Thank you, convener, and thank you for the opportunity to come along today to discuss the Audit Scotland report, “The Scottish Government’s purchase of Glasgow Prestwick Airport”. We note in particular the key messages in the report that the Scottish Government’s “purchase process was reasonable” and that
“Good governance arrangements are in place to monitor the airport’s ongoing business and financial performance.”
We have noted what Audit Scotland said about passenger growth assumptions in the purchase business plan. The business plan was commissioned from appropriate professional advisers who, in turn, based their projections on analysis from aviation experts. That assisted in informing the purchase process, which, as noted, was conducted in six weeks. We understand Audit Scotland’s observation that the assumptions were “optimistic”, although we also note Audit Scotland’s judgment that recalculation using less optimistic assumptions would not have influenced the decision to buy.
The purchase business plan was only the start of a process. Since acquisition, it has been a challenge for the board and Prestwick’s management to deal with the realities of actual passenger and freight numbers and to develop a vision for Prestwick. Initially, a senior adviser was appointed to prepare a revised business plan. That work was completed in May 2014. As noted in the Audit Scotland report, in October 2014, the airport published its strategic vision, which was a combination of the senior adviser’s work and other factors that the airport considered might play a critical part in its future business strategy.
In her evidence to the committee four weeks ago, the Auditor General for Scotland said that
“The strategic vision looks reasonable”.
Of course, there is no quick fix, as has been said on a number of occasions. As the Auditor General also noted at the committee meeting last month, there are considerable challenges—for example:
“Forecasting the future, as they say, is always difficult”.—[Official Report, Public Audit Committee, 25 February 2015; c 27-28.]
However, a non-executive chair, Andrew Miller, is now in place, and we are in the process of appointing other non-executive directors with commercial, property and aviation or engineering backgrounds. We have, as the report noted,
“Good governance arrangements ... in place to monitor the airport’s ongoing”
operations.
We all want to see that performance improve so that the hope and intention that the then Deputy First Minister expressed in her statement to Parliament on 8 October 2013 can be fulfilled—namely,
“to see Prestwick, as a thriving airport, return to private sector ownership at some point in the future.”—[Official Report, 8 October 2013; c 23389.]
Ministers have not set a timescale for that, as the report records, because the long-term opportunities could take some years to take effect.
We should, however, recognise the improvements in Prestwick’s fortunes since acquisition. Freight cargo tonnages have grown by 32 per cent since acquisition, to a rolling annual total of 12,683 tonnes. That follows Cargolux increasing its weekly services from four to six in early 2014, combined with improved charter and Air France performance.
The Bristow Helicopters search and rescue base has been secured and construction has commenced, ahead of a 1 January 2016 start date. The Trump Organization has decided to base its aircraft at Prestwick to link with Turnberry and its other resorts. As the committee noted previously, Prestwick has been shortlisted for the location of the United Kingdom spaceport. It has redeveloped and sold non-operational and surplus land holdings where appropriate, and it has worked with local partners to recommence the Scottish air show after a 22-year absence. Work is now taking place to build on the success of the 2014 show.
The team at Prestwick is working on a range of other potential opportunities. Although they are commercially confidential at this stage, we hope to hear some positive announcements later this year. By working on those and other initiatives, we hope that Prestwick will prosper, to the benefit of Ayrshire and, of course, the Scottish economy as a whole.