Duchy Says No ‘Profit Cap’ On Airport Lease

airport 12The Duchy of Cornwall has denied claims that the airport lease has a ‘profit cap,’ which makes it commercially unviable.

The Duchy were responding to comments made by Council Chairman Amanda Martin at Tuesday’s public meeting in the Wesleyan Chapel.

During the session, councillors and Chief Executive Theo Leisjer were questioned about the decision to hand back the St Mary’s airport lease and pull out of running the facility from next year.

The Council cited restrictive terms on the lease, and the lack of commercial acumen in the authority as the two main reasons for their decision.

Cllr Martin told the meeting that the Duchy imposes a ‘profit cap’ as part of the lease, which means that if they make any money over a set threshold they have to “hand it over to the Duchy.”

Amanda said that cap was sufficiently low to make it “not reasonable” and that it also affected long-term investment in the facility.

“If we make a profit, we can’t reinvest it,” she said. “We have to hand it over to the Duchy.”

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

But in a statement to Radio Scilly, the Duchy of Cornwall said there appears to be “some uncertainty” over the terms being used to describe the lease.

They say there is no profit cap in place. The Council pays a peppercorn rent, which becomes a higher ‘profit rent’ if the facility makes a surplus after all costs have been accounted for.

And the Duchy said it only comes into effect after money has been put into reserves to cover future investments.

After that, if there is any profit, the Duchy will be paid some rent but the Council will keep the rest.

The Duchy also confirmed that the Council has never had to pay this higher rent in the thirty years that the lease has been in operation.

We contacted the Council’s Press Office yesterday to ask if the Chairman’s comments had misled attendees of the meeting about the terms of the airport lease and why it was being surrendered.

They say the current lease is no longer conducive to operating an airport commercially and that the Duchy is working in partnership with the Council to establish the most viable long-term solution for the airport.

They added: “At the Council public meeting on 10 November, Cllr Martin made reference to a profit cap which refers to the provision for a profit rent in the current lease. The Council therefore rejects any allegations or suggestions that she misled the audience.”

38 Responses to Duchy Says No ‘Profit Cap’ On Airport Lease

  1. Pete November 22, 2015 at 12:47 pm

    Adam. DO NOT GIVE UP trying to get on the Council.

  2. Adrian J,G. Davis November 18, 2015 at 11:12 am

    Of course as a Councillor my duty is to represent the electorate but though we live in a free democracy we do have to have laws, otherwise we have anarchy! All local Authorities must work within the law and this includes providing certain services. There are of course decisions to be taken in just how such services are provided (e.g. how often bins are collected, how much Council tax etc.) which is where we come in. As already said other non statutory services can be provided, or assisted, when affordable , such as meals on wheels.
    In representing you I do follow these Comments and I am happy to be contacted in person
    should you wish. We are all biased in some way and it is only by communicating that we can take informed decisions and understand ‘the will of the people’ ! This is difficult in an isolated community ; public meetings such as we have held in the past only skim the surface—-it’s up to you if you have an issue.

    • Adam Morton, St.Martins November 18, 2015 at 1:24 pm

      Lets get this straight; what exactly has changed in the past year to make the airport inoperable compared with the last thirty? Every other business in Scilly has had to adapt to decreased numbers and lower budgets by economising and sharing the costs between fewer people, why is the airport any different? From outside the secret meetings it looks like the council is about to compound these difficulties by either privatising to an outside operator who will need to increase charges drastically to achieve a profit or further increase the SSco monopoly? If it is some good reason then we just have to accept that ,on the other hand for your chairman to allegedly claim that it is inoperable on the basis of high rents that have not been paid is cause for concern!
      I cant help thinking that the electorate might have voted differently if the status of our unitary authority was to be changed as drastically as it is. There is always an excuse to NOT do something, the challenge is finding a way TO do it! As you know ,Transport was top of the agenda in 2013. About how much more reliable or cost effective would you say it is now ?Exactly how much less is the budget which now makes it allegedly impossible to continue non statutory services? Presumably you have trimmed the management costs to match the corresponding loss of duties? If so can you explain why the bill seems to be more not less?
      Whilst I am dissatisfied with the Council’s answers to date ,I do appreciate that you at least are willing to stand up and give some answers.

