Teesside Airport makes huge losses
Airport bosses aim for 1m passengers within five years as covid brings £13.8m loss
Teesside Airport bosses aim to boost annual passenger numbers to 1m within five years despite the pandemic bringing a £13.8m hit to its finances.
An updated business plan for the airport has been released showing fresh targets for the site in the wake of covid and the departure of operator Stobart – now Esken – in July.
The 16-page document forecasts the airport is on track to meet and surpass its pre-pandemic targets – and hit revenues of £30.5m by 2025.
But the report also detailed how covid had hit the publicly-owned airport hard – with a £13.8m loss in the previous financial year.
Lockdowns and travel restrictions severely hit the aviation industry in 2020 with limits on travel running into 2021.
The report showed the airport placed 28 of its 61 staff on the government’s furlough scheme – with no job losses reported from the site.
Despite the troubles the virus has brought, officials say it has also provided opportunities “which may not have otherwise materialised” as other airports closed.
The vision is to make Teesside a “mid-sized regional airport” – with the ambition to still take a share of the 400,000 passengers within a half hour drive of Teesside who use neighbouring Newcastle Airport.
Airport officials are aiming to increase passenger numbers from 141,000 to more than one million by March 2026.
The report added: “Passenger numbers have been increasing month on month since reopening after lockdown, driven primarily by the low-cost carrier Ryanair and the full regional services of Loganair.
“As we go into summer 2022 we expect to see further growth in these markets, plus growth from holiday charters.”
The majority shareholding in the airport is now owned in a 75-25 split by the Tees Valley Combined Authority and a newly formed charitable trust after Esken left the airport in July and handed back its share.
Hooking in a low-cost carrier before 2022 was central to the original 10-year turnaround published in early 2019.
This plan forecast passenger numbers as high as 1.4m by next year with a LCC on board at the airport.
A more modest seasonal/regional growth at the airport forecast passenger numbers of 314,000 by next year.
Ryanair’s return to Teesside after a 10 year absence was listed as achieving the return of a low-cost carrier ahead of schedule.
But passenger number forecasts have now been pared back from the original projections in this latest report.
References were made to agreements struck with Ryanair and TUI in the plan – with a total of the number of new flights exceeding the original 10-year plan.
Terminal improvements and an “extensive renovation” of hangar one attracting Willis Asset Management were also listed.
And work on the South side business promised as many as 4,400 jobs in the report and money to help the airport.
But the updated business plan did not incorporate any money forecast to be raised by the park once it is operating.
Losses “greater than forecast”
The new business plan showed 2020/21 losses were greater than originally forecast in the 2019 document – with the pandemic blamed.
Airport officials believed this was in line with other airports and operators and pointed to how other airports had seen higher grant support.
However, the plan outlined how Teesside’s performance since April had still been hit by the pandemic despite “highly encouraging” pre-pandemic passenger numbers.
The report added: “Government guidelines have resulted in low customer confidence and therefore low passenger numbers have been experienced since flight resumption.
“This has meant that TIA’s core revenue and profitability drivers have remained severely eroded in 2021/22.”
A £10m loan was signed off by TVCA leaders over the summer to cope with covid impacts – something the business plan labelled as “relatively modest”.
In the past, Tees Valley Mayor Ben Houchen has said the £10m was “significantly smaller” than support provided to some other regional airports.
These include a £34m bail-out for Liverpool John Lennon Airport, while Luton Airport received a £119m loan from Luton Council to help support it recover from the pandemic.
The mayor told a cabinet meeting: “The £10m that we need for the airport is because there is a financial loss to the airport as a result of covid.
“There isn’t a single airport in the country that hasn’t been affected because of covid, most disproportionately more than ourselves.
“We need this to continue to meet our ten year plan – that’s the hole it’s created in the current plan.”
Officials have said the £10m investment over the next two years would mean that no further funding would be needed to secure the airport future.
Cllr Norma Stephenson, former chairwoman of the TVCA overview and scrutiny committee, has called for a breakdown of what the bailout money had gone towards at a meeting last week as part of pleas for more information on the airport’s performance.
400,000 target for 2022
Despite the loss last year, the updated vision showed the airport was forecasting revenues of £30.5m by March 2025 – with profits expected in the next three years.
These are both ahead of the original 10-year plan’s forecasts.
Officials say increasing revenue from the airport’s property and land will be key to turning the site around.
They also say work on its South side business park will continue next month with construction beginning on a new road – and a new freight facility due to be opened later this year.
Mr Houchen said the airport was coming out the past 18 months “stronger than ever” despite the travel troubles of the pandemic.
He added: “As well as securing popular destinations that people across Teesside, Darlington and Hartlepool were crying out for, we’re also making headway on our business park, and the airport’s freeport designation means we’re perfectly positioned to welcome new investment and firms looking to place themselves at the heart of our area.
“We’re confident of welcoming more than 400,000 passengers through our new terminal next year thanks to all of the new flights we’ve secured, and our investment in the terminal, creating an airport people will want to use time and time again.
“Our airport is so much more than just flights to Alicante, behind the new routes are new jobs supporting families and the local community, this summer we’ve created 40 new jobs and this will continue to grow further as our airport does.
“Of course, we shouldn’t rest on our laurels, and that’s why we’re working harder than ever to secure even more new routes, airlines and operators.
“If the airport hadn’t been brought back into public control, it would have been a housing estate by now.
“Instead, we’re turning it around, supporting the local economy and jobs, and becoming an airport that people can be truly proud of.”
Middlesbrough MP Andy McDonald has raised concerns about the withdrawal of routes from Teesside this summer.
The former shadow transport secretary questioned how the £13.8m loss compared to other sites when Teesside was a small airport.
“If Ben Houchen is heralding a £13.8m loss as a success, I would hate to see what failure looks like,” said Mr McDonald.
“This is very rich on announcements and expressions of confidence but the figures don’t lie.
“These are significant amounts of money.
“The bottom line is this has got to be thoroughly scrutinised. We cannot just ignore vast amounts of public money being directed towards the airport and yet people’s transport needs are not being properly addressed.
“Other city regions are moving on apace in that direction – why on Earth is the Tees Valley not doing the same?”
The airport business plan is due to be discussed at a Tees Valley Combined Authority (TVCA) cabinet meeting on Friday morning.