Cardiff airport concerns

Two years may have passed since the Welsh government bought Cardiff airport but the debate over the use of public money hasn't.

Since the acquisition, Welsh ministers have loaned the airport more than £20m and the viability of those loans have now come under scrutiny in relation to state aid.

There is clear concern at the department for transport and clear frustration in Cathays Park at the attitude in London, as reflected in the claim from one Welsh government source that UK government civil servants are erecting politically motivated obstacles to the airport.

The main argument appears to be about forecasts for future passenger numbers in the light of the expansion by Flybe in June.

In a leaked letter written in the beginning of June, a senior DfT official believed the forecast was over overestimated.

Higher revenues

The subsequent response from the Welsh government said that view was based on out of date information.

The forecasts are central because of the way the loans work. The Welsh government lends money to Cardiff airport. Much of that money is used by the airport to promote new routes operated by Flybe. The money that's repaid to the taxpayer will eventually come from higher revenues in the shops, cafes and car parks at the airport as a result of more passengers.

So if the passenger forecasts are considered unrealistic then it will have a bearing on the likelihood of the money being repaid.

Passenger numbers are on the up this summer at Cardiff airport. Figures for June show they're up 12% on the same period last year and the expectation is for that to be repeated in July and August. Much of it is down to the impact of Flybe.

Turning round Cardiff airport was always going to be a slow and difficult process in a tough commercial world, the last thing it needs now is to get into difficulty over state aid issues.

Hanging in the air

To be clear, there is no suggestion of anyone actually referring the airport to the European Commission, which has a policing role in these matters, but no-one will want it hanging in the air, particularly when everyone knows Bristol airport is looking closely at events in the Vale of Glamorgan.

There are around a million passengers from south Wales using Bristol every year and it will resist attempts at Cardiff to get these passengers to remain on the Welsh side of the Severn when they consider flights.

A good summer for the airport will also be of huge benefit for the First Minister as we edge closer to the assembly election as he looks to justify the biggest acquisition his government has made, and one which is still controversial.