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

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...?

 

Documents have now been released prior to Mondays meeting https://doncaster.moderngov.co.uk/ieListDocuments.aspx?CId=130&MId=5160

Already seems outdated given what we know now. My prediction is Monday they’ll wave it through, perhaps with some very hollow compromises like last time. None of it will come to pass but it’ll give Deform enough ammunition to say told you so down the line.

 

Labour supporter Dan Fell

 

Documents have now been released prior to Mondays meeting https://doncaster.moderngov.co.uk/ieListDocuments.aspx?CId=130&MId=5160

Has anyone looked at the table on Page 11 of the report, Paragraph 50? You can see the unfunny joke right there.

The numbers are a hoot. This whole rescission vote on Monday about the £57m loan to cover the "Borrowing Required" might just about get the terminal building up to scratch! Then those £5.3m "Funding" figures from 2028 - presumably the Gainshare, which as things stand they aren't going to get: that won't even cover the wages and rent.

I can see now why they're peddling this absurd fantasy about passenger flights from Easter 2028 - it is because that is when some revenue had better start to materialise, not when they can actually, feasibly resume such flights. With the best will in the world they're looking at 2030, probably 2031, and even that needs everything to go smoothly.

Unless I'm missing something the numbers don't remotely map onto reality on any level. What's a new fuel farm going to cost? Then fire station and rescue/firefighting equipment to RFFS Category requirements, ATC tower equipment and systems, airfield ground lighting upgrades to current standards, Runway and taxiway maintenance and remarking, then operational systems and IT, staffing, training... you're looking at at least £200m just get the thing open.

That's the upfront "Capex" cost. To that you add operating costs through the development period and the early years of operation. An airport at sub-1m passengers loses money - that's not speculation, that's why DSA closed in 2022 and why every regional airport at similar scale either has subsidies, deep-pocketed parent groups, or eventually closes. Operating losses of perhaps £10-20m per year for years three through eight or nine until volumes (might) build sufficient revenue. That's another £80-160m of cumulative operating subsidy required.

Then the lease costs. Base rent £3.3m rising to £5m indexed, running through the period. Across ten years, even if turnover rent stays at zero, that's £40-50m of base rent alone. If turnover rent applies in any form - which at present it does at 20% - that adds significantly more.

Then debt service. £57m of borrowing accumulating interest costs over ten years of perhaps £15-25m, depending on the borrowing profile.

Then ongoing capital maintenance. Airport infrastructure requires ongoing capex - runway resurfacing every 7-10 years, equipment refresh, system upgrades. Perhaps £5-10m per year of ongoing capex once operational.

Then we come to the very real possibility of having to upgrade the grid because the power supply is inadequate...!

What am I missing? If they're in a flat spin over £57m then quite simply the project has no future. If it costs £48m to wind it up then that'll be the best spent money in this whole sorry saga! You can see £500m over 10 years. Maybe more depending on what happens over the electricity.

The whole thing - even just at a glance - is being sold to the public on the basis of hilariously underestimated costs and revenue projections that are pure fantasy.

 

Has anyone looked at the table on Page 11 of the report, Paragraph 50? You can see the unfunny joke right there.

The numbers are a hoot. This whole rescission vote on Monday about the £57m loan to cover the "Borrowing Required" might just about get the terminal building up to scratch! Then those £5.3m "Funding" figures from 2028 - presumably the Gainshare, which as things stand they aren't going to get: that won't even cover the wages and rent.

I can see now why they're peddling this absurd fantasy about passenger flights from Easter 2028 - it is because that is when some revenue had better start to materialise, not when they can actually, feasibly resume such flights. With the best will in the world they're looking at 2030, probably 2031, and even that needs everything to go smoothly.

Unless I'm missing something the numbers don't remotely map onto reality on any level. What's a new fuel farm going to cost? Then fire station and rescue/firefighting equipment to RFFS Category requirements, ATC tower equipment and systems, airfield ground lighting upgrades to current standards, Runway and taxiway maintenance and remarking, then operational systems and IT, staffing, training... you're looking at at least £200m just get the thing open.

