Jazmin Li
The Scottish government has been trying to sell Prestwick Airport since 2019, when they put the airport up for sale after purchasing it for £1 in 2013 to save it from closure. However, the sale has been put on hold as the government has rejected bids to buy the airport, with ministers stating that they do not intend to sell at this time. The airport has faced financial difficulties, with outstanding loans of over £40 million from the Scottish government, but it has recently started to turn a profit, reporting a pre-tax profit of £1.2 million for the year ending in March 2021. Despite this, the airport still owes taxpayers a significant amount of money, and the future of the sale remains uncertain.
| Characteristics | Values |
|---|---|
| Current owner | Scottish Government |
| Purchase price | £1 |
| Year of purchase | 2013 |
| Reason for purchase | To protect jobs and an economically important regional asset |
| Total loans provided by the Scottish Government | £42m+ |
| Amount written off | £33m |
| Amount owed to taxpayers | £43m |
| Operating profit in 2020-21 | £500,000 |
| Total profit after tax for the year | £12m |
| Status of sale | On hold |
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What You'll Learn
Scottish ministers' plans to sell Prestwick Airport
Scottish ministers have decided not to sell Prestwick Airport, at least for the time being. The decision comes after a second bid for the airport complex was rejected, following months of uncertainty. The Scottish Government bought the airport for £1 in 2013 when it was threatened with closure due to heavy losses. The government has since loaned the airport more than £42 million to stay afloat, with £33 million written off.
Finance Secretary Kate Forbes told MSPs that Prestwick was "carving a niche" as a specialist airport. She said the business "continues in a positive direction" and had turned a profit in 2020-21. Forbes also noted that the airport was "heavily involved" in the COP26 conference and was providing "essential services for the importation of cargo, including supplies for the NHS".
Despite the decision to reject the latest bid, Scottish ministers still intend for Prestwick Airport to return to the private sector at the appropriate time and opportunity. They plan to reflect on future options for the airport and develop its strategy for growth.
The decision to reject the bid has been criticised by opposition parties, who argue that the government must demonstrate a clear plan for the future of the airport and the public money invested. They have also been criticised for "botching" the sale process, with calls for an independent review to give future bidders confidence.
Prestwick Airport's chief executive, Ian Forgie, has expressed optimism about the airport's future, stating that its performance has improved significantly since 2016-2017, with a focus on diversified operations helping to adapt to the drop in passenger numbers due to lockdown restrictions.
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Prestwick Airport's financial performance
Glasgow Prestwick Airport has demonstrated a notable improvement in its financial performance over the years. In 2020, the airport reported an underlying operating profit of £3 million for the fiscal year ending March 31, 2020, compared to a £1 million loss in the previous year. This positive trajectory was reflected in a 46% year-on-year revenue increase, with revenues climbing to £36 million from the previous year's figure of £24.6 million.
The airport's financial turnaround can be attributed to the development of new revenue streams and effective cost-control measures. The diversification of operations has been pivotal in adapting to the challenges posed by the pandemic and the decline in passenger numbers. Glasgow Prestwick Airport has recognised the importance of cargo operations and specialist freight services, particularly during the pandemic when it played a crucial role in handling personal protective equipment (PPE) for healthcare workers in Scotland.
Despite the impact of the pandemic on the aviation industry, Glasgow Prestwick Airport has continued to strengthen its position as a vital strategic provider of international freight and aviation services. The airport's diverse business model, encompassing revenue streams from passenger travel, cargo operations, general aviation, fuel supply, and property, has contributed to its resilience and profitability.
In the fiscal year 2023-24, Glasgow Prestwick Airport achieved an operating profit of £3.2 million, marking its fifth consecutive year of profitability. This success is a testament to the airport's ability to adapt and thrive in a dynamic market. The airport's collaboration with Royal Mail, announced in June 2024, is expected to further enhance its cargo capabilities and attract additional e-commerce cargo flights.
While the airport has experienced financial challenges, with operating losses of £7.8 million in 2016-2017, it has shown a steady improvement since then. The Scottish Government's decision to purchase the airport for £1 in 2013 to prevent its closure due to heavy losses has proven beneficial. The airport has not only turned a profit but also supports over 4,000 jobs in the region.
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Prestwick Airport's future
The Scottish government purchased Prestwick Airport for £1 in 2013, taking it into public ownership to protect jobs and an economically important regional asset. The airport has since received over £43 million in loans from the government to keep it afloat, with £33 million written off. While the airport has turned a profit in recent years, it has not been commercially successful enough to repay the loans provided by the government.
