Chairman Says Restrictive Duchy Lease Affecting Airport Viability

airport runway 2015“The sooner we’re shot of the airport, the better.” That was the view expressed by Council Vice Chairman Steve Sims at Tuesday’s public meeting in the Wesleyan Chapel, where councillors explained their decision to hand back the St Mary’s airport lease to the Duchy of Cornwall.

That opens the way for the Duchy to appoint a commercial operator to run the facility.

Councillors explained it was driven by their lack of ability to run the airport commercially and the highly restrictive lease conditions imposed by the Duchy.

Council Chairman Amanda Martin told islanders that the Duchy imposes a ‘profit cap’ as part of the lease.

She said that means if they make any money over a set threshold they have to “hand it over to the Duchy” and the cap was “sufficiently low to make it not reasonable.”

Amanda said this had been in place since the mid 1980’s and wasn’t sustainable.

If the Duchy hasn’t managed to find a commercial operator by the end of the one-year notice period, Amanda said the Council would step in to continue operations. And she said this would provide them with an opportunity to renegotiate the lease.

Council Chief Executive Theo Leijser focussed on the inability of the Council to run commercial operations like the airport.

He said the authority had “struggled to have meaningful discussions” with other operators to run services.

And he said the current airline Skybus doesn’t connect properly with other transport routes on the mainland.

Theo was asked why the Council’s own report, commissioned from experts Parsons Brinkerhoff, said that no operators in the UK either had the correct aircraft or the commercial interest in operating out of St Mary’s.

At the time, Radio Scilly reported that the consultants had spoken to all UK airlines using aircraft that could land here, including Loganair, Manx and Guernsey airline Aurigny. None of them were interested in adding the route.

But Cllr Martin said the Channel Islands operator had shown interest and Theo replied that it was, “four years ago and things had moved on.”

Other members of the audience asked why the Council was concerned about the Duchy’s profit cap if the airport wasn’t making any money anyway.

The senior Manager responsible for the airport, Craig Dryden, said it “just about broke even” last year.

But Craig said they were faced with increasing costs due to more safety compliance, as well as falling passenger numbers, down last year to 93,000 from the peak a decade ago of 130,000.

The Council’s accounts show the airport was in the red by £170,000 last year, although Theo explained this was due to the money spent on the refurbishment.

One islander felt that the only way a commercial operator would be able to make a profit is to “basically sack people” and raise money through car parking and concessions like gift shops.

But Cllr Martin said, “that wouldn’t be our problem.”

Cllr Gaz O’Neill said he was “flattered” that so many people think the Council were the best people to run the airport.

There was some confusion over whether the public money invested in the airport would have to be paid back, and whether the Council could recover the £600,000 it overspent on the refurbishment project last year.

Theo said if the airport continues under it’s present purpose, then no repayment of the grants would be required.

But he didn’t know if the Council could recover their extra costs.

Cllr Steve Sims hoped that the European funders would meet the cost of the overspend and he thought there could be an announcement about that on New Year’s Eve.

13 Responses to Chairman Says Restrictive Duchy Lease Affecting Airport Viability

  1. Pete November 15, 2015 at 9:48 pm

    Red Baron. You would like the islands to continue as a tourist destination with a increase in fares. I don’t understand your thinking. You are already complaining about the high cost of fares, restricting your travel.

  2. Red Baron November 14, 2015 at 4:25 pm

    Guys, we’re going to be alright. Always have been, always will be. We’re very fortunate here, and are sort of a protected species due to our geography. As bullish as that sounds, it’s true. Id be kore than happy to move to the mainland if the government paid for my move and found me a property.

    • Chargepayer November 15, 2015 at 9:24 am

      Why should the government pay for your move and find you a property? Your posts are no more than an attempt to deflect discussion away from the unprofessional approach to the airport issue by the chairman (or Amanda as you refer to her).
      The chairmanship of the council has never been conducted so poorly and sadly the vice chairman, who many thought showed promise is a failure. The VC through an obvious departure from the application of basic common sense over a prolonged period has rendered himself unfit to hold senior office for the foreseeable future.

      • Red Baron November 15, 2015 at 2:31 pm

        Because otherwise people would be trapped on the islands because they couldn’t afford to get off. Those born here didn’t sign-up to be held captives on two square miles of land. The average wage here is very low and the average price of a home, and of a bag of shopping, is very high. I could shop for groceries cheaper in Kensington. Comes a time when people’s choices are taken away from them due to outside forces, and that’s not fair. People in other parts of the UK can pack a car and move where they like, we can’t, that freedom of movement is already very questionable, but with increased fares would be impossible for many.

        I’d like to see this place try to continue as a tourist destination with increased fares.

        If the council want to free up more council housing then they could offer financial assistance for people to move to the mainland. I’m sure they’d be a lot of takers. Otherwise people just can’t afford to move. It costs a fortune at the best of times in the UK but over here is even worse. Haulage to pz, then onwards. Fares to get across, but also fares to even go and view the property first!

        This place is no longer fit for working class people. The local cartels own everything and suck all the profit up, and do nothing for their employees. They just palm them off to the council, and then we wonder why there’s so little social housing. And the Duchy are SO helpful, charging high rents for ‘family homes’, so those people can’t save enough for their own homes.

        It’s nothing like it was 30 years ago, it’s been ruined by greed and a passive council. I feel sorry for the present councillors having to deal with decades of bad decisions that have all come to a head within a very short space of time. Moor well, the runway, housing, healthcare, the helicopter, the roads, the school, just to name a few.