That's the upfront "Capex" cost. To that you add operating costs through the development period and the early years of operation. An airport at sub-1m passengers loses money - that's not speculation, that's why DSA closed in 2022 and why every regional airport at similar scale either has subsidies, deep-pocketed parent groups, or eventually closes. Operating losses of perhaps £10-20m per year for years three through eight or nine until volumes (might) build sufficient revenue. That's another £80-160m of cumulative operating subsidy required.

Then the lease costs. Base rent £3.3m rising to £5m indexed, running through the period. Across ten years, even if turnover rent stays at zero, that's £40-50m of base rent alone. If turnover rent applies in any form - which at present it does at 20% - that adds significantly more.

Then debt service. £57m of borrowing accumulating interest costs over ten years of perhaps £15-25m, depending on the borrowing profile.

Then ongoing capital maintenance. Airport infrastructure requires ongoing capex - runway resurfacing every 7-10 years, equipment refresh, system upgrades. Perhaps £5-10m per year of ongoing capex once operational.

Then we come to the very real possibility of having to upgrade the grid because the power supply is inadequate...!

What am I missing? If they're in a flat spin over £57m then quite simply the project has no future. If it costs £48m to wind it up then that'll be the best spent money in this whole sorry saga! You can see £500m over 10 years. Maybe more depending on what happens over the electricity.

The whole thing - even just at a glance - is being sold to the public on the basis of hilariously underestimated costs and revenue projections that are pure fantasy.

Absolutely agree and if you scroll back far enough, you will find I have made similar points more than once. Utter lunacy. The reality is that even when an airport succeeds in growing its throughput, that leads to a need for further investment. There is no sitting back watching the profits roll in. It's spend, spend, spend and a very deep pot of money is needed. But DSA won't get that far. The revised and lowered projected passenger figures show that the cost of this farce vastly outweighs the benefits which seem to be nothing more than a figment of the imagination of the mayor and others.

 

Absolutely agree and if you scroll back far enough, you will find I have made similar points more than once. Utter lunacy. The reality is that even when an airport succeeds in growing its throughput, that leads to a need for further investment. There is no sitting back watching the profits roll in. It's spend, spend, spend and a very deep pot of money is needed. But DSA won't get that far. The revised and lowered projected passenger figures show that the cost of this farce vastly outweighs the benefits which seem to be nothing more than a figment of the imagination of the mayor and others.

Yes, as footfall increases so does wear and tear etc. so you end up chasing your tail.

I don't know how they've been allowed to take it this far. They've obviously used every means available to suppress scrutiny, and the regulatory mechanisms appear only just to be springing to life. And the press have been pathetic. The red rating from Grant Thornton should have been headline news, not tucked away in an article in the YP that I think was behind a paywall. That's the council's own auditor telling them they're on a financial suicide mission, and I wouldn't mind betting that's based on the council's own cost estimates not the real ones.

Looking at the numbers in that report, I don't think they can even get it open. They need to be able to run on zero revenue for years, possibly indefinitely. There's no way they're flying any passengers before 2031, not a chance, and when they do they're going to have to pay airlines for the privilege. They won't have got through the ACP and aerodrome certification by Easter 2028, never mind have signed contracts with airlines. And this Gainshare funding that it looks like they aren't going to get anyway - it's £5.3m a year, it'll barely cover the base rent!

They need to stop this now, and if it costs £48m it'll be money very well spent.

 

Has anyone looked at the table on Page 11 of the report, Paragraph 50? You can see the unfunny joke right there.

The numbers are a hoot. This whole rescission vote on Monday about the £57m loan to cover the "Borrowing Required" might just about get the terminal building up to scratch! Then those £5.3m "Funding" figures from 2028 - presumably the Gainshare, which as things stand they aren't going to get: that won't even cover the wages and rent.

I can see now why they're peddling this absurd fantasy about passenger flights from Easter 2028 - it is because that is when some revenue had better start to materialise, not when they can actually, feasibly resume such flights. With the best will in the world they're looking at 2030, probably 2031, and even that needs everything to go smoothly.

Unless I'm missing something the numbers don't remotely map onto reality on any level. What's a new fuel farm going to cost? Then fire station and rescue/firefighting equipment to RFFS Category requirements, ATC tower equipment and systems, airfield ground lighting upgrades to current standards, Runway and taxiway maintenance and remarking, then operational systems and IT, staffing, training... you're looking at at least £200m just get the thing open.

