Tough times ahead for Derry airport despite £7m windfall

Falling passenger numbers, grounded flights and plummeting profits – not exactly the best conditions for a regional airport struggling to take off.

So why then has the Northern Ireland Executive agreed this week to give the City of Derry Airport a £7 million funding windfall?

According to the North’s political leaders, it all comes down to economics – or rather the specific kind of “politic-omics” that Northern Ireland likes to specialise in.

The North’s First and Deputy First Ministers say the £7 million support package will ensure that the “airport remains a key gateway to the northwest” and that this is vital to the local economy.

The airport is 100 per cent owned by Derry City and Strabane District Council but managed by the UK firm, Regional & City Airports (RCA) – which also operates and manages four other airports.

Passenger numbers

Last year, passenger numbers nose-dived by 18.8 per cent to just over 284,000. By contrast, passenger numbers rose last year at Belfast International to more than 4.3 million people and to more than 2.6 million at George Best Belfast City Airport.

RCA argues that Derry’s airport faces certain challenges from the impact of airport departure tax – which every passenger departing from a UK airport must pay – and to competition from Dublin Airport. Of course, these are the exact same conditions that both Belfast International and Belfast City operate in.

The difference is that Derry is the only airport in the North in public ownership and the only one that does not make a profit.

All three airports compete with each other and Derry more often than not is the one that comes out as the loser as highlighted recently by its Ryanair experiences.

The low-cost operator’s Belfast base, which it re-opened earlier this year, is flourishing. However, it announced recently that, from next March, it plans to ground its services between Derry and London Stansted and to axe its summer route to Faro.

According to the Derry airport, Ryanair has blamed a host of reasons for its decisions – from the devaluation of sterling following the Brexit vote, to the airport departure tax and, not least, to the success of its new Belfast to Gatwick service which has tempted passengers away from the Derry-Stansted service.

Roy Devine, the chairman of Derry's operations, claims the airport is a "key economic driver for the northwest".

He says it generates a total of £15.7 million gross value added for the local economy, almost half of it from inbound tourism and business connectivity with the balance accounted for by airport operations.

Local taxpayers

But when you look at these figures in tandem with the amount that the local authority owners – and in turn local taxpayers – have to contribute every year just to keep the doors open at the airport, it is not difficult to see why some, like independent councillor, Paul Gallagher, believe Derry's airport is something of a local vanity project.

The airport has struggled to secure new routes in the last five years and the loss of the Ryanair routes is not just a disappointment, it raises a question mark about its viability as a functioning airport.

The airport has indicated it is in discussions with various airlines to replace the Ryanair services but it has in the past admitted that “low yield markets” can be a less than attractive proposition for the industry.

However, the airport has been successful in creating new revenue streams from corporation aviation and now attracts air taxis, private charters and small private jets to use its facilities.

Although part of the new £7 million funding package from the Executive will be employed for route development, the majority will be invested in the airport’s existing infrastructure – and that is where its future might lie.

The airport is currently in discussions with a commercial organisation that specialises in servicing and repairing aircraft.

It hopes to persuade this potential inward investor that Derry airport would be the perfect location to develop a new maintenance facility which in turn could deliver a major jobs boost for the area.