Financial support for new routes

[Findo]

It will be interesting to see the EU investigation into Strasbourg and possibly Charlois funding of new routes from their airports.

The provision of some subsidy to start a multi national business on your doorstep gets my applause as a good way to use public money. As long as the terms are the same for everyone then I believe more, not less, airport operators and Government bodies should look at this way of stimulating traffic with all the subsequent benefits to local and possibly national economies. Better half a million pounds spent on getting a direct flight to your local airport than dozens of posters stuck in tube stations !!

As an example the following new routes have started out of Scotland with some initial backing from the Scottish Executive ..


Edinburgh to Cologne

Edinburgh to Jersey

Glasgow Prestwick to Skavsta (Stockholm)

Glasgow Prestwick to Girona (Barcelona)

Edinburgh to Oslo

Edinburgh to Milan

Edinburgh to Geneva

Edinburgh to Zurich

Glasgow Prestwick to Berlin

Glasgow Prestwick to Gothenburg

Kirkwall to Bergen

Edinburgh to New York (Newark)

Inverness to Birmingham.


Not all these routes will survive but few of them would have started without some direct assistance.

It has also been reported on an Edinburgh newsgroup that -

SAS are showing flights to Stockholm next march using a daily B737-600 SK2541 and operating daily arrving 0935-1055.

Presumably also a route which will attract initial route support. Well done the politicians for once :ok: :ok:

[LGS6753]

Sorry, I disagree.

Subsidies never work. They distort decision-making, they distort competition, and they are a waste of taxpayers money (like so many other government-inspired crackpot schemes).

Subsidies took British Steel to Ravenscraig and Consett - look at the long-term damage done there.

Subsidies to some farmers are destroying other farmers elsewhere in the world.

Subsidies to airlines will end in tears - not for the early travellers or the besuited ribbon-cutters (friends of Blair no doubt), but to the people who move to take jobs, or whose jobs are undercut by the subsidee.

It's no surprise that the Scottish (Socialist) Executive is doing this - Old Labour has failed Scotland before, and now their sons are doing it all over again.

[Findo]

LGS - Thanks for the party political broadcast.

How would you describe the discounts landing and handling fees offered by many airports to new carriers ? :confused:

Subsidies for a specific period kept Rolls Royce as a going concern. :ooh:

Subsidies made British Airways an attractive proposition to be privatised. :eek:

[Meeb]

Well said Findo, LGS6753 does not understand the situation in Scotland or the funding given to operators.

LGS6753, on another thread you wrote:

To gain interest from serious lo-co operators you need a coffee shop AND a cash machine AND a bus stop.

When CVT has all three, it should apply in writing with details of its financial incentive package.

That could take a while...

FGS6753, a wee bit confused are we...? Run along and do not offer such trite comments such as: It's no surprise that the Scottish (Socialist) Executive is doing this when you obviously do not have a scooby what you are talking about! :rolleyes:

[Frankfurt_Cowboy]

There's a world of difference between airport operators doing deals to attract interest from airlines, and tax payers money being given out to encourage operators to start up unrealistic and ultimately unprofitable operations.

[ajamieson]

There's a world of difference between airport operators doing deals to attract interest from airlines and tax payers money being given out to encourage operators to start up unrealistic and ultimately unprofitable operations.
Bingo!

LGS6753 Scotland does not have a socialist government. Yet. ;)

[LGS6753]

Findo -

Deals between private companies are a matter for those companies only. If (say) BAA want to offer inducements to (say) Ryanair, that is a matter for the management and shareholders of both organisations.

Subsidies are monies involuntarily coughed-up by taxpayers and distributed by politicians.

Is there any wonder I dislike them so much? It's my money they're wasting!!

ajamieson -

In my humble opinion both Labour and the Lib Dems are socialists. As they control the Scottish Parliament, I'm afraid Scotland does have a socialist government. Their actions prove it.

