1.It is staggering that the Department commissioned and completed the St Helena airport before ascertaining the effect of prevailing wind conditions on landing commercial aircraft safely at St Helena. For a project of this size, we would expect the Department to have applied a thorough concept design and risk management process in the early part of any engineering works to test assumptions and highlight potential operational issues such as wind shear. Wind shear is a well-known concept in airport construction and should have been identified as an issue for St Helena. The Department was unwilling to tell us who was responsible for this oversight ahead of its own review into where accountability lies and until it has decided whether it will take legal action against its contractors or disciplinary action against its officials.
Recommendation: The Department should, as soon as it is completed, send us a copy of its review identifying who was accountable for the failure to identify this key issue.
2.The Department did not do enough to ensure it had the appropriate technical resources and competence to build the airport. Whilst the Department does have previous experience of building an airport (in Montserrat, which opened in 2005), this is not a core function of the Department. It therefore relied upon advice from external contractors to build the St Helena airport. The Department told us that it used a variety of sources to inform its decision-making, of which the feasibility study by Atkins was an important part. It did not, however, commission an independent advisor or seek support from other departments with the necessary technical expertise to corroborate or challenge this source of advice. The Department acknowledged the potential benefit of introducing more independent challenge to its processes in future.
Recommendation: The Department should develop an independent challenge function and build it into its procedures for considering the feasibility of technically demanding projects outside its core business.
3.The Department has not yet determined the extent or cost of the remedial action required to bring the airport into commercial use. The Department is gathering data on the impact of wind shear through computer-based and physical modelling of weather conditions on the northern approach to the runway. It is also investigating air access using the airport’s southern approach where wind shear is less of an issue but which requires aircraft to land with a tailwind. Landing with a tailwind places additional restrictions on the aircraft’s weight, potentially reducing passenger capacity. The Department is in discussion with a number of alternative airlines to provide this service because Comair, the airline currently contracted to provide a weekly commercial flight, does not have an aircraft of suitable size for landing on the southern approach. As the Department is still collecting data on wind conditions, it has not yet established a timetable for or forecast the additional cost of possible solutions. The Department is also now in a potentially difficult position when it comes to negotiating the best possible deal with a new commercial air service provider, given the obvious need for it to have a new service in place as soon as possible.
Recommendation: The Department should write to us by April 2017, and more regularly to the stakeholders of the airport, with an update on its strategy and forecast costs for bringing the airport into commercial use.
4.We are extremely sceptical about the Department’s projected tourism figures and the island’s ability to support such growth in the tourist industry. We fully recognise that the Government has an obligation to support and sustain the people of St Helena. An airport on St Helena should bring benefits such as improved access to medical services and employment prospects. In order for the island to achieve economic self-sufficiency, a significant growth in tourism is required. In its business case, the Department forecast that the number of tourists visiting St Helena annually would rise from just less than 1,000 to just over 29,000 by 2042. The NAO report highlighted the uncertainty over projections for tourist numbers, not least because in 2010 the Department reduced its original projection of 59,000 tourists to 29,208 to account for possible optimism bias without any new primary research. Over-egging prospective tourism growth may have made the business case stack up but, even then, the business case for building the airport was marginal at best. The projected expansion in tourist numbers also relies on air access for tourists, the achievability of which is uncertain given the current difficulties in landing aircraft safely.
Recommendation: The Department should re-calculate its projected tourism figures to provide an updated assessment of progress towards economic self-sufficiency and the consequent reduction in the Department’s subsidy.
5.The reputational damage to St Helena from this fiasco could further hinder its ability to attract investment. The St Helena Government is relying on investors to build the necessary infrastructure to support tourism growth. The NAO report quoted a Departmental review which found that the investment climate in St Helena is not attractive and is not competitive internationally or regionally, in part due to factors within the St Helena Government’s control such as high corporation tax and importation duty. The St Helena Government established Enterprise St Helena (ESH) to lead and champion the island’s economic development. ESH has some way to go to improve the marketing for the island’s location and attractions. Negative press reports about the airport can only have aggravated St Helena’s problems in marketing its tourist potential.
Recommendation: The Department should engage closely with the St Helena Government to secure real progress against the joint Memorandum of Understanding to remove barriers to inward investment.
13 December 2016