      • JIM T November 19, 2015 at 3:08 pm

        “Lets get this straight; what exactly has changed in the past year to make the airport inoperable compared with the last thirty? ”

        Passenger numbers.

        Let’s talk about staffing costs. It costs £x to run the airport with, say, 15 flights a day. How do you propose staff costs reduce? Perhaps less flights? Perhaps half-day opening?

        If the airport was MORE busy, the staff costs would largely stay the same as they are now, but income from landing fees would be way up. But Skybus aren’t going to operate 30 flights a day when most of them would be a fraction full. There is a formula in terms of passenger numbers per flight in order to make money.

        Where else can the airport save money? I think we’d all appreciate a list of possible savings on this page. Go on, make yourselves useful!

        But more than this, why should a local authority struggle and burden itself with the running of an airport to keep a community viable? It’s beyond the point of viability now, it cannot self-sustain and it’s unfair for Whitehall to expect a council tax base from 2,200 inhabitants to sustain a commercial airport with many of those residents already not in a position to afford a return flight to the mainland more than once a year. I welcome an increase in fare prices because then things will quickly come to a head in terms of reaching a breaking-point between this model and one of subsidy.

        What if the Council just stopped running the airport, and the Duchy failed to find another provider?
        No functioning airport. Then what?
        Is it the fault of the council or duchy to provide an air service for the population? No, it’s not.
        But guess what, there’s 2,200 people on these islands who need ‘something’ to get them to the mainland to get them to medical appointments, which I remind you is a legal right for every citizen in the land (well, those with national insurance numbers…). We should, by law, be able to get to medical appointments for £5 or less.
        Now, I’m more than happy for the government to lay on private helicopters for each patient as and when we need them, but something tells me that the cost of doing so might be a bit high.

        • Simon November 19, 2015 at 4:33 pm

          But that’s not the problem passenger numbers are improving and no less an authority than the chairman has told the electorate that it’s the Duchy of Cornwall taking all the profit. If we cannot accept the word of the chairman of the council who else should we turn to for an accurate account of the true position?
          We are obliged to take her word aren’t we?
          Surely it would be inconceivable that the first citizen of any community would misrepresent the facts?

        • Adam Morton, St.Martins November 19, 2015 at 11:43 pm

          Passenger numbers through St.Marys are as good as they have been for many years, remember 30000 of them flew through Tresco!
          You MUST be from the Council ; no full name ,8 paragraphs and you have said nothing! Excellent qualifications for a career in the civil service or politics!
          Remember it wasn’t me who said that the airport would offer “resilience”! No, that was your CEO! I feel now as I did then, that (appropriate) improvement in year round sea service and a freight subsidy would better serve the islands and we should have forgone airport lounge, road resurfacing, seafront seating, innovation centers and quay extensions for the time being to achieve it. So I feel totally at liberty to point out the glaring mistakes in the current policy!
          If you want suggestions for savings from members of the public then you need some public information which is rather the whole point of this debate! there is no indication three years in that there is any method in the madness,no master plan -nothing!
          Do you seriously suppose that in the quite likely event of there being no interested airport operators and the IOSSSco heroically step in to save the day, that we will avoid inevitable increases? No of course not , the only difference will be that the Council will turn round and say there is nothing they can do, they are powerless . Meanwhile the SSco recover costs on ticket fares (as they do now) and the Council says we can’t have a subsidy because the link is viable. The link is viable because the operator charges what it costs. The only difference will be that the Council really will have no influence and whose fault is that?

          • grommet November 20, 2015 at 8:13 pm

            adam ..again you mention the roads. the roads were done at the same time by Lagan as they had all the plant over to tarmac the runways so it made quite logical sense to repair/resurface the roads at the same time.

            You seem paranoid that if the ISSCO take over the airport fares will go up ? well they WILL go up regardless of whoever takes over the airport as if you believe the stories here that it will be offered to a private operator they WILL have to make money so they will increase landing fees/passenger handling which in turn the ISSCO will have no option than to increase the ticket costs to cover it as they wont be able to absorb any big increase by the private operator.
            It would be in the ISSCO’s interest and vital for the operation of aircraft to take on the airport if no one else does, as they couldn’t function obviously with no open airport this side.
            MONOPOLY MONOPOLY i hear the cry !!

            right i’m off to get my skateboard and go and surf the smooth black waves of telegraph hill

          • Solomon November 21, 2015 at 10:31 am

            I cannot believe skateboarding is in your job description, still if your grant funded what the heck!