[symphonyangel]

quote:
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There's a world of difference between airport operators doing deals to attract interest from airlines and tax payers money being given out to encourage operators to start up unrealistic and ultimately unprofitable operations.
------------------------------------------------------------------------

Of course so many airports are government owned there is no distinction - Frankfurt (who also own Hahn), French, Italian, Manchester etc - these airport operators use the taxpayers money to encourage start up operations - don't be fooled Frankfurt Cowboy!

[Frankfurt_Cowboy]

I don't know, maybe I've got this wrong, do the owners of, say, Leeds/Bradford airport actually pay airlines to operate flights? No matter who owns them you have to make a distinction between actually paying money out and making an allowance. If knocking a couple of quid off landing fees will encourage someone to start a service then you're making a net gain overall. It's not like bunging Continental a rake of cash to artificially stimulate interest in a route that they wouldn't normally look twice at. Stimulatiing growth is one thing, artificially creating it is quite another. It's a simplistic view I know, and may well be incorrect but as I see it there are the differences.

[Findo]

Frankfurt Cowboy


encourage operators to start up unrealistic and ultimately unprofitable operations.

Which of these routes do you think are in your definition of unrealistic and ultimately unprofitable ?


Edinburgh to Cologne

Edinburgh to Jersey

Glasgow Prestwick to Skavsta (Stockholm)

Glasgow Prestwick to Girona (Barcelona)

Edinburgh to Oslo

Edinburgh to Milan

Edinburgh to Geneva

Edinburgh to Zurich

Glasgow Prestwick to Berlin

Glasgow Prestwick to Gothenburg

Kirkwall to Bergen

Edinburgh to New York (Newark)

Inverness to Birmingham

[nef]

EDI-CGN has been cut back to a summer only service, and PIK-TXL appears to have been cut successively from daily to 5x weekly to 3x weekly, so there are two that don't seem to be doing well. However, I understand flights must be year round and at least 5x weekly to get the subsidy, so I guess they'll be getting their support withdrawn?

Don't get me wrong, I'm happy to see the subsidies, but I do think there are one or two routes mentioned that are a bit questionable, whilst others that would be good are not in place ie. GLA/ABZ-BRU/FRA, DND-AMS. I guess it's a function of what airlines approach you.

That said, I think people are maybe putting too much emphasis on the subsidies from the executive. We're talking £7-8 million spread between all these routes, with payments spread over 3 years. It doesn't seem like all that much money to me. The airport operators surely provide the bulk of the discounts - BAA claim £60 million across EDI, GLA and ABZ over 3 years. What maybe has made the difference more than money is government lobbying of the airlines and airport operators, particularly BAA.

BTW, can anyone tell me who is operating the Kirkwall-Bergen service?

[Frankfurt_Cowboy]

Findo,
again I'm no expert but I'm guessing that if airlines could make money from these routes without the subsidies given from our pockets then they would already be raking it in. I take your point that on some of the routes there may well be the necessary revenues to make them viable but looking at them I'd say that quite a few of them are "jobs for the boys, take the money while it's there and then go" type of services. Air travel doesn't directly affect peoples quality of life, apart from those living offshore, for whom I support subsidies to keep communities viable. But I don't see why people in Edinburgh can't make the fairly short trip over to Glasgow to get a flight and vice versa, or why government money should be used to set up services from their nearest airport.
Undoubtedly the population bases of these two cities will create a large pool of revenue that would support a healthy and prosperous air travelling community. But by artificially stimulating airports in both conurbations the natural growth of the area is being diluted and ultimately, should the subsidies be stopped (or ruled to be anti-competitive) then everyone loses as Scotland is left with a great many unprofitable services that will prompty be shut down.
In comparison, I live near a very nice airport but for most of the destinations that I regularly travel to I have to travel 40 miles accross the pennines (lots of traffic congestion, bad weather, crowded, unreliable trains etc. etc.) This is due to market forces, undoubtedly in Scotland Jack McConnell or whoever would take pity on me and pay some airlines to put on the flights that me, and people like me want. Perhaps I should ask the government to subsidise my travelling by paying my travel and parking expenses??
At the end of the day air travel isn't a matter of life and death, there isn't an underclass of people whose quality of life is affected because they can't fly to New York from their local airport. It's ridiculous and and insulting to even suggest this and to back this up by spending tax payers money to subsidise when there are matters of literally life and death that would benefit from the money. And before anyone calls me anti Scottish I'd object to the practice of subsidising air transport wherever it takes place, it's just that the Scots seem to be going for it big style at the moment.

