City of Derry Airport: Council express future funding concerns

City of Derry Airport is owned by Derry City and Strabane District Council

Derry City and Strabane District Council has warned that money from Stormont to help secure City of Derry Airport's future is unlikely this year.

The airport is owned by the council and it costs ratepayers £3.45m to help pay operational costs.

In a document obtained by BBC News NI, the council said it is facing an estimated £729,000 shortfall in airport funding for the next financial year.

The paper was presented to councillors in a closed meeting.

In a statement, managing director of the airport Steve Fraser said there has been positive engagement between the airport, elected representatives and government departments.

"In all cases, the economic and strategic importance of the airport for the north west region is recognised. We fully expect when ministers return to Stormont that the airport business case will be addressed," he added.

It is understood the behind-closed-doors meeting at council was to discuss financial challenges ahead of striking the district rate for 2024/25.

In the paper, council officials were told that the estimated amount needed for the airport in the next financial year was £3.75m.

"While these figures are estimated at this point, it is clear that council funding will only be sufficient to sustain the airport up to a maximum of January 2025," the paper said.

"This will become a critical financial consideration by Spring 2024."

• Sharp drop in passengers at City of Derry Airport

• Deadline to restore NI devolution due to expire

In 2021, the council submitted a business case to Stormont for £3m a year over a six-year period to help reduce the burden on ratepayers. The document said that an initial £3m was secured in 2022/23.

In October last year, the council wrote to the Department for Infrastructure (DfI) requesting further funding to help meet the airport's annual running costs.

In reply, the DfI's permanent secretary Dr Denis McMahon said it was unlikely to provide further funding for the airport this year because of the ongoing financial challenges at Stormont.

Northern Ireland's devolved government has not sat since it collapsed in February 2022

In a statement to BBC News NI on Friday, a spokesperson for the DfI said: "The department confirmed to the council in December that funding would not be provided in 2023/24.

"The department also advised that the issue of funding for City Of Derry Airport is a cross cutting one that requires executive consideration.

"The most recent funding provided by the department in relation to the airport was £3m covering the period 1 April 2022 to 31 March 2023 under a ministerial direction.

"A ministerial direction was required as the accounting officer had concerns regarding the affordability, value for money and regularity of the expenditure."

PSO air routes see the government support flights which would not be commercially viable without support

Meanwhile, BBC News NI has also learned that another Stormont department has still not decided if funding for daily flights between City of Derry Airport and London Heathrow will be renewed after March.

The route, which is operated by Loganair, is widely regarded as one of the most important air links at the council-owned airport, as it connects the north west of Northern Ireland with the rest of the UK.

It is jointly funded by the Department for the Economy (DfE) in Northern Ireland and the Department of Transport in London under what is known as a public service obligation (PSO).

A PSO is intended to support regional economic development.

A spokesperson for DfE told BBC News NI: "At this time, the department does not know its budget beyond March 2024.

"It is therefore not possible to allocate funding for 2024/25 at this stage.

"The department is currently planning for the 2024/25 budget year and will be bidding for the £1.018m required for the Public Service Obligation.

"The department will endeavour to update all stakeholders as soon as it can."

A UK government spokesperson said funding for airports in Northern Ireland is a devolved matter which rests with the Department for Infrastructure.

"The government supports restoring a locally elected, accountable and effective devolved government as soon as possible to address issues facing Northern Ireland."

A council spokesperson said they are engaging with City of Derry Airport on a regular basis and with the relevant departments at the Northern Ireland Executive, the UK Government and Irish Government.

They said they regularly discuss current funding challenges and "the urgent need for financial support required to retain the connectivity benefits [the airport] provides across the north west region".

"Included in those discussions are requests for funding for the continuation of the PSO route from London beyond the existing two-year contract; a funding package from government over a six-year period towards the overall operating cost of the airport and also a commitment from North-South Ministerial Council to prioritise a Dublin PSO service."

The council said it recognises the strategic importance of the airport to the city and region and is doing everything possible to secure the necessary funding.