          • Adam Morton, St.Martins November 22, 2015 at 8:54 am

            Grommet, your ramblings have nothing to do with reasons for the Council giving up the airport. I’m not sure why you feel the need to reiterate my point about inevitable ticket price increases?
            Apart from Councillors Davis ,Grottick & Billsborough , it seems that anyone speaking in favour or on behalf of the council uses an alias – now why could that be?
            One can only conclude from your attitude that you simply don’t care about the islands future and are quite happy to see industry ruined, living costs snowballing , young islanders driven out and the place becoming a ghost 2nd or retirement home like every other mainland coastal village? Instead of getting of your backside and seeing that the few resources we do have are used fairly to strengthen the economy for a time when there are no grants to keep you occupied. I didn’t have time but I tried standing for council and doing my bit but that not being successful I am reduced to making my points on this forum and I use my name so as not to be hiding my interests ,You on the other hand!!!!

  3. Nobby Nobbs November 16, 2015 at 5:24 pm

    It seems to me that the council’s policy with regards to the airport, is to hand it back to the Duchy in the hope that the Duchy offer it back to the council at a lower rent because no one else wants it.
    Great strategy!

    • Bella Blue November 16, 2015 at 8:00 pm

      No very risky foolish strategy and if this was the case why risk upsetting the duchy by telling the electorate porky’s? Not even you can’t defend our accident prone council over this one Stuart its beyond the limits of credibility!

  4. Jenny November 16, 2015 at 10:46 am

    AJDavis makes a valid point about the statutory responsibilities of the Isles of Scilly Council. Not so long the residents of these Islands were informed that the reason why there were high levels of staffing at the Council, some with pay greater than other local authorities10 or more times the size of the Isles of Scilly was because of the additional responsibilities the officers had. Now it looks like the management of the Air port, water and sewerage, education, fire service and Park House is being relinquished by our council please could the number of staff be reduced and the high wages of the senior officers and directors be reduced to reflect this. This would free up money to support the statutory services.

    • Fred Up November 17, 2015 at 12:19 am

      Very true, moreover the officers are being paid much higher salaries…..I think I’m correct in saying the last permanent CEO was on about £85k and the present incumbent £110k.
      We certainly got what we wished for didn’t we? Everything is run so smoothly now!

  5. Adrian J,G. Davis November 15, 2015 at 7:36 pm

    Dear R.B and A.K.B. etc,
    Much that has been said on this matter is true but there are some very important inaccuracies..
    However as there were three CONFIDENTIAL meetings before the decision to relinquish the airport lease was taken I am reluctant to correct any facts even though the matter has since been discussed publicly and ‘on air’ by others.! (i.e. I am not sure now what info. I have is privileged and what is not!!) I will say though that at the time I questioned our ‘legal officer’ on the reasons for the secrecy, an issue which still troubles me, and the disquiet voiced by the large number of comments that have followed the decision becoming public only reinforces my profound feeling that this whole issue has not been handled well from the point of view of the community.

    I also think we should all understand that the LA has statutory duties that it has to fulfill and other services which it decides to carry out for the benefit of all. In these stringent times it is incumbent for us to look carefully at where we will be able to make savings so that the non-statutory services will, as in other LAs. bear the brunt of cuts .Members are endeavouring to find out exactly where our obligations lie.

    • Adam Morton, St.Martins November 16, 2015 at 9:11 am

      Is it not the point that a LA represents the wishes of the local electorate ie not what it considers statutory or what would save it money? I wonder how many of the electorate realised what decisions would be taken in their name? judging by the responses ,not too many! AKW sums it up perfectly – it may be that the Council has chosen the only sensible way forward but when the few facts presented to the public turn out to be flawed,it must shake any faith that the matter is being dealt with in a professional manner and in the public interest!
      After all, this airport project was held up by your CEO as the solution to our transport difficulties and now he wants to dump it – bit late for that now!

