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CoDA (Operations) Ltd Board outline Business Plans for City of Derry Airport to Derry City and Strab

06 September 2016

An In-Year 2016 Business Plan setting out the primary objectives for the City of Derry Airport was presented to members of Derry City and Strabane District Council’s Governance and Strategic Planning Committee today, Tuesday 6th September in the Guildhall. 

Presenting the In Year Business Plan, the Chairman of CoDA Operations Ltd, Mr Roy Devine highlighted that the airport is a vital piece of infrastructure and key economic driver for the north west region, generating a total of £15.7m GVA into the local economy, through £8.3m per annum of operational GVA and £7.4m of catalytic GVA from inbound tourism and business connectivity.  Mr Devine commented that City of Derry Airport is operating in a very challenging environment and that the Airport Board, Derry City and Strabane District Council and the Airport’s strategic partners are determined to work collectively to achieve its vision of remaining the airport of choice for the north-west region. 

Mr Devine outlined that the operational subsidy for CoDA is now £1m or 32% lower than 2010 levels; with the majority of metrics for commercial income and costs significantly better than those in 2010.  He explained that the Council’s operational subsidy for the facility for 2016/17 is £2.1m with a forecast outturn of £2.2m, stating that the difference (£86k) would be funded from CoDA’s reserves. 

Mr Devine noted that CoDA is involved in ongoing discussions with the airport’s main route carrier Ryanair and is also in discussions with a number of regional airlines but   was unable to comment any further at this stage.

Tom Wilson, Accountable Manager for Regional and City Airports, (the company responsible for the day to day operations for the airport), updated members of the Governance and Strategic Planning Committee on how the Airport’s Business Strategies has been refined to reflect the current economic climate and take into account the challenges the Airport faces in terms of APD – Airport Departure Tax, the global financial crisis, competition from Dublin and other airports in the Republic and a low yield environment, as well as airline strategic changes and business rates.
Mr Wilson commented: “APD, a charge on all departing air passengers that is levied by the UK Exchequer, has progressively increased and has had a severe impact on regional airports like CoDA, threatening current services and limiting growth. This tax is more regressive in NI given the land border with the Republic where APD has been abolished. The impact of APD is one of the reasons airlines have reduced capacity and not added growth. Airports in the south of Ireland do not have APD and also have the added advantage of direct support incentives to stimulate route development which are currently not available to CoDA, and are therefore able to increase capacity and customer base.  The abolition of APD would be hugely beneficial to CoDA”, he explained. 
Mr Wilson outlined that the consolidation of airlines to a small number of low cost operators and small regional airlines, who are less likely to take risks on new routes, has also had an impact while the presence of two privately owned competitive airports in Belfast, resulting in a dilution of yields as airlines compete to maximise load factors, was a fundamental factor for CoDA. 
He explained that the prolonged impact of the Global Financial Crisis on the airline industry, NI’s challenging low yield market and the decision by Ryanair to open a base at Belfast International and compete directly for market share and with other airlines based there, were also having an impact on CoDA.  The report outlined the total Airport rates bill of £265k and the increase of 137% in rates charges since 2013 had caused a corresponding deterioration in the airport subsidy and that this was currently under appeal. In terms of passenger numbers, Mr Wilson outlined how CoDA’s annual traffic grew at a rapid rate and peaked at nearly 450k in 2008 before the economic downturn and fell to 338k in 2010 recovering to approximately 412k in 2011 however, due to a reduction in services passenger numbers have fallen since 2011 and the decline in 2014 and 2015 reflects the termination of Birmingham and reduction in summer sun services.

Mr Wilson stated there are many positives for the Airport, since 2010 we have achieved substantial income improvements from corporate aviation to include air taxis, private charter and small private jets for business, tourism, medical or private visits.  Due to staff training, improved marketing and targeted investment in facilities the airport has substantially increased income since 2011.

Looking ahead to the In Year Business Plan, Mr Wilson provided details of a summary of the 2016 rates budget and current forecasts.  He said CoDA remained committed to delivering on the Master Plan developed in 2012 that includes ongoing work to promote the development of an aviation Maintenance and Repair Operation on the site. He referred to the ongoing work of the airport board and management in seeking Route Development Support from a range of sources including Public Service Obligation funding, Department for Transport Regional Air Connectivity Fund, NI Route Funds, North West Air Access Consortium; Tourism Ireland marketing support and the NI Executive.

Mr Devine commented that  while route development has been very challenging over the past five years CoDA acknowledges that if it is to grow routes and frequencies it must provide financial support to airlines to reduce their commercial risk, particularly in the early years of a new route, stating:  “We will continue to work proactively with airlines and our key partners and stakeholders to maximise the opportunities that exist to access marketing support funding so we can maintain existing and develop new routes.  

Concluding Mr Devine stated “City of Derry Airport provides a vital air access link for the local community and performs a pivotal role in the economics of the region.  The retention and expansion of CoDA remains a key element of the infrastructural development of the North West region, providing significant air connectivity for business and tourism, and generating £15.7m GVA per annum.  We will continue to work to ensure that the airport remains an important regional gateway and plays its role in the future development of the North West.”