THE reduction and eventual abolition of air tax will have a “transformative” effect on Prestwick Airport and could speed up its return to private ownership, the Infrastructure Secretary has told MSPs.
Keith Brown has updated Holyrood’s Infrastructure Committee on progress in turning the airport into a viable enterprise after it was bought by the Scottish Government for £1 in November 2013 to prevent closure and job losses.
The Government has so far committed to providing just over £25 million in loan funding, with auditors stating earlier this year that another £15 million was likely to be needed before it is handed over to new private owners.
Projected passenger numbers for the airport for 2015/16 are at 782,500 compared with 1.58 million in 2014/15 after dominant airline Ryanair reduced the number of flights it operates from Prestwick.
The reduction has led to further questions over when and if the airport can be returned to commercial viability.
Mr Brown told the committee that there are a number of factors which could aid its transition to private ownership, including the reduction of air passenger duty (APD) and a bid to become the UK’s spaceport.
The Scottish Government will gain full control over APD as part of the new Scotland Bill.
The SNP administration has already pledged to slash the tax by 50% in the next Parliament, and then move to abolish it altogether.
“Ryanair and others have pointed to the substantial growth that could be engendered if we are able to do that,” Mr Brown said.
“We know anecdotally that countries like Mexico and other places are taking planeloads of passengers who are now going to Paris rather than London ... because of additional costs of both visas and also APD.
“It puts you at a competitive disadvantage.
“People are leaving Scotland to go to Dublin if they want to fly to Dubai so they can avoid the long-haul passenger duty.
“I think there is no question that it would be transformative for Prestwick.”
Mr Brown added: “Ryanair have said that they remain committed to Prestwick and they have got substantial operations aside from the passenger traffic that they have there.
“I know that the management at the airport have been very assiduous at looking for new passenger business, they are working very hard at it and I would hope that they would be able to come forward with progress in relation to that.”
Asked about an “exit strategy” when the Government would seek to return the airport back into private ownership, Mr Brown told MSPs: “We believe that there are too many variables ... that it wouldn’t make sense for us to be specific about a date.
“If that (APD) changes quite dramatically the fortunes of the airport, of course you could achieve that position much more quickly.”