[ecj]

Loganair operated the Kirkwall - Bergen in the summer on a Sunday using an Aberdeen crew.

This particular route is fairly thin.

[brabazon]

Frankfurt Cowboy

You make some good points.

I guess if governments are going to give out money in this way they need to have strict guidelines - particularly in today's de-regulated environment when state aid is outlawed. They are able to support essential air services/public service routes - such as Glasgow - Barra and the air services in the Orkneys and Shetlands. But what criteria are they using for these new routes? e.g EDI-JER?

[ecj]

I think the Frankfurt_Cowboy has little understanding of life in northern Scotland, and of the importance of airlinks which serve these communities.

He appears never to have heard of the concept of PSO routes. Perhaps further research on his part might assist him at looking at the bigger picture.

[Frankfurt_Cowboy]

Errrr, ECJ. Fortunately you're right and I have no concept of living in the north of Scotland but I also state that for isolated communites (i.e. living on an island or such) the concept of route subsidy is essential. Much as rural bus routes are, these are often a lifeline and their withdrawal with have massive effects on communities, rendering them untenable. By all means pay for these services to continue, they are essential. Is this the bigger picture you mean????

[HZ123]

Was not Concorde completely subsidised by the Uk tax payer and then futher funded by those able to put their carriage on the good a/c down to tax. Or off the black economy. Those routes stated within the HIA areas have to be subbed as a vital life line.

This arguement will go round and round as to some extent it is impossible to identify which airline has not been given some form of financial enducement in the past or in the future. Someone tell me whose conscience is clear.

[Findo]

The point I was making in the first instance was that this is good use of public money which sees direct results. I completely disagree that having air services does not change lives. As a consumer I love the choice I have now. By a combination of low cost carriers and sensible use of public money there are destinations available which have never been served before from Scotland - at fares I can afford.

All of these services are bringing in toursist and creating jobs. You can see the effect on a daily basis so it is changing people's lives. Much more direct and useful spending of public money than decades of pretty posters in the London tube system for some dubious benefit.

I cannot see why the EU wants to protect Air France at Strasbourg and nobody at Charlois. AFR like BAW and others had decades of freedom to start up routes and make them affordable to non business travellers. They didn't do it and are only now reducing fares because of competition stimulated by some start up subsidy.

As for the sucess of the services we will have to wait and see. The EDI - Cologne service has been suspended until next season, not too unusual for a new route. The PIK - Berlin service started at twice a week and is now 3 times. I understand they have not yet met the frequency threshold to qualify for the route subsidy so in the meantime PIK (a private company) are assisting them. :ok:

[Frankfurt_Cowboy]

I'm certainly not an expert, don't claim to be, don't want to be. I'll say it again as some people seem to be hard of reading/understanding.

Route subsidy where air travel is essental for community growth and prosperity (i.e Scottish Islands, Scilly Isles etc.) =GOOD (well not good but OK)


Tax payers money given to airlines to start services that can't sustain themselves economically = BAD

And I quote
"As a consumer I love the choice I have now. By a combination of low cost carriers and sensible use of public money there are destinations available which have never been served before from Scotland - at fares I can afford."

Arrogance and cheek.

[donder10]

How would EDI-EWR classify as a PSO route?

[Findo]

Cowboy

And I quote

"As a consumer I love the choice I have now. By a combination of low cost carriers and sensible use of public money there are destinations available which have never been served before from Scotland - at fares I can afford."

