Steamship Company Won’t Pass On Higher Airport Fees To Customers

skybus twin ottersThe Chief Executive of the Steamship Company says the 5% increase in landing fees at St Mary’s Airport, voted in by councillors yesterday, will not be passed on to passengers.

Rob Goldsmith said the company did not feel an increase as high as 5% was necessary, given the recent growth in the market to Scilly and strength of bookings for the summer season.

And he warned that the company “would not expect to see a further increase in airport charges next year” if passenger numbers continue to grow as expected.

He assured passengers that fares will remain unchanged as a result of the decision.

Councillors reconvened their Transport meeting yesterday.

It had been delayed from last week amid calls for more time to digest the late financial details, which some councillors only received on the day of the meeting.

Officers were also asked to consult with the Steamship Company and Islands’ Partnership to get a better understanding of visitor numbers over the coming year.

Senior Manager for Infrastructure Craig Dryden said that had been “constructive” as Finance Officer Sarah Chodkiewicz presented new figures showing that passengers numbers would actually be closer to the 93,000 forecast, rather than the shortfall put forward last week.

Senior Finance Manager Laura Roberts said that meant the airport’s reserves would also be in a better state than the £15,000 expected last week. They’re now anticipating £51,000 to be in the bank account at the end of March.

At the last meeting, she gave three options for increasing charges – 10%, 15% and 20%.

But confusingly, Laura only provided councillors with models for an increase of just 5% yesterday.

That would have put around 70p onto the cost of each ticket if it had been passed on to passengers.

She said if charges went up by this amount, and with an anticipated rise in passenger numbers, they’d be able to put £188,000 into reserves next year and a further £150,000 the year after.

But Craig warned that they ”shouldn’t base financial modelling on trying to predict anticipated growth in the future” even though Roberts did exactly that.

He said the airport needs to increase fees because the current reserves were very low and sufficient income was required to ensure it could operate safely and effectively.

We have to plan for any unforeseen circumstances, said Craig. Last year, the airport spent an extra £127,000 on agency air traffic controllers because they had staff shortages.

And he said over the next 25 years, they’d need to resurface the runway and replace ageing equipment, like fire engines.

Transport Chairman, Steve Sims said there was “broad consensus among officers and councillors” that they need to put away around £200,000 a year into reserves to safeguard the future of the airport.

Steve said he “was quite unhappy” with the 5% increase because it didn’t hit that amount.

But Cllr Robert Dorrien Smith disagreed.

Robert felt the 5% rise would create a “quite substantial increase” in the reserves that “might actually be more than is required in the short term.”

He proposed a 3% increase, which was also backed by Cllr James Francis.

James said customers wouldn’t expect price rises in the current “deflationary environment.”

Robert also questioned Cllr Sims’ calls for more money to go into reserves.

He said the last time he’d seen an asset replacement programme was two years ago and he wanted an updated version presented at the next meeting

“When do we need this reserve and is it for runway replacement or machinery?” he asked.

But Council Chairman Amanda Martin felt going lower than 5% was “irresponsible.”

Amanda said officers had proposed “taking out training” as there wasn’t enough money in next year’s budget. This included delaying plans to train another air traffic controller for a year.

It was “unthinkable,” in a situation involving passenger safety and security, for the airport to go ahead without training, she said.

And Laura said costs for the Council had been cut to the bare minimum, with no contingency if anything should happen.

Cllr Dorrien Smith was assured the rise in charges was just for one year, and he withdrew his proposal for a lower increase.

He said he was confident in the islands’ ability to deliver more traffic this season and they’d have an opportunity to “redress” the 5% increase in 12 months time.

Councillors eventually voted for the increase with only Transport Chairman, Cllr Sims, voting against it.

6 Responses to Steamship Company Won’t Pass On Higher Airport Fees To Customers

  1. Cummings February 27, 2015 at 8:12 pm

    From an outsiders perspective, it would appear the Council is not the correct body to be managing the airport, or any thing else !!!
    Perhaps the Council should look towards Cornwall Council and Newquay Airport, while they own the Airport, they have set up Cornwall airport Ltd. to run the Airport. This allows the Council to remain at arms length from the management of the Airport, no interference from Councillors??
    The alternative would to hand over the Airport lock stock and barrel to a Not for profit Company or Community Interest Company. In any of these suggestions it would allow
    Board members to appointed with the knowledge of running an airport.
    It may be possible to persuade someone of the standing of Sir Peter Rigby Chairman of the Rigby Group who have a major holding In Exeter International Airport, and as a matter of interest now owns British International Helicopters.

  2. Allan hicks February 27, 2015 at 6:28 pm

    There’s an old saying, “if you think safety is expensive, wait until you have an accident” a good reserve is essential.

    • Stuart Moore March 2, 2015 at 12:44 pm

      Well said Allan

  3. Steve Sims February 27, 2015 at 1:18 pm

    Terry I wish you were on the Transport committee.

  4. Oleg Guraty February 27, 2015 at 1:15 pm

    ‘Rob Goldsmith said the company did not feel an increase as high as 5% was necessary, given the recent growth in the market to Scilly and strength of bookings for the summer season.’ well what about the drop in oil price of nearly 50%??????

  5. -Terry- February 27, 2015 at 10:16 am

    Sorry but RDS is completely wrong.

    So RDS, the only thing that reserves pay for is replacement machinery and runway maintenance? And what happens if a plane crashes? Who pays for that? What happens if they lose ATC’s again? Who pays for that? What happens if x,y,z….the risks of running an airport are huge in this day and age, they can’t run an airport serving 93,000 passengers with a ‘fall-back’ of £50,000 for ‘sundry emergencies’.

    I think the Council should be getting the full £200k each year for their reserves. And what’s more the extra 5% would only, at the very most, cost passengers 70p a ticket because the IOSSCO have kindly agreed to eat the first 5% as highlighted in this article.

    The airport is the second most valuable asset on the islands (after the harbour) and it has to be protected at all costs. If that cost is a 70p increase or a £7 increase, it doesn’t matter, it’s essential, and the type of people who visit Scilly are exactly the type of considered, responsible, intelligent travellers who would understand how important it is for us to charge a little extra to keep flights running on-time and safely to this unique and fragile paradise.

    This is about safety and being prepared for the future. Something the people of Scilly should be very serious about. If you are complaining about a small ticket price increase then you are ignorant to the catastrophic risks associated with running an airport and just how fortunate we are to have one on the islands.