Supplementary memorandum by BAA plc (EU
08A)
In May 2002, BAA Scotland announced the establishment
of a £60 million, five-year route development fund, providing
financial incentives from BAA to airlines considering launching
new direct international services to and from BAA Scotland's Aberdeen,
Edinburgh and Glasgow Airports.
This long-term funding programme was devised
in line with BAA Scotland's commitment to share the commercial
risks, and significant costs, faced by airlines launching new
international services.
While we continue to support important services
between the Highlands and Islands and the central belt, BAA Scotland
is reluctant to provide financial support to airlines wishing
to serve the commercially-competitive and busy Scotland-London
market. While this stance may frustrate some airlines who would
like additional finance, it does reflect Scotland's aspirations
to develop strong, direct international connections, thereby reducing
travellers' reliance on the London airports.
In March 2004, BAA Scotland announced an extension
of the scheme, with a further £35 million committed to the
existing fund. The company now spends around £14 million
a year developing new routes to Scotland's main airports. This
investment, like BAA's capital spend, costs the taxpayer nothing.
The BAA Scotland route development fund is distributed
to airlines in the form of discounted airport charges and marketing
support, both financial and in-kind, for example through the provision
of key advertising sites at airports.
Individual deals are commercially sensitive,
although discounts of 75% in year one through to 20% in year three
indicate the extent to which BAA will support new routes. Marketing
support varies, though this is significant.
It is important to recognise that only airlines
can make the final decision on which airports they fly to and
from, although BAA Scotland is committed, through this extensive
package of funding, to creating the conditions in which airlines
can operate commercially-successful air services from Scotland.
To date, BAA's route development fund has supported
some 30 new routes. However, in May 2004, Duo Airways, which had
benefited from BAA's support, went into administration and six
international services were lost. BAA is currently examining the
opportunities to replace the Duo services.
SCOTTISH EXECUTIVE
AIR ROUTE
DEVELOPMENT FUND
In November 2002, First Minister Jack McConnell
MSP announced details of a £6.8 million Scottish Executive
air route development fund, to support new routes generating economic
benefit for Scotland.
BAA Scotland's understanding is that this fund
has supported around 13 routes from Scotland's airports, including
those not in BAA's ownership and those operated by Duo.
The air route development fund is administered
by Scottish Enterprise on behalf of the Scottish Executive. The
principal contact is Mary McLaughlin, director of transport, on
0141 248 2700 or mary.mclaughlin@scotent.co.uk.
May 2004
| 
