Wales

Cardiff Airport is sold to the Welsh government for £52m

  • 27 March 2013
  • From the section Wales

Troubled Cardiff Airport has been sold to the Welsh government for £52m.

First Minister Carwyn Jones said it would not be operated by the government and would be managed "at arm's length" and "on a commercial basis".

Mr Jones has been critical of the airport after a slump in passenger numbers from a peak of two million in 2007 to just over one million in 2012.

Rival airport Bristol raised concerns that Cardiff would unfairly benefit from state support.

Speaking after the government announced the deal, Mr Jones said it was vital for the number of passengers to be increased.

Figures showed just over one million passengers used Cardiff in 2012, down about 200,000 in a year.

Meanwhile, nearby competitor Bristol Airport, which has sought assurances that Cardiff will not get state handouts, had seen almost six million passengers last year.

Cardiff was hit by the withdrawal of flights by budget airline bmibaby in 2011, but has said it expects 5% - 8% growth during 2013.

Last May, Mr Jones called on the then owners TBI to invest in its future or put it up for sale.

"Cardiff Airport is a vital gateway to Wales for business, tourists and general travellers alike," he said on Wednesday.

"It is essential that its future is secured and that we develop high-quality sustainable services.

"The airport will not be operated by the Welsh government. It will be managed at arm's length from government on a commercial basis and, over time, I expect to see a return to the public purse on the investment.

"A chief executive of the airport will be announced in due course. In the meantime, I am delighted that Lord Rowe-Beddoe has agreed to serve as chairman of the airport board."

In the longer term, the board will look at the possibility of bringing in a commercial operator and Mr Jones also opened up the prospect of the airport looking to attract long haul and transatlantic flights.

Mr Jones said the Welsh government had been contacted by a number of interested parties.

After hearing of the sale, Bristol Airport chief executive Robert Sinclair was sceptical that government involvement would be "arm's length".

'Highly competitive'

"However, the purchase price of £52m paid by the Welsh government - which is well above market value when compared to recent transactions involving UK airports - gives us concern that ongoing government involvement and support is highly likely," he said.

"Airports across the world are commercial businesses operating in highly competitive markets and the global trend is towards privatisation of these assets, not nationalisation.

"Bristol Airport has never been concerned about competition from Cardiff or other airports, provided that competition is on a level playing field without any form of state subsidy or government support."

The airport's existing staff will remain but only 40 are employed directly.

An average of around 1,000 staff work on the site as sub-contractors but that figure can vary considerably.

In the months leading up to today, Mr Jones said the airport gave a bad impression of Wales as it fell behind its rivals.

The owners said at the time that they had no plans to sell but would listen to offers.

Only this month there was bad news when Swiss carrier Helvetic announced it was pulling out, two years after the Welsh government spent £500,000 marketing Wales in Switzerland.

Helvetic started flying to Zurich from Cardiff in 2011, but had already dropped winter services after low demand and will not fly this summer.

'1970s-style nationalisation'

However, Spanish airline Vueling said it was increasing services to Malaga and Alicante from Cardiff after a "positive response from Welsh travellers".

Asked if the purchase was a gamble, Business Minister Edwina Hart said it was "the right thing to do."

But opposition politicians were sceptical of the Welsh government's involvement in trying to turn around the airport's fortunes.

"I have yet to be convinced that a 1970s-style nationalisation is the answer to the airport's problems," said the leader of the Welsh Conservatives, Andrew RT Davies.

"When you consider the recent decision by Helvetic to withdraw, in spite of the Welsh government having invested around half-a-million pounds, it is far from clear that the first minister is the best man for the job of rescuing this airport."

Eluned Parrott, Welsh Liberal Democrat economy and transport spokesperson, called on the Welsh government to "urgently announce its plans to transform the airport".

Plaid Cymru also said it wanted to see the detail of the government's plans.

"There is no reason why a publicly-owned national airport for Wales could not be far more successful than the airport in its present state," said party leader Leanne Wood.

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