Prestwick Airport taxpayer bailout doubles to £40m

THE cost to taxpayers of bailing out troubled Prestwick airport has doubled to £40 million and may rise even further, a public spending watchdog has warned.

Prestwick airport was bought by the Scottish Government for £1. Picture: Robert Perry

Inflated passenger estimates were used to justify the buyout, according to Audit Scotland, but these have continued to tumble in the first year since the takeover.

Nicola Sturgeon is now facing claims of a “cover up” over the spiralling costs after presiding over the purchase of Prestwick for £1 in November 2013 to save it from looming closure.

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The Audit Scotland report today says that there are “uncertainties” over future plans which are crucial to its survival – and suggests ministers may have to cut their losses.

“It is important that its plans for the airport include regular consideration of its ongoing financial liability and a well-defined exit strategy covering a variety of possible scenarios,” it states.

Infrastructure secretary Keith Brown insisted there is “no quick fix” to the airport’s problems and said that the Scottish Government is committed for the “long-term”.

It was estimated that £21.3m of loans would be needed to keep the airport going when it was first bought. But it has emerged that this soared to £39.6 million in a “revised” business plan drawn up last year.

MSPs say they have been kept in the dark about the overruns by Ms Sturgeon.

Labour infrastructure spokeswoman Mary Fee said: “The SNP’s handling of Prestwick airport has been a farce since day one.

“As the minister in charge Nicola Sturgeon was repeatedly unable to answer the most basic financial questions about the airport and its future. Scottish taxpayers have a right to know how their money is being invested.”

The airport is heavily reliant on budget carrier Ryanair, but suffered a blow last year when the Irish firm axed a number of Prestwick routes and opened a base at nearby Glasgow.

Passenger growth of 10.2 per cent in the first five years after purchase was predicted by ministers, but the watchdog states that these were “optimistic”.

These were scaled back six months after purchase when “commercially sensitive information” came to light, but still envisaged 6.5 per cent growth. In fact passengers numbers fell by 15 per cent in the first year of operation.

The prospect of the loans being fully paid back will depend on new developments which may include the airport securing UK spaceport status, a fall in air passenger duty which is due to be devolved to Holyrood, or by becoming a hub for emergency disaster relief programmes, as well as training pilots an engineers.

But the report warns: “These options will take some time and may result in the Scottish Government providing the airport with additional loan funding.”

The airport lost £4.2m in the first year after the takeover and has yet to repay any of the loans it has received from taxpayers. It will do this when it starts making money again, which is expected to be in 2021.

Lib Dem South of Scotland MSP Jim Hume said: “The cost of investing in Prestwick airport to the taxpayer more than doubled but the SNP government kept that a secret. People will want to know why this long term cost to the taxpayer of £40m was covered up.”

Scottish Conservative transport spokesman Alex Johnstone said a clear plans is now needed to offload the airport from public hands.

But Mr Brown said that the report is clear the Scottish Government is “highly likely” make a long-term profit.

A spokesman for Transport Scotland said the report only sets a projection of “potential loan facilities” which have not been confirmed. He said: “It would therefore have been inappropriate for ministers to speculate on how much Glasgow Prestwick airport may or may not need to borrow in future years, given any confirmed facility would need to be based on a robust business case and subject to the availability of the necessary budgetary provision.

“Ministers have made it clear throughout this process that additional loan funding, beyond the £25m already set out, may be required for Glasgow Prestwick airport. Ministers have committed to updating parliament as and when this is confirmed.”