    • Another Keyboard Warrior November 16, 2015 at 10:53 am

      Thank you for responding, I very much appreciate your willingness to engage with people on this site – much as I am sure many others at the council hate this, it is a hot bed of discussion and a useful platform for people to air their views, have a debate and ask questions on specific issues as they arise.

      Personally, I fail to see how hiving off a service which is supposed to be run in a financial bubble will have any positive impact on the remainder of the councils spending? apart from the savings from the additional responsibility allowance of the Airport Accountable Manager, and perhaps the chief will forego £5-10k of his salary, what marginal savings will be made on the council side? They must be charging the airport a share of their IT costs, HR costs, finance staff, costs of democracy etc all this will have to come back to the ‘centre’.

      Whilst I can accept some *details* should not be available to the public, a huge ‘in principle’ debate on the future options of the airport service would seem like a key decision as defined in the The Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012 to me, but I’m sure your ‘legal officer’ knows best.

      But if you are convinced that you have seen all the information needed to make this decision, and we are to be denied the opportunity to scrutinise it for ourselves then I guess I’ll have to accept that you know what you are doing.

  6. Mandy Morning November 15, 2015 at 9:12 am

    Red Baron is very wrong. Amanda Martin blamed the Duchy Of Cornwall’s restrictive lease for the Council decision to hand back the airport. We were told that the Duchy’s proportional take was so great it meant that the Council could not reinvest in the future of the airport. We have now been told that this is not the case by the Duchy. We have also been informed that the Council has never had to pay any of this cap to the Duchy. Ever. Furthermore, the Council has only paid a papercorn rent. At best, the community has been given selective information in the public meeting and there has been the omission of important facts which might have made people think differently about the Council’s decision. There is a word which describes an individual who presents as fact any information which turns out to be incorrect in order to achieve their intended outcome. I suspect that the moderator will not let this comment go online if I used this word.
    We have been greatly let down by people that we put faith in at the ballot box.

    • Gordon Bilsborough November 15, 2015 at 3:27 pm

      I am seeking clarification from Mandy Morning about the definition of a word she did not use. Did she mean “terminological inexactitude,” an expression first used by Winston Churchill in the House of Commons in 1906?

      • Leslie Welch November 15, 2015 at 8:54 pm

        It is probable that Mandy meant “economical with the actualite “. It is so sad to see what an absolute embarrassment our current chairman has proved herself to be, she couldn’t hold a candle to even the poorest of her predecessors.

  7. Red Baron November 14, 2015 at 4:17 pm

    Um…doesn’t the duchy response just back up what Amanda said? The council can’t make money on the airport because the duchy will take a cut of it after all running costs have been accounted for.

    ha ha! All this gum flapping based on nothing, just laughable! Bless you all.

    • Pete November 14, 2015 at 11:43 pm

      Read the article AGAIN Red Baron.

    • Adam Morton, St.Martins November 15, 2015 at 9:01 am

      No it really doesn’t!It was cited as the reason for giving up the lease ,except that it has now been shown as a non reason in that the Duchy has never charged them a rent in 30 years and only requires one IF they start making a profit, I really cant see you could get fairer than that!

      • Red Baron November 15, 2015 at 1:58 pm

        Doesn’t it say everything that we haven’t made a profit in 30 years? Obviously not talking to a room of successful businessmen here. The council has ‘coped’ in years gone by, but with failing passenger numbers it’s now not able to self-sustain, ie it costs the taxpayers to keep it running. Still following? The council cannot make up the shortfall year after year because it will bankrupt the authority very quickly.

        • Another Keyboard Warrior November 15, 2015 at 4:47 pm

          With your lack of interest in checking the facts, maybe you should stand for the council!

          The point you are not grasping is that the airport will NEVER make a profit, because all SURPLUSES are put in an unlimited reserve to even out in year losses and to save for replacing infrastructure and assets.

          If you bother to do even a rudimentary bit of research, you’d learn the Airport trading account is reported in the accounts each year and these sit on the Scilly.gov website for all to see:

          The council successfully operated the airport for 30 years, it is the lack of cost control on the capital project that have torpedoed the balances despite the assurances that it would all be eu funded and was ‘worst case scenario’ estimates.