In 2021, the Scottish government announced that it would not proceed with the sale of the airport to a private buyer, despite having selected a preferred bidder earlier that year. The decision was made after considering bids received and a recommendation from the Prestwick board, who had concerns about the long-term future of the airport. This marked the second failed attempt to sell the airport, with a previous bid falling through due to the impact of the COVID-19 pandemic on the aviation industry.
Despite the Scottish government's intention to eventually return the airport to the private sector, opposition parties and rival MSPs have criticised the handling of the sale process. There are calls for the government to demonstrate its plan for the airport and address the tens of millions of taxpayer pounds invested in it. The airport's chief executive, Ian Forgie, has expressed optimism about its future, stating that it is "significantly brighter now than it was five years ago," but acknowledged the short-term challenges posed by the ongoing impact of the pandemic on travel.
In 2022, it was reported that Prestwick Airport recorded a pre-tax profit of £1.2 million for the 12 months to March. However, the airport still owes taxpayers over £43 million, and efforts to sell it have not yet been successful. The Scottish government continues to face pressure to address the concerns surrounding the airport's future and the repayment of public funds.
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Criticisms of the Scottish government's handling of the sale
The Scottish government has faced criticism for its handling of the sale of Prestwick Airport. In December 2021, the government announced that it would not be proceeding with the sale, despite a preferred bidder being chosen in February. This was the second attempt to sell the airport, as a previous bidder, believed to be Glasgow Airport owner AGS Airports, pulled out in November.
Scottish Labour's net zero, energy, and transport spokesperson, Colin Smyth, criticised the government's handling of the sale, stating that "serious questions" needed to be asked. He accused the government of failing to provide any explanation for what went wrong and demanded that they demonstrate a plan for the future of the airport and the taxpayer money invested in it. South Scotland Conservative MSP Brian Whittle echoed similar sentiments, calling for an independent review of the process.
The airport, which is located in Ayrshire, Scotland, has been in public ownership since 2013 when the Scottish government purchased it for £1 to protect jobs and prevent its closure due to heavy losses. The government has loaned the airport more than £42 million to stay afloat, with £33 million written off. Opposition parties have called for the repayment of the money owed to the public purse.
Despite the criticism, the Scottish government has defended its decision, stating that Prestwick Airport is a vital strategic asset that supports thousands of jobs in the region. Finance Secretary Kate Forbes highlighted the airport's role in the COP26 conference and its positive direction, turning a profit in recent years.
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The airport's importance to the local community
Glasgow Prestwick Airport, commonly referred to as Prestwick Airport, is an international airport serving the west of Scotland. It is located one nautical mile (two kilometres) northeast of the town of Prestwick and 32 miles (51 kilometres) southwest of Glasgow.
The airport is important to the local community in several ways. Firstly, it is a significant source of employment for the local area, supporting over 4,000 jobs in the west of Scotland, including direct jobs at the airport and indirect jobs across Ayrshire and the surrounding urban cluster. The airport is also home to Prestwick Aerospace, the largest aerospace cluster in Scotland, which provides extensive employment opportunities for the local community.
Secondly, the airport has a long historical connection with the local community, dating back to the early days of aviation in the region. The first recorded aviation activity at Prestwick took place in July 1913, and the airfield became a fully licensed aerodrome in 1934. During World War 2 and the Cold War era, thousands of US and Canadian servicemen transited through or were based at the airfield, forging a special connection with the local community.
Additionally, the airport has played a crucial role in supporting the local economy. It has been described as an important infrastructure asset by the Scottish Government and has brought in revenue through property rentals, maintenance, technical stops, cargo, training, and refuelling. The airport has also contributed to the Scottish Aviation industry, with Scottish Aviation Ltd being a world leader in aircraft maintenance, design, and manufacturing.
Furthermore, the airport has provided essential services to the local community, including medical evacuation services to the Scottish island communities and serving as a specialist airport during the COP26 conference.
While the airport has faced challenges in recent years, with a decline in passenger traffic and attempts to sell it to the private sector falling through, it remains an important part of the local community and is committed to adapting and improving its operations.
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Frequently asked questions
No, Scotland has decided not to sell Prestwick Airport, despite the small operating profit in the last year.
Scotland decided not to sell Prestwick Airport after a bid to buy the travel hub fell through. The Scottish Government ministers had formally put the airport up for sale in 2019 after they paid £1 for it in 2013 to take it into public ownership.
The Scottish Government has restated its long-term commitment to return the Airport to the private sector. However, they have clarified that they will not proceed with a sale at this time.
Prestwick Airport has recorded a profit in the last year. However, it still owes taxpayers over £40 million in loans provided by the Scottish Government to keep the airport afloat.
