Cardiff Airport is receiving a further £20m in financial support from its owners the Welsh Government. It is the first instalment of a planned £205m support programme from the Cardiff administration aimed at reviving the fortunes of the airport.
Last year the Welsh Government announced its 10-year subsidy support package for the Cardiff Airport, which it acquired in 2013 from Spanish firm Abertis in a £52m deal. It said its funding support would help drive a diversification strategy in areas such as aviation maintenance, repair and overhaul, general aviation and increasing freight movements. Some of the funding has also been earmarked to attract new airlines and routes, with the aim of increasing passenger numbers to exceed two million annually over the next decade.
Last year the Welsh Government submitted its subsidiary plans to the Competition and Markets Authority (CMA), through its Subsidy Advice Unit. Having taken evidence from other Ƶ airports, its nearest rival Bristol Airport responded that the plans appeared to breach the Subsidy Control Act by giving its nearest rival an unfair competitive advance. The Welsh Government said having assessed the non legally binding report from the CMA, it has amended its planned subsidiary support programme.
Once the Welsh Government’s case is published on the subsidy transparency database any legal challenge will have to be submitted within a four week window to the Competition Appeals Tribunal. It is expected to be uploaded in a matter of days. Bristol Airport confirmed it would take time to assess the £20m subsidy package before deciding on its next steps, which could see it lodging a legal challenge.
In statement Cabinet Secretary for Economy, Energy and Planning, Rebecca Evans, whose responsibilities include the airport, said: “We have given consideration to the Competition and Markets Authority’s assessment and have refined the technical details of the ten-year programme. We will now proceed to a first investment of £20m We remain committed to the growth of this essential economic infrastructure, which currently generates over £200m in gross value added (GVA) annually and supports thousands of jobs in the South Wales region.
“The funding will develop additional economic activity for the benefit of the South Wales region and beyond, as part of an outward-facing, vibrant and attractive national economy. Developments may include facilities for aircraft maintenance, cargo handling and general aviation. Some of the investment will go towards exploring new opportunities such as possible air routes. My officials will monitor the economic performance of the investment and will ensure that the subsidy be kept to a minimum to deliver the project. I commit to keeping the Senedd updated at appropriate times during the course of the ten-year programme.
A Bristol Airport spokesman said: “Bristol Airport is proud to welcome customers from South Wales, providing opportunities to reach more than 115 destinations using our extensive range of airlines. Visitors also frequently use Bristol Airport to attend major sporting events in Wales.
Our airport has and continues to invest, including work under way on a major £400m investment to improve facilities for customers over the next five years, at no cost to the taxpayer.
“The CMA report (last year’s) highlighted that there was little evidence showing how the Welsh Government’s proposed substantial state subsidy for Cardiff Airport would minimise market distortion. We remain deeply concerned about the damage this subsidy could cause to competition between airports and airlines. We will now take some time to assess the subsidy package before deciding on our next steps.”
Welsh Conservative Shadow Cabinet Secretary for Transport and Infrastructure, Peter Fox MS, said:“The Labour Government’s decision to inject the first £20 million of a planned £200m to Cardiff Airport will bring the total amount of Welsh taxpayer money invested to over £200m.
“Cardiff Airport is a financial burden on the Labour Welsh Government and Welsh taxpayers and it is time for Labour to finally do the right thing and sell the airport to the private sector.
“Ministers in Cardiff Bay lack the essential expertise to manage an airport. That is why an experienced corporation in the private sector, with proven industry knowledge, would be better placed to ensure the airport not only survives but thrive.”
However, with airport continuing to be loss-making, what appetite would there be from the private sector to acquire the airport or take a significant controlling stake alongside the Welsh Government?
In its last financial year, it posted an Ebitda (earnings before interest, tax, depreciation and amortisation), of £5.8m. However, this was before the release of a Welsh Government grant of £10.1m as part of the airport’s five year post-Covid recovery plan, which once discounted resulted in an Ebitda loss £4.3m.
With grant, debt and equity support, and the £52m paid to acquire it, the Welsh Government has invested around £180m in the Rhoose-based airport. Since being acquired it has made accumulated losses of more than £61m.
The airport’s passenger numbers for the financial year to the end of March, 2024, were 862,000 compared to 910,000 in the previous financial year, but were up marginally for the 2024 calendar year. However, the airport is still well short of its post pandemic annual passenger number of 1.6 million.
Last week it was confirmed that the airport’s chief executive Spencer Birns has left to pursue other opportunities.