          The question is, were all the legal and financial implications fully explored and considered by members when this decision was made in closed session. We cannot see the report, and when we are told the reasons by the most senior and what should be the best informed people and they are then found to be inaccurate, then we start to think *perhaps* there needs to be a bit of public scrutiny. This is why I agree with others that we should be concerned that the decision was made properly.

          Was a 10-20 year plan drawn up?
          What are the financial implications to the council of losing th service? eg on the cash flows?
          How much of the central costs which are allocated to the airport but which will have to be reabsorbed by other services (HR, IT, finance, corporate etc )
          What’s the value of the assets to be transfered off the balance sheet ? What if any consideration will be received for the assets?
          What are the legal implications regarding the assets?
          What happens about the ATC house on Ennor close paid for from the airport account?
          What happens to any liabilities on the airport service on the date of transfer?
          How will the council protect and care for the airport staff during the transition?
          What consultation was done?
          What other options were proposed?
          Etc etc

          Rather than ensure good management for services, the approach being taken seems to be ‘we now have poor management, therefore we’ll get rid of the services’.

          Slowly the council is being chipped away before our eyes, and we will NEVER get it back. That may well be a good thing judging by the way things are being run at the moment, but it’s a decision that shouldn’t be taken lightly.

        • Adam Morton, St.Martins November 15, 2015 at 5:22 pm

          The Council does not /isn’t allowed to make up the shortfall,haven’t you been following this story? X ammount of running costs divided by X number of passengers, same as any other business ,What’s so difficult about that? Best quit before you get shot down.

  8. Mandy Morning November 13, 2015 at 8:52 pm

    Jack M asks why the fuss? One could assume that we, who sat through the presentation by our elected representatives are somewhat troubled because what we were told appears not to have been factually correct. The Council pretty much said that the Duchy was to blame for the council giving wishing to terminate operation of the airport. The Chair clearly stated that there were charges levied by the Duchy which made the Council operation unviable. The Duchy now say this is not the case and that they have not charged at all. That is not what we were led to believe. because of their charges they levied . Since then the Duchy have said that they didn’t charge the council and Allan Hicks has confirmed this. Can you understand why I feel that I have been tricked because I took the Council told us on face value?

    • Keyboard warrior November 14, 2015 at 9:17 am

      The question of ‘who is best to run the airport’ is moot.

      The quality and accuracy of information provided to members to make a good decision is the point, and when the most senior officer and the most senior councillor tells the public essential facts upon which a very key decision is made but which then turns out to be wrong, are we not then justified to wonder what the heck is going on? I would hope that they did not lie knowingly, but either they didn’t bother checking the facts themselves, or they are being misinformed by their legal and finance advisors. Assuming they wouldn’t do that deliberately either, it can only be down to incompetence.

      I think we know they are not bright enough for conspiracy. I am sure they are lovely people doing the best they can, but it’s how deep does the incompetence go and how many poor descisions made on unchecked facts are going to be made before they are routed out.

      • JackM November 14, 2015 at 10:26 am

        You say that the question of ‘who is best to run the airport’ is ‘moot’… err, no, that’s the crux of this whole story!

        So you’re angry because there’s been a bit of a fuddle in information, management, etc – okay, so the Council are incompetent. So surely it would be best if they weren’t running the airport? (And if you think you can do a better job, why not become a councillor or apply for a job at the council??)

        The main argument for bringing in an established airport operator, who probably runs several airports in the country, is that they know what they’re doing and have the resources (and the ability to borrow) behind them.

        It’s not a conspiracy. It’s a clear case of a very small local authority openly admitting that they cannot run an airport and wanting to find a solution – and to move things along the first thing is to give a year’s notice to the airport lease.

        • Chargepayer November 14, 2015 at 1:27 pm

          The crux of the story is that the council have seemingly led the electorate up the garden path again. There can be no excuse for disinformation it is actually insulting that the chairman and chief executive thought that we could be so easily duped.
          Can you imagine the perception that the duchy now have of the authority? Irrespective of anyone’s views of the duchy they are a quite significant player in the country with important contacts, our council has needlessly done the Islands a disservice.
          What will our six figure CEO next admit he cannot run, according to JackM as long as he openly throws in the towel that is perfectly acceptable!

