Memorandum submitted by City of Derry
Airport and Derry City Council
1. AIRPORT HISTORY
The airport was built by the Ministry of Defence
as one of four airfields on the North coast and opened as Eglinton
Airfield in the early '40s. The airfield was host to the RAF,
Royal Navy and the American Eagles and with the other three airfields,
Limavady, Ballykelly and Maydown, played a key role in the defence
of the North Atlantic. The airfield closed in the early '60s with
the transfer of HMS Gannet to Prestwick Airport. Intermittent
commercial operations took place from the airfield during the
'60s and '70s with services to Glasgow by Emerald Airways and
the local flying school, Eglinton Flying School who operated the
airfield up until 1978, when the current Airport Authority, Derry
City Council were approached to take on the ownership and management,in
a role similar to that of other local authorities throughout the
UK.
Derry City Council opened the airfield towards
the end of 1978, operating a passenger terminal from a number
of portable buildings located on a disused runway. The first commercial
scheduled flight commenced on 2 April 1979 to Glasgow, operated
by Scottish Airline Loganair who has maintained the service over
the past 25 years. This was the only scheduled service operated
up until 1989 when Loganair introduced a service to Manchester,
a new service was also introduced to Dublin.
Passenger numbers had remained fairly constant
from 1979 to 1989 at around 10,000 per annum. From 1989 to 1994
with the additional services to Manchester and Dublin passenger
numbers had grown to 39,000 per annum. When the portable buildings
were reaching the end of their operational life and had been outgrown
by the increased passenger numbers.
The Airport Authority applied for and secured
funding from the European Regional Development Fund for the re-development
of the airport. Upgrades and improvement were made in all areas
of the airport including, new terminal building, fire station,
access road, car parking, with upgrade to runways, airfield lighting
and navigational aids. The new airport was opened in April 1994
and re-named City of Derry Airport.
Jersey European Airways began a feeder service
via Belfast City Airport connecting up to 16 destinations. Passenger
numbers almost doubled from 39,000 in 1994 to over 75,000 in 1995.
However, with the introduction of low fares airlines at Belfast
International, passenger numbers declined over the next four years
to 54,000. See annex one.
The mid 80's saw the launch of Europe's first
low cost airline, Ryanair. It quickly became apparent that low
cost access could assist in the economic regeneration of the North
West region with high unemployment, a shrinking manufacturing
base, with an untapped potential for tourism development.
Following the completion of safety improvement
works, jointly funded by both the Irish and Northern Ireland Governments.
Airport Management successfully secured an agreement with Ryanair
who began scheduled services to London on 1st July 1999. Between
1999 and 2004 passenger numbers have grown significantly with
scheduled services to London, Birmingham, Manchester, Dublin,
Glasgow and package holiday charters to Majorca, Salou, Lanzarote.
See annex two.
Employment Contribution
The airport currently provides employment for
up to 120 staff on the airport site through direct and in-direct
employment and supports several hundred jobs in the North West
economy.
Tourism Contribution
The Airport Authority employed MORI to conduct
a year long passenger survey in 2002. The survey indicated that
the business and leisure spend in the North West region by visitors
exceeded £12 million per annum. This excluded 4,500 corporate
business passengers who accessed the region by company jet.
2. STRATEGIC
DEVELOPMENT PLAN
With the publishing of the Government's white
paper on the Future Development of Air Transport, new safety requirements
for Runway End Safety Areas, new regulations on Public Safety
Zones and our customer airlines' requirement to deliver infrastructure—the
Airport Authority engaged specialist aviation consultants who
produced a Strategic Development and Master Plan.
The Airport Authority has applied to both the
Irish and Northern Ireland Governments for joint funding and is
currently awaiting the decision.
3. CORPORATE
GOVERNANCE, AND
FINANCE
The City of Derry Airport is one of three commercial
airports operating in Northern Ireland, with Belfast City and
International serving the greater Belfast region and are both
privately owned, with the City of Derry serving the North West
region including Donegal in the Irish Republic, the airport is
in public ownership through the local authority, Derry City Council,
similar to a number of regional airports throughout the UK.
The former Conservative Government introduced
the Airports Act of 1986 and required local authorities to transfer
airport undertakings to a public airport company. The intention
was to produce an "arms length" relationship between
these airports and their local authority owners in order to allow
the airports commercial freedom.
