Long-term strategy and new routes for Cardiff Airport revealed

The Welsh Government has set out its long-term strategy for Cardiff Airport as the three-year support package comes to an end, identifying major new routes and expressing an openness to working on new ownership models.

In a written statement published today (22 July) and issued during the Senedd recess, Ken Skates, Minister for Economy, Transport and North Wales, said the Welsh Government is working with Cardiff Airport’s leadership team to develop a longer-term strategy for the business, “focused on how the airport can contribute to economic growth and help reduce economic inequality in South Wales”.

Challenges

Cardiff Airport is estimated to generate a Gross Added Value (GVA) of over £200 million annually and creates thousands of jobs in South Wales.

As at other airports in the UK, the Covid-19 pandemic has brought significant challenges, including a sharp drop in passenger numbers and the number of flights offered.

In an unprecedented move, the Welsh Government has taken “decisive action” to protect the airport during the pandemic, providing vital financial support through a three-year rescue and restructuring package.

Strategy

The recently announced strategy aims to build on Cardiff Airport’s unique strengths with two main objectives: attracting and growing aviation and aerospace businesses linked to the airport, and focusing on improved passenger connectivity to a small number of global airports and economic centres of importance to Wales.

Key to the strategy is supporting existing businesses at the airport to enable them to grow, and attracting new businesses to both the airport and the Bro Tathan business park.

The Welsh Government also hopes to develop facilities to encourage private aircraft owners to use the airport when visiting South Wales. This would, they hope, increase the airport’s offering to organisers of major sporting and cultural events in the region, as well as making it more attractive to VIP business travellers and overseas investors.

Air freight is another area they hope to develop: attracting more logistics operations to improve the supply chain and export options for the region and maximising the use of increasing freight capacity in line with route development.

In the longer term, the Welsh Government is also focused on developing sustainable aviation technologies and making the most of the region’s aerospace cluster and green energy initiatives.

The expected additional jobs, combined with the range of aerospace courses offered by colleges and universities in Wales, would create even more career opportunities in the sector for people across the region, they said.

New routes

To improve connectivity, Cardiff Airport will develop routes to locations identified in the Welsh Government’s International Strategy as important to Wales’ economic growth, such as the Middle East and South Asia, major economic and financial centres and hub airports within the European Union and North America.

According to the Welsh Government, these route developments are expected to increase the airport’s annual passenger numbers to just over 2 million within the next decade.

Cardiff Airport’s existing terminal needs to be upgraded to accommodate increased passenger numbers while reducing the carbon footprint of ground operations.

Improving the bus service between the airport and Cardiff city centre is also part of the strategy.

Position

Mr Skates said the measures taken by the Welsh Government during and after the pandemic to protect the airport “have done their job, but have left the business in a position where it does not have the financial resources it needs to drive these economic developments”.

To ensure that the South Wales region can make the most of these opportunities, the Welsh Government plans to provide the airport with additional long-term investment funding, and will seek regulatory approval for a package of up to £206 million over ten years.

Analysis commissioned by the Welsh Government has shown that this funding could result in the airport supporting a significantly higher number of jobs in the region by 2034 and generating a significant increase in annual gross value added.

“Commercial freedom”

Mr Skates is unwilling to share a public breakdown of the figures, writing: “To achieve the economic objectives outlined in this statement, it is important that the airport’s leadership can operate with the commercial freedom and agility needed to negotiate the best possible deals with airlines and other businesses.

“Therefore, while the Welsh Government and the airport have a plan for where the new investment money will go, we will not be providing a public breakdown of the figures.

“Taking into account these commercial considerations, in the interests of transparency, we will regularly report on the flow of funding to the airport and closely monitor the economic performance of the investments.

“As the investment in the airport would be classified as a subsidy of particular importance under the UK subsidy regime, our proposed investment package should be submitted in the first instance to the Competition & Markets Authority (CMA) for consideration.

“This referral will take place over the summer recess period and will take 3-4 months to complete. Once Ministers have had the opportunity to consider the CMA report and have then made a final decision on the shape of an investment package, they will report back to the Senedd.”

Tensions

Mr Skates acknowledged the tensions between owning an airport and addressing the climate emergency, writing: “We recognise this ongoing challenge. But taken together, we believe returning the airport to pre-pandemic levels of activity would deliver significant economic benefits to the region.

“People and businesses in Wales still want to fly and if they can’t fly from Cardiff they will simply go elsewhere, potentially creating additional carbon emissions.

“Strategies to reduce our global aviation emissions are best considered at UK level and implemented through international institutions. That said, owning the airport gives the Welsh Government the opportunity to take responsibility for some of Wales’ aviation emissions.

“We want to seize that opportunity and that is why our airport strategy is aimed at stimulating the development and local acceptance of more sustainable aircraft propulsion technologies and reducing the CO2 emissions of the airport infrastructure.

Looking longer term, the Welsh Government has indicated that it is open to exploring different ownership models for the airport, including potentially arrangements with the private sector or other public sector partners.

Mr Skates said: “We are open to ideas about how the airport will be run in the future, as long as we can be confident that it maximises its potential as a means of delivering sustainable economic growth and reducing inequality in the South Wales region.

“However, in the medium term we hope that this significant investment will ensure that the airport will seize the opportunities that only it can, for both our people and our economy.”