          This airport business is another example of shameful and inexcusable behaviour from a badly flawed and increasingly incompetent political and management structure.

        • Pete November 14, 2015 at 2:52 pm

          Jack M. You say a bit of a “fuddle” When the Isles of Scilly council start telling porky’s, people have a right to be Angry.

  9. JackM November 13, 2015 at 7:14 pm

    Why are you all so keen on the Council running the Airport? If the Airport hadn’t been run by them, but was now proposed to be so, I bet there would be massive opposition from the same armchair warriors.

    There is no great conspiracy – it’s simply that the Council quite rightly don’t want to run the Airport because they feel they don’t have the resources and expertise!

    Could the keyboard warriors care to spell out who they’d like to see run the Airport? If not the Council, then why the fuss? If they can’t, then could they kindly give their keyboards a welcome rest?

    • Keyboard Worrier November 13, 2015 at 11:26 pm

      Only an employee or an inner circle councillor or a partner of one or the other would attempt to defend the crass fumbling directionless blunderfest that this present council represent.

      • Chargepayer November 14, 2015 at 8:25 am

        “Don’t want to run the airport because they feel they don’t have the resources expertise!” They have more staff than ever before they have a Chief Executive who is paid more than 100K. Money is no object GET THE EXPERTISE and stop playing with looney unwanted projects that only embarrass the population.
        The chairman has been caught out AGAIN, the vice chairman should have stood down after his conviction, our council is a disgrace.

    • Adam Morton, St.Martins November 14, 2015 at 9:26 am

      In the first place its public money; if it were the Councils intention to give up airport operation then they should have done it before spending £5m on it because like the alleged savings from private operation there would have doubtless been savings from private development. Second ,if they give up the operation after spending all that money, then if the SSco were to take it on ,it would represent a considerable public investment and could potentially be used as some kind of bargaining chip to get the SSco to cooperate a little in the public interest regarding subsidy,year round sea service or whatever. Third, IF another outside operator were to take it up then as has rightly been suggested,the only incentive is running it as a profit making enterprise which is not in the public interest. As far as I can see the Council seems to be getting rid of all its major responsibilities rather than doing them properly but only after investing all our money in them so in other words the taxpayer is paying for a public service , then the Council does a flop and privatises it whilst retaining all its officers on top dollar.
      All it requires is to divide the £450k or whatever it is by the number of passengers but most of the Councillors have accommodation and recognise that this makes the cost of travel even more non competitive so for the sake of £1 or so ,the books don’t balance! Then on the other hand you have Mr Leijsers new “legal Council” full of clip board bearing officers with their mainland stile vision except that the economy cannot support it without all the other mainland standards that go with it! Eg regular and cost effective transport equal opportunity etc etc.
      Either the Council or the SSco could run the airport but in so doing there are responsibilities either way.If the airport is privatised then our transport stands to become substantially more expensive or a complete monopoly or both. which in my view would obligate the Council to ensure there were some public safeguards.
      The Council just makes future obstacles for itself at every turn. I wanted them to concentrate on a freight subsidy which would then in turn allow them to complete public works at much lower costs whilst also allowing cost effective investment in the economy and housing followed by workable waste solutions ,they chose to spend all the money on the projects so now we have expensive assets and an industry that can’t afford them with no hope of any help on transport costs.

  10. Stephanie November 13, 2015 at 6:11 pm

    This just doesn’t add up. I think they are hiding something.

    The truth will come out though…it always does.

  11. Richard B. November 13, 2015 at 5:33 pm

    As a regular to your lovely islands for over 20 years can it only be me who senses something is wrong within your council – what are they hiding ? I follow your news and there always seems to be problems. Perhaps the locals feel the same but no-one wants to think the worst and/or ask the questions, it must be difficult in a small community.

  12. Linguine November 13, 2015 at 1:44 pm

    Would that it was only business acumen that our council lacked, what more do they need to do to divest themselves of their last fleck of credibility?
    Linguist you should hang your head in shame you can’t even make your story add up!

  13. Fred Up November 13, 2015 at 1:19 pm

    Oh my, it just gets worse! Economy with the truth in attempt to divert blame.
    It’s no more than one has come to expect from a regime which confesses to having no commercial acumen and a linguist who admits difficulty with budgets.