LONDON – On Monday 26 September, Peel Group – the management group for the Doncaster Sheffield Airport (DSA) complex – issued a formal statement regarding its Strategic Review into the ongoing viability of the airport.
Despite recent word of the appearance of a serious buyer for the airport, Peel Group state that “no tangible proposals have been received regarding the ownership of the airport or which address the fundamental lack of financial viability.”
The formal statement confirms the finding that a viable financial business plan to ride out the current crisis is not evident. The statement continues:
“The high fixed costs associated with running a safe, regulated airport, together with recent events materially reducing prospective future aviation income streams, mean that a break-even business plan cannot be identified for the foreseeable future.”
As a result, DSA will begin winding down the provision of aviation services during the week commencing Monday, 31 October 2022.
Peel Group say that DSA will continue to work closely with airport customers and other users to explain the impact of this service reduction and work with them to minimise the disruption to their operations and customers.
The Strategic Review process from July to present
Since the July 2022 announcement of the Strategic Review, Peel has been actively engaging on a weekly basis with local and national political stakeholders, including proactively engaging with working group meetings, primarily led by officers at Doncaster Council, South Yorkshire Mayoral Combined Authority (SYMCA) and the Department for Transport (DfT).
Throughout the consultation process up until today, Peel has also been in close contact with the airlines and other aviation users of the Airport.
The group says that “None of these discussions has delivered any tangible results that have changed the Board of DSA or Peel’s clear view that the Airport is and will remain unviable.”
“Prospective buyer” fails to eventuate
Peel received a letter from the Mayor of South Yorkshire and Mayor of Doncaster on Thursday, 8 September, which pointed to the appearance of a serious buyer for the airport complex.
Despite this advice, Peel Group say they have yet to receive a response to their urgent requests for details with regards to the buying consortium’s identity.
Neither have they received any advice of the terms of any proposal, or evidence of the consortium’s financial standing or aviation expertise.
A proposal for public funding
On Friday, 23 September, Peel received a further letter from SYMCA and Doncaster Council which put forward a proposal to provide public money to DSA to fund its operating losses until 31 October 2023.
The grant was described as providing DSA with free cashflow to sustain losses that may occur over thirteen months while the Peel Group and South Yorkshire partners jointly explore the future potential of DSA and the GatewayEast site.
Addressing this proposal Peel Group states that their Board has concluded that it cannot responsibly accept public money for this highly uncertain process against the backdrop of an unviable, loss-making operating business.
Peel Group management statements
Robert Hough, Chairman of Peel Airports Group, speaking for the Doncaster Sheffield Airport, said: “We recognise that this will come as a great disappointment to many. The intractable problem remains the fundamental and insufficient lack of current or prospective revenue streams, together with the airport’s high operating costs.”
“Our employees have always been DSA’s greatest asset, and we are grateful to them all, past and present, for their dedication and diligence over the years. The immediate priority remains to continue engaging closely with them over the next few weeks.”
“As such, DSA will now begin a formal process of consulting with team members. We will do everything we can to minimise the impact of these proposals and work closely with local authorities and agencies to support our employees through what we know will be an extremely difficult period.”
“DSA has remained in contact with union representatives on site throughout and we are committed to ensuring they are updated through every step of this next phase.”
Steven Underwood, Chief Executive, Peel Group said: “We recognise that we are living in uncertain times, and we understand that our announcement will be difficult to hear for the Doncaster and wider South Yorkshire communities in which we have worked and invested for over two decades.”
“However, as has been seen many times before in industries undergoing structural change, although change brings uncertainty it can also bring significant opportunity. As the Strategic Review concludes, we look forward to collaborating with our partners to create a vibrant, long-term vision for GatewayEast and the airport site.”
“We will not accept any public sector grant to cover the costs of an airport that is not viable due to its lack of adequate forward revenues and high operating costs. Accepting funds from SYMCA may postpone the inevitable for another thirteen months, but it will divert funds away from services on which communities throughout South Yorkshire rely.”
“Instead, we intend to continue working closely with local and national stakeholders to develop a forward-thinking strategy for the airport site, in conjunction with the £1.7 billion GatewayEast development next door, to help unlock vibrant, job-creating alternatives to ensure future growth and prosperity.”
“We have the potential to attract cutting-edge, future-tech businesses to South Yorkshire, but only if we are able to collaborate with our local stakeholders and community in South Yorkshire.”
Summary
In concluding yesterday’s statement, the Peel Group says it “prides itself as a Northern, family run regeneration company that has a strong track record of delivering jobs and investment for towns and cities across the North.”
Nevertheless, the loss of Doncaster Sheffield airport is a sad event for the local community and also for the greater region.
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