That's the upfront "Capex" cost. To that you add operating costs through the development period and the early years of operation. An airport at sub-1m passengers loses money - that's not speculation, that's why DSA closed in 2022 and why every regional airport at similar scale either has subsidies, deep-pocketed parent groups, or eventually closes. Operating losses of perhaps £10-20m per year for years three through eight or nine until volumes (might) build sufficient revenue. That's another £80-160m of cumulative operating subsidy required.

Then the lease costs. Base rent £3.3m rising to £5m indexed, running through the period. Across ten years, even if turnover rent stays at zero, that's £40-50m of base rent alone. If turnover rent applies in any form - which at present it does at 20% - that adds significantly more.

Then debt service. £57m of borrowing accumulating interest costs over ten years of perhaps £15-25m, depending on the borrowing profile.

Then ongoing capital maintenance. Airport infrastructure requires ongoing capex - runway resurfacing every 7-10 years, equipment refresh, system upgrades. Perhaps £5-10m per year of ongoing capex once operational.

Then we come to the very real possibility of having to upgrade the grid because the power supply is inadequate...!

What am I missing? If they're in a flat spin over £57m then quite simply the project has no future. If it costs £48m to wind it up then that'll be the best spent money in this whole sorry saga! You can see £500m over 10 years. Maybe more depending on what happens over the electricity.

The whole thing - even just at a glance - is being sold to the public on the basis of hilariously underestimated costs and revenue projections that are pure fantasy.

Well written. Strictly speaking a profit can be made on operations sub 1mppa. However this requires a solid niche and much lower fixed costs to achieve. It’s not clear whether certain derogations applied last time will be carried forward, this could add to the costs. There is also little room for rental income. Not sure whether the hangars are even part of the lease? I assume they are but if not this will cause problems.

The airport lost on average £20.00 for every departing passenger. People might say that it’s not all about passenger flights, but in the eyes of the public who are supporting this that is all they’re interested in. They’re saying Easter 2028 because that’s realistically when they believe they can start handling passenger flights, it does not mean that they have any tangible interest from airlines. They’re saying will find those discussions cannot take place in any meaningful way until they have a date set in stone, this runs the risk of having no airline partners for the full start date.

They’re now talking of interest in an integrator facility. Who pays for that? Ain’t going to be Peel as they said they couldn’t justify the speculative investment last time. Which pot of gold will the council find for this?

 

They’re saying Easter 2028 because that’s realistically when they believe they can start handling passenger flights

They're going to have a fully certified aerodrome, controlled airspace, and airline contracts signed by Easter 2028? Holy cow!

 

They're going to have a fully certified aerodrome, controlled airspace, and airline contracts signed by Easter 2028? Holy cow!

They could get the airfield certified reasonably quickly. Airspace I think very little chance, and any airline contracts (even if there are any interested airlines) would depend on the airlines insurers as to whether they can operate Class G in lieu of airspace. The reason they’re saying that skipping from Easter 2028 would knock it back a year is because that’s typically the start of the summer schedules. They’re clearly targeting a TUI return. TUI don’t seem to be in growth mode.

 

They could get the airfield certified reasonably quickly. Airspace I think very little chance, and any airline contracts (even if there are any interested airlines) would depend on the airlines insurers as to whether they can operate Class G in lieu of airspace. The reason they’re saying that skipping from Easter 2028 would knock it back a year is because that’s typically the start of the summer schedules. They’re clearly targeting a TUI return. TUI don’t seem to be in growth mode.

I don't see how they can even afford it. I can see £57m just on getting the terminal building ready to handle passengers, never mind anything else. They don't appear to have anywhere near enough money.

At it AGAIN, publishing absurd propaganda uncritically:

'Don't derail DSA': Cargo boss makes plea to councillors ahead of £57m vote

The man leading efforts to bring cargo flights back to Doncaster Sheffield Airport is urging councillors not to derail the project at a crunch meeting on Monday. Chris Burn reports.

www.yorkshirepost.co.uk

When you strip away the PR gloss, this article is yet more municipal gaslighting. The Yorkshire Post has just handed a megaphone to a man whose salary is directly funded by the very £57m loan he is lobbying to protect, and they haven't asked him a single critical question.

