Teesside’s publicly-owned airport should not be asking for any more money, according to the region’s mayor.

A £20m package of extra cash for Teesside Airport was backed by Tees Valley Mayor Ben Houchen and council leaders earlier this month.

But the decision on the £1.3bn investment plan – which included the extra airport money – was referred to the combined authority’s overview and scrutiny committee held this week.

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An £11.8m loss was recorded at the site in 2021/22 – with covid and infrastructure investments given as reasons for the blow.

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Pressed on whether more millions would be ploughed into the airport, Mr Houchen said “reasonably” it should not be asking for more money.

The airport was given £10m extra last year after a tough 2020/21 hit by covid losses. A presentation to the scrutiny committee offered up the “benefit cost ratio” – a calculation used by the government to measure the value for money of a project – of multiple projects.

A value higher than one is deemed to bring a net benefit. The report showed Stockton High Street’s regeneration measured 2.8, the Boho Digital City vision clocked 2.7, and Teesside Airport measured 7.9.

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TVCA chief executive Julie Gilhespie said inward investment was important to the region’s economy – with the area the fastest growing in the UK for foreign direct investment. She told the committee how international connectivity via Schiphol was key to development and “unlocking investment”.

Ms Gilhespie said: “We’ve seen the work at Teesworks and Wilton more generally that the future growth of the Tees Valley is linked to international inward investment from major businesses. The airport becomes really important to be able to fly in and out of business.”

The top officer did concede covid had brought a big impact given the wider effects on aviation. Councillors were told the extra £20m was to absorb covid costs and “drive investment in cargo and freight” alongside investments in fire and air traffic control infrastructure.

Ms Gilhespie said they’d seen more summer flights at the airport than at any time in the last nine years. She warned the aviation industry had not bounced back but she was “confident we would get there”.

A refreshed airport business plan forecasts the airport will hit profit during 2024/25. It will be then that loan money invested in buying and maintaining the airport would be paid back to the Tees Valley Combined Authority (TVCA) over decades.

Ms Gilhespie said they were “refocussing” the business on commercial operations. The top officer said: “However much people want leisure flights – and we all want leisure flights – they don’t generate a lot of profit.

“The thing that will generate profit at the airport is the commercial revenue that underpins economic stability and builds on the performance of the region.” New hangars for Willis and a new jet centre, Draken’s expansion, and a recently completed cargo handling facility for freight as part of the freeport zone were pinpointed as money-makers for the site.

Rent, landing fees and fuel purchases all raise money for the airport. Ms Gilhespie said they were in a number of talks with different cargo handlers and expected “significant revenue” in the next 12 months.

Councillors were also told the TVCA was in talks with Alfanar about a base for creating sustainable aviation fuel. “It’s another thing that we can offer them that will allow them to favourably look at Teesside as a place,” added Ms Gilhespie.

“These are the things which underpin profitability in the next three years. Leisure flights have grown considerably – we do expect more growth next year and into 2024.

“But as I say, it’s important to be realistic about the level of profitability that they bring. An airport needs to have other revenue to support it.”

The top official said she’d learned the key to making money out of leisure flights was “making people spend money in the terminal” – by getting them into departures as quickly as possible to spend money in bars and businesses. But Stockton councillor Steve Nelson wanted more detail on what the extra £20m for the airport was going towards.

He added: “I understand there won’t be any more after the £20m – how confident are you that the airport will be profitable by April 2025?” Mr Houchen said just over £11m was to cover the £11.8m losses in 2021/22 which were “slightly higher than forecast” given the pandemic.

He told the committee they didn’t make anyone redundant during covid – and staff saw salaries topped up to 100%. The mayor said: “On top of the £11m – there were specific costs because the airport is starting to move forward.

“Because the airport starts to move through categories as it gets more successful, fire cover has to go up and you have to have a higher category of investment in air traffic control. You have to have a higher spec of security to process people from landside to airside.

“There’s £3m to £3.5m of additional cost we had to spend in that year.” Mr Houchen said there was infrastructure investment for Willis to extend their apron, which also went into the £20m.

But former Darlington leader Cllr Stephen Harker questioned why they didn’t foresee costs linked to the growth of the airport. Ms Gilhespie explained they had little understanding of how important commercial revenue would be when they bought the airport – adding they didn’t know it would be a freeport zone for hangars.

Meanwhile, Mr Houchen said the updated business case predicting a profit had been “road tested”. He added: “It’s still a year ahead of the original business plan despite the impact of covid.

“Fundamentally, (we won’t need more money) as long as we hit our numbers.” Cllr Nelson believed there were a lot of conditions to meet for the airport to hit profit.

But the mayor insisted they would “grow” the site. Mr Houchen added: “We need more income from cargo and freight, we need more investors who build us hangars who pay us rent, which means you’ve got more people paying income.

“We’ve tried to be prudent in those projections. We think those are achievable numbers – those aren’t fanciful numbers.”

Councillors wanted more assurances there wouldn’t be more requests for extra airport money. Cllr Nelson added: “That extra £20m – might that happen again next year or the year after?”

  Mr Houchen said they could guarantee it wouldn’t “if they hit the numbers”. He added “You’re asking if I can predict another pandemic or a global war and its impact on aviation…. Yes, reasonably, we should not be asking for any more money.”

Cllr Harker had concerns about the transparency of the airport finances – and believed the paper was “optimistic” given the coming “economic crisis”. Mr Houchen said he was optimistic but the “nuclear option” was that the TVCA would take ownership of the land if the airport project didn’t work as the first charge-holder didn’t work.

Ms Gilhespie said the airport was a private company which published its accounts every year. She added “We have also published the business plan including the financial forecasts – they’re in the public domain.

“No private company publishes that sort of information and arguably you could say – and I know people in the airport do say it – that it’s anti-competitive that we publish this stuff because they’re sharing information with competitors that competitors don’t share back.” Mr Houchen said that included Manchester Airport and Newcastle Airport which had “significant local authority control”.

He added: “We talk about transparency but each local authority still has a share holding in the airport – there are board members appointed to the airport board by local authorities which get all the detail as well. It’s nonsense.

“When people talk about transparency what they mean is they can’t be bothered to look for information which is publicly available.”

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