Clear and robust plans should be next step for Glasgow Prestwick Airport
A new report by Audit Scotland states that the process followed by the Scottish Government in its purchase of Glasgow Prestwick Airport was reasonable, and it now has to develop comprehensive plans to clearly map out potential future development of the airport.
The Scottish Government bought Glasgow Prestwick Airport from previous owner Infratil for £1 in November 2013, to prevent its imminent closure, safeguard what it considered to be a strategic infrastructure asset and protect the significant number of jobs associated with the site.
Audit Scotland has concluded that the Scottish Government acted reasonably when buying the airport, given the tight timescale of six weeks in which it had to conclude the purchase. It established appropriate governance arrangements and identified the risks associated with the airport's ongoing commercial viability.
However, the report highlights that the Scottish Government should have been clearer in some areas, including modelling the potential withdrawal of Ryanair and fully quantifying the economic benefits of the purchase.
To January 2015, the Scottish Government has provided the airport with £9 million of loan funding, and is committed to a further £16.2 million to the end of March 2016, if required. Latest estimates have put the required total funding, up to the financial year 2021/22, at £39.6 million.
Though Audit Scotland considered Scottish Government's passenger growth forecasts optimistic, financial modelling carried out as part of the audit showed the purchase could achieve a positive return. The eventual return achieved will depend on future developments which could affect the airport's sale price, passenger numbers and other assumptions.
Caroline Gardner, Auditor General for Scotland, said:
"Our report recognises that the purchase of Glasgow Prestwick Airport was carried out to a tight deadline and in uncommon circumstances.
"The Scottish Government and Glasgow Prestwick Airport should now ensure that a clear strategy is put in place, which takes into account future development potential, and includes robust business and financial plans, full evaluation of potential risks, and a well-defined, regularly reviewed exit strategy."
The Scottish Government is still assessing a number of potential future opportunities for the airport. Audit Scotland plans to carry out further work at a later date on the airport's performance.
