s airspace is taken.

This is very positive, as if we were to lose the airspace this would be another barrier to saving DSA which would add time, cost and complexity in our efforts to see it reopen.


How will the leased be paid for?
The airport operator would ultimately pick up the cost of the lease, CDC will be the leaseholder and work with an operator to make the airport a success. It is highly likely that there will be need for an initial rent-free period and / or public sector investment to reinstate airport operations. All these costs have been considered as part of the Financial Viability Assessment and Strategic Outline Business Case.

Why are passenger projections at 2m per year rather than 4m per year which has been mentioned previously?
As part of our determination on economic and financial viability we undertook a series of commissioned studies that have collectively modelled three distinct scenarios for both freight and passenger movements, these are referred to as ‘Optimistic, Base; Pessimistic’, and ultimately take a long-term assessment of 30 years+; it is on this basis that we envisage for the Optimistic scenario the level of passengers will reach the 4m mark at year 2047; and year 2051 for Base; Pessimistic is beyond the 30 year profile. Obviously, this is caveated with ultimately who we attract in regard to an operator and airlines; however, our aviation experts are clear, with the right economic conditions we can achieve 4m+ passengers beyond the 30 years.

#SaveDSA details from Ros Jones this afternoon. Pushing for a 100-250 year lease.

Apparently do not intend to attract a based operator in the medium term - yet still confident of achieving 2mppa in year 10…

 

[Seasider]

It's getting more like a Brian Rix farce every day. (apologies to our younger members, ask Dad/Grandad)

 

[pug]

It's getting more like a Brian Rix farce every day. (apologies to our younger members, ask Dad/Grandad)

Can’t fault them for looking out for what they believe is the best interests of Doncaster, it is their job. There’s a point though when a bit more of a pragmatic approach must be taken. They know it’s a high risk venture on the back of years of losses previously, they state as much a few times in the report. Will be interested to see how far they get in the official tender process.

 

[White Heather]

So, being optimistic, they think they can hit 4m. in 24 years time? I'd love to know what the losses will be over that time. I see no way of being profitable at 2m. Perhaps they are planning on a self service airport!

I hope they have taken into account the regular improvements in equipment and technology required by Government and the associated costs, as well as periodic expensive maintenance to runways, lighting, ILS, fire equipment, baggage equipment etc.

LBA is currently operating at about 4m. passengers and in summer that equates to around 50 - 60 flights per day (100 - 120 movements per day on 737/Airbus/ATR72 types predominantly). I'd be very surprised if DSA, with its catchment area, and the competing airports surrounding it, ever gets to that level. Sadly, chances are I'll be long gone so will never know.

Nothing I've read makes me think this is anything other than another loss maker waiting to happen.

 

[GolfFox]

The airspace problem isn’t just the financial cost to reestablish it if it goes (although that is substantial). The problem is that new airspace is only granted when there are sufficient air transport movements to justify it.

If the old DSA airspace does go, then it will take a substantial, established passenger operation to justify the (re)allocation of controlled airspace to the new airport by the CAA… and the catch 22 is that airlines want controlled airspace in place before they will operate. This is a huge impediment to establishing the kind of operation that CDC wants.

My feeling is that CDC is out of luck here, and the airspace will go. Leaving the airspace extant without a controlling ATC unit would be against the CAA’s rules and, even if the CAA did want to do CDC a favour, the other local airspace users (general aviation, gliders, paragliders etc.) would scream blue murder.

I also would be surprised if the airspace did not go. It was designed based upon the Peel projection of a very high number of movements and by todays standards probably outdated procedures. The result was an inordinately large footprint and volume for the very small amount of traffic into DSA which impacted negatively and needlessly on GA airfields miles away. CAA will obviously (and a number of comments in the consultation referred to this) be aware and that it would not be equitable to re-instate it 'as is'.

 

[White Heather]

I didn't see it, but I'm told that this morning, Look North who are DSA's No 1 fan club, did another report on the plans to reopen, and it was stated that the Council are now approaching airlines asking them to commit to operating from DSA.

Good luck with that!