This permitted local authorities who owned airports
such as Manchester, Birmingham, Liverpool, Luton, Exeter etc,
to set up public airport companies to operate and commercially
manage their airports. A number of these airports have seen major
commercial development and growth and since been sold to the Private
Sector, this includes central Government owned airports such as
the British Airport Authority (BAA) and in Northern Ireland Belfast
International Airport.
The Airport Authority recognises the importance
of the further commercial development of the airport and employed
specialist aviation consultants the Symonds Group to carry out
a strategic review of the current and future Governance and management
arrangements. The consultants recommended that Derry City Council
set up a Public Airport company to oversee and manage the airport
and maximise commercial potential.
The Airport Authority has made a number of requests
to the Department for Regional Development Northern Ireland seeking
powers to establish such a company, however the '86 Airports Act
has not been enacted in Northern Ireland with a change to legislation
forecast to take up to two years. The Airport Authority continues
to pursue this issue.
Finance
The Aviation industry is highly regulated by
both the Civil Aviation Authority and the Department For Transport,
small regional airports of less than one million passengers are
unable to cover the resulting high operating costs.
Despite a substantial growth in passenger traffic
over the past five years, airport revenues, particularly from
low cost airlines do not cover operating costs, despite the airport
being amongst the most efficient and low cost UK airports of a
similar size. See Annex three.
The current annual deficit of approximately
£1.3 million includes approximately £600,000 repayment
of capital and loan interest and is funded by ratepayers from
the Derry City Council area. The Airport Authority does not receive
any revenue funding from central government despite government
receiving in excess of one million per annum in Airport Departure
Tax (APD) from passengers who fly to and from the airport. This
is in contrast to the Scottish Airport Model where large self-funding
airports operated by the BAA have been sold to the Private Sector,
with the Scottish Assembly funding Capital and Revenue costs at
small regional publicly owned airports throughout Scotland recognising
the importance of transport in economic and tourism development
in peripheral regions. This investment is in excess of £25
million per annum.
4. AIRPORT CAPACITY
Current airport capacity is approximately 500,000
passengers per annum subject to the frequency of flights and the
limits of infrastructure such as the number of check-in desks,
which is limited to six and the physical space available in the
departure area, which is limited to 180 seats. Forecast demand
and capacity for the next 15 years is addressed in the Strategic
Development and Master Plan.
Runway and Safety Issues
The main runway is 1,852 metres in length, however
up to a third of runway length for both landing and take off is
not useable due to the presence of houses and obstructions immediately
beyond the airport boundary.
New requirements introduced by the International
Civil Aviation Authority and the Department For Transport requires
Airport Authorities to provide Runway End Safety Areas and establish
Public Safety Zones at runway ends. These areas allow aircraft
in an emergency to over run a runway safely without comprising
the safety of the aircraft or the public who live close to the
runway. The Airport Authority is currently addressing this safety
issue and proposes to purchase a number of properties in the interest
of public safety.
Until these safety issues are addressed operators
are restricting or refusing to operate certain types of aircraft.
This is affecting our ability to attract new operators and expand
current routes particularly in the low cost sector.
5. ROUTE DEVELOPMENTS
AND THE
AIR ROUTE
DEVELOPMENT SCHEME
Since January 2004 the Airport Authority has
secured six new routes, three domestic schedule, one charter and
two mixed charter/schedule:
Domestic Schedule
Birmingham
Manchester
Glasgow Prestwick
Both Birmingham and Manchester are supported
by the Air Route Development Scheme. Both routes operate in the
highly competitive low cost market and without the start-up support
of the Air Route Development Scheme could not have been secured.
The Glasgow Prestwick route has been rejected by the Scheme and
will only receive support from the airport's start up Discount
Scheme.
Charter
Faro, Portugal
Mixed Charter/Schedule
Alicante, Spain
Malaga, Spain
40% of the Alicante and Malaga routes are sold
in the Spanish market to both tourism and business. Both routes
were rejected by the Air Route Development Scheme.
Airport Management firmly believes that the
Air Route Development Scheme is an affective tool when persuading
an airline to operate a marginally viable route, by providing
support funding off setting up to 50% of airport charges in the
start-up three years. This makes the difference between a route
starting or not. However, it is important to note that the route
must be commercially viable in the medium and longer term.
In the past six years Northern Ireland has seen
a dramatic shift from full service airlines to no frills airlines.
With the low cost sector now exceeding three million passengers
per annum, Airport Management firmly believe that this trend will
continue for the foreseeable future with no frills airlines providing
low cost access to the price sensitive tourism market.
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