 

Well written. Strictly speaking a profit can be made on operations sub 1mppa. However this requires a solid niche and much lower fixed costs to achieve. It’s not clear whether certain derogations applied last time will be carried forward, this could add to the costs. There is also little room for rental income. Not sure whether the hangars are even part of the lease? I assume they are but if not this will cause problems.

The airport lost on average £20.00 for every departing passenger. People might say that it’s not all about passenger flights, but in the eyes of the public who are supporting this that is all they’re interested in. They’re saying Easter 2028 because that’s realistically when they believe they can start handling passenger flights, it does not mean that they have any tangible interest from airlines. They’re saying will find those discussions cannot take place in any meaningful way until they have a date set in stone, this runs the risk of having no airline partners for the full start date.

They’re now talking of interest in an integrator facility. Who pays for that? Ain’t going to be Peel as they said they couldn’t justify the speculative investment last time. Which pot of gold will the council find for this?

As @pug says above, it is possible to make money on a lower passenger base, but that would require potentially taking Ground Handling and Fuel in house too. To do this, they’d need more staff and more importantly more equipment at a high cost, pushing the amount needed to reopen higher and higher.

As for scrutiny from the press, I’m aware from a post I saw on social media that they are using a Leeds based media agency called Yasper, who’s founder has written many articles for the YP. I’m sure they will be helping with the media narrative. Only this morning there is an absolutely ridiculous column post in the YP basically calling on Peel to do the right thing with the lease for the “goodwill” of South Yorkshire. I mean I have absolutely no words for this sort of media narrative.

 

I don't see how they can even afford it. I can see £57m just on getting the terminal building ready to handle passengers, never mind anything else. They don't appear to have anywhere near enough money.

At it AGAIN, publishing absurd propaganda uncritically:

'Don't derail DSA': Cargo boss makes plea to councillors ahead of £57m vote

The man leading efforts to bring cargo flights back to Doncaster Sheffield Airport is urging councillors not to derail the project at a crunch meeting on Monday. Chris Burn reports.

www.yorkshirepost.co.uk

When you strip away the PR gloss, this article is yet more municipal gaslighting. The Yorkshire Post has just handed a megaphone to a man whose salary is directly funded by the very £57m loan he is lobbying to protect, and they haven't asked him a single critical question.

I think with the loan they’d have around £90million total without Gainshare. Total they claim including Gainshare £193million but a lot if that spread out over nearly 30 years. Nowhere near enough.

I too think it’s a disgrace that someone who is being bankrolled entirely by the public sector is permitted to discuss with the press at this stage. It’s a vested interest.

 

As for scrutiny from the press, I’m aware from a post I saw on social media that they are using a Leeds based media agency called Yasper, who’s founder has written many articles for the YP. I’m sure they will be helping with the media narrative. Only this morning there is an absolutely ridiculous column post in the YP basically calling on Peel to do the right thing with the lease for the “goodwill” of South Yorkshire. I mean I have absolutely no words for this sort of media narrative.

The press are an absolute joke. Pug was saying the other day that the public are still cheering it on despite the red rating from Grant Thornton, but how would they even know about it? The newspaper headlines are all, Major Milestone Reached! First Jet Lands at DSA! 80 Businesses Sign Letter Supporting Reopening Airport! Accompanied by a photo of Jones beaming outside the terminal building going "Wooohooo! Weeehaaay! Everything is going to plan! We're very excited!"

Actually, it is a total disaster. The lease is toxic, they haven't got anywhere near enough money, the auditor is basically telling them to stop before they bankrupt the council, the revenue projections are a fantasy as are the cost estimates, they're nowhere with the ACP, and to cap it all off... the airlines aren't interested!

 

The press are an absolute joke. Pug was saying the other day that the public are still cheering it on despite the red rating from Grant Thornton, but how would they even know about it? The newspaper headlines are all, Major Milestone Reached! First Jet Lands at DSA! 80 Businesses Sign Letter Supporting Reopening Airport! Accompanied by a photo of Jones beaming outside the terminal building going "Wooohooo! Weeehaaay! Everything is going to plan! We're very excited!"