        What unprofessional approach to the airport are you on about? It’s patently obvious that a local authority shouldn’t run an airport. They should no more run an airport than they should run the coop, or the fish and chip shop, or a cattery. But no….although I’m an idiot for wanting a bespoke solution to population movement, you’re apparently not an idiot for wanting a council
        To run an airport? I forget which council runs Heathrow, is it the same one who runs. Debenhams?

    • Pete November 15, 2015 at 12:35 pm

      If you live over here Red Baron, you are probably living a life of luxury now. So why move.

  3. overscilly November 14, 2015 at 4:18 pm

    The only ‘profit’ element in any ‘public transport’ Airport is that made from franchising of services and shopping.The shere cost of providing the basic CAA/EASA regulated Air Traffic and Rescue and Fire service on top of the licences and equipment maintenance means someone has to cover all that for it to function at all.First you have to know what it costs then decide who it benefits.The split is usually Passengers, Operators, Tourist, Trade, Business Trade,Local residents,Employee’s of the above.With only 93,000 pax a tax on them will help,but then they probably feel they are already paying too much to get to Scilly anyway.The truth is EVERYONE benefits from the facility so the cost should be spread across the spectrum in a proportional way including local.The reality is that the cost of providing a safety regulated facility is always going to be expensive,however this has to be balanced against the loss of Island income if you decide not to provide a service at all.

  4. Resident November 13, 2015 at 10:12 am

    I do not feel convinced by the Chairmans remarks. The Council has wasted public money on unnecessary upgrades and now put the future of our vital link in jeopardy .The airport is never likely to make profits to interest commercial operators but it is vital link for the islands.
    Strange that it was rushed through by the cabal in Secret but the Chairman is now happy to give the reasons at a Public meeting! Not worried about offending the Duchy then!?
    I am reassured by Councillor Sims about the overspend refund. Does he mean April 1st.?

  5. Adrian J,G. Davis November 13, 2015 at 9:18 am

    As I see it-:

    1) All leases are ‘restrictive ‘ in some way.
    2) It is essential that the income of this vital facility is increased by a considerable amount, a fact which is going to affect all our pockets.
    3) As an LA we are constrained by some legislation which does not apply to a commercial operator.
    4) However by relinquishing the lease we have given the opportunity for a third party to take over and may have lost all control when ,as the present lease holders we could have renegotiated the lease at this point.
    5) The only motive a commercial operator will have in taking on the lease will to make a profit which will possibly leave these islands and increase the cost.
    6) I felt that this issue is so vital to us all that the community should have had some opportunity to be involved. However I do see the argument for keeping it in part three ( individual jobs, commercial considerations etc.) but I felt that the public interest outweighed that decision and the the whole issue is now being discussed in detail on RS etc.!!

    • The day they gave away the airport November 13, 2015 at 4:20 pm

      It’s odd that all of a sudden this 30 year old lease is now discovered to have such a toxic stranglehold on operating the Airport that it has to be gotten out of immediately? It’s so out of the blue, was this meeting the first time you had heard about it, was renegotiating even given as an option?

      I sincerely hope the council did not make this decision in haste on scant information – in the years to come you may all be remembered as ‘the ones that gave away the airport’

  6. Adam Morton, St.Martins November 13, 2015 at 9:10 am

    I think I see the plan now, give up the lease and then hopefully it will be the Duchy that get all the flak for issuing it to someone else! One would think that would be quite a good safeguard by the Duchy in the public’s interest to run it at cost and so far the question of dividing profits is the least of the Councils worries. The fact that Mr Leijser is playing down outside interest suggests that he already knows that it is either the SSco taking it on or the Council want a lease where they can make it a money spinner, either way its not particularly in the public interest.
    More to the point is that If they with public backing and a virtual monopoly & more or less known passenger numbers, cannot make it commercially viable, what chance do they think anyone else has in this or any other area? Why are they not conducting a transport review with the greatest urgency? Already they don’t know passenger numbers by sea, soon they won’t even know airport numbers , speculation & spin by IP will run riot .
    The Council chair seems to be particularly adept at scare mongering on political issues whilst ignoring the real ones. We had the evils of the media reporting & FRIST in the first year, water regulations last year and then the proposed trust port this year. Oh and not to mention the expert advice on engineering projects that will likely set us back another few million on the quay. She needs to earn respect and stop trying to create bandwagons to deflect from the real problems faced in our economy.
    But then I suppose what can we expect when the public think that a weather station or an observatory is going turn things around!Does anyone do any research or projections of actual results?Or is it done on the basis of web hits turning into bookings!

  7. Allan Hicks. November 13, 2015 at 8:52 am

    Yes there is a clause in the lease which states a percentage of any profit over a given figure is payable to the Duchy. But, even when we processed 130,000 passengers NO payments were due to be paid as the budgets were calculated to cover running costs and make a small contribution to reserves.

  8. Prudence Slack November 12, 2015 at 9:39 pm

    This shower should be down on bended knee begging a former airport manager to tell them how it was done the airport only ever made a m o d e s t surplus set toward reserves never a profit.
    Why offend the Duchy what possible benefit comes from that, it was tactless and inept which is unfortunately all too often the case with our current leader.
    It’s far more likely they’ve had their palm read once too often by the CAA.
    Absolute rank incompetent amateurs it would be laughable if it wasn’t so damned important.

  9. Candid Council November 12, 2015 at 12:04 pm

    The council should be applauded for laying bear their shortcomings so candidly. In case we were under the illusion that they were running a tight ship, it is refreshing to hear top brass admitting so openly to everyone that they are poor communicators and managers. And they certainly are not afraid of alienating what one might have thought of as a key stakeholder/partner and squarely blaming the Duchy. It was a little sad and surprising just how little regard they have for their airport staff’s futures though. But is appears tact and diplomacy are clearly as overrated as a familiarity with actual figures.