Actually, it is a total disaster. The lease is toxic, they haven't got anywhere near enough money, the auditor is basically telling them to stop before they bankrupt the council, the revenue projections are a fantasy as are the cost estimates, they're nowhere with the ACP, and to cap it all off... the airlines aren't interested!

If you read any Facebook comments (appreciate not necessarily representative) they’re either ‘get it open’ or ‘it’s a white elephant’. There appears to be very little middle ground. The holding of this against people who have serious concerns is part of a much bigger problem. I’ve seen people call it ‘Donnygate 2.0’, it is a scandal in the making. Unfortunately the press have to be complicit these days due to social media mobility and the general race to the bottom as a result of this.

The best place for these sort of expose are outlets like Private Eye, there is an awful lot of confirmation bias based on an unbounded belief that the airport is viable it just wasn’t made to be so. I’m afraid you cannot argue with pork, that belief will withstand whether the airport reopens or they build houses on the runway.

 

, there is an awful lot of confirmation bias based on an unbounded belief that the airport is viable it just wasn’t made to be so. I’m afraid you cannot argue with pork, that belief will withstand whether the airport reopens or they build houses on the runway.

Yes, so it seems. Although if the Yorkshire Post is going to publish propaganda from people with vested interests, it is painfully obvious how these daft ideas can take hold. That article I linked to above doesn't even make passing mention of the auditor's red rating, it just transcribes the fantasies of a man who is personally benefitting from the continuation of this farce.

 

Where on earth is the closing project down figure come from. That is absolutely outrageous and insane cost.

Last year Mayor Ros Jones said that the Council has enough funds for the project to last to the first break clause date. This comes from the first tranche of Gainshare and other funding pots that was released by Coppard to get the project moving.

So with that in mind. How on earth has costs escalated to this huge amount.
Ros Jones knew that SYMCA funding was paused until the lease could be renegotiated.

So the thing would have been to not mobilise until funding was guaranteed to be released.

Then last week or week before Ros Jones publically states in media video interview that Airspace still remains at Stage 1.

Redundancy would be not much due to company being in existence less than two years and staff employed even less than that.

What has she been purchasing when there were no further funds committed.


All points to complete and utter mismanagement of the highest order.

How is it near £50m to close the project down, when the Council never had anywhere near that amount to last til 2031 break clause date.

 

Where on earth is the closing project down figure come from. That is absolutely outrageous and insane cost.

Last year Mayor Ros Jones said that the Council has enough funds for the project to last to the first break clause date. This comes from the first tranche of Gainshare and other funding pots that was released by Coppard to get the project moving.

So with that in mind. How on earth has costs escalated to this huge amount.
Ros Jones knew that SYMCA funding was paused until the lease could be renegotiated.

So the thing would have been to not mobilise until funding was guaranteed to be released.

Then last week or week before Ros Jones publically states in media video interview that Airspace still remains at Stage 1.

Redundancy would be not much due to company being in existence less than two years and staff employed even less than that.

What has she been purchasing when there were no further funds committed.


All points to complete and utter mismanagement of the highest order.

How is it near £50m to close the project down, when the Council never had anywhere near that amount to last til 2031 break clause date.

They're trying to make the cancellation costs look as high as possible for obvious reasons.

It's a bit bullsh!tty. Because the council holds the lease until at least 2031, the bulk of the lease and site management costs that make up the £48m figure exist regardless of whether they reopen it for flights or not.

The problem is, the gainshare funding was explicitly approved only to facilitate the reopening and future operation of the airport. If the reopening is scrapped, that grant money is withdrawn and cannot be used to pay for closure or site-holding costs.

You probably already know, however, that the gainshare funding won't be released anyway because Peel aren't going to get rid of the 20% turnover skim.

So basically the council is left holding the baby regardless. The purpose of the £48m figure is to try to frighten Reform councillors so they don't vote to rescind the loan approval on Monday. Most of those costs are coming the council's way whatever happens.

Edit: the £48m figure will be an absolute worst-case scenario, if Peel won't agree to early surrender of the lease etc. Over 5 years it would anyway be manageable, as I think Reform have pointed out.