Arrogance and cheek

Maybe you could explain the arrogant or cheeky comments.



Route start up aid is very common as you can see from the quote below about US Airways starting a new service from Philadelphia -hardly the home of socialist subsidy -

"US Airways will get financial aid in promoting travel between Philadelphia and Scotland from the Philadelphia Convention and Visitors Bureau, Philadelphia International Airport, Scottish tourism authorities and BAA Scotland, officials of the airline and the agencies said."



Phily (http://www.philly.com/mld/philly/business/7041044.htm)

[Frankfurt_Cowboy]

Findo

The reason that the prices are lower and the range of destinations is wider is because British tax payers are paying a percentage of the costs and ergo your fare. Let's put this in perspective, not subsidising a bus to take children to school, not subsidising a meals service for the elderly. Subsidising you to go on your holidays, or away on business. It's a non essential service, a luxury, hard to believe but the world would manage just fine without air travel, it's not a public service it's a business, simple as that. If people think that it's OK that tax payers money is spent to pander to the whims of the (Scottish) travelling public then that's fine, I personally don't.

[Runway 31]

The bigger picture needs to be looked at here. It is not only the Scottish travelling public who benefit. The country and the Scottish economy as a whole benefits a great deal.

While some of the routes may over time prove not to be viable, the majority will. The incentives available will give some time to the operators to build up their passenger figures ensuring the routes are viable over the longer term.

Ryanair on their Scottish routes consider 55% of the passengers to be inbound with up to 80% on the Hahn route and 70% on the Scandanavian routes inbound.

These passengers put a fair amount of monies, many millions extra into the Scottish economy which would have went somewhere else if the flights were not available to allow the passengers to come here and spend their hard earned cash.

You have to spend money to accumulate money.

Far more is coming into the country, from tourism, into commerce and all the other business activities associated with air travel than is being spent by the Executives incentives.

Runway 31

[Meeb]

At last someone hits the nail on the head, thank you Runway 31. :ok:

Frankfurt, you acuse Findo of being arrogant and cheeky then you say: "Fortunately you're right and I have no concept of living in the north of Scotland"
I would say that is both arrogant and cheeky, and if you think Yorkshire is some sort of utopia... god save us...:{

[Findo]

Frankfurt Cowboy would you like to comment upon the effect of Ryanair's operation through PIK ?



Ryanair boosts Scottish economy by £89m+, new Scottish enterprise survey shows airline's flights support some 2000 jobs nationally, 720 in Ayrshire

The arrival of low-cost airline Ryanair has had a sky-high impact on the Scottish economy, according to new independent research released today (5 November).

Visitors landing at Glasgow Prestwick International Airport on Europe's largest low fares airline pumped up to £89 million into Scotland…and new flights by the carrier are expected to make this figure grow even more.

Ayrshire alone has benefited from Ryanair's presence at Prestwick to the tune of between £13.8 million and £18.4 million.

Ryanair's inbound passengers stayed for a massive 2.4 million nights in Scotland during 2002-2003, and the average duration of their visit was just under eight nights. These passengers spent just under 280,000 nights in Ayrshire - proving good news for local hotels and guest houses.

The findings were revealed in the final report issued by economic development consultants SQW and survey experts NFO World Group. Scottish Enterprise Ayrshire commissioned the survey in July 2002 to examine the economic impact of the Ryanair air routes, with particular emphasis on passenger information such as
demographics, reasons for travelling, levels of satisfaction and contribution to the local economy.

Key findings of the report are:

The presence of Ryanair flights to and from Prestwick supports between 620 and 720 full time jobs in Ayrshire, and between 1500 and 2000 across Scotland.
Passengers exhibited a high socio-economic profile, with 78% of passengers in the top ABC1 grouping.
Passengers were using Glasgow Prestwick International airport as a gateway to Scotland, with major economic benefits seen in the Greater Glasgow area up to the Highlands and Islands.
The average spend per person per trip for visitors to Scotland was £215.
Cost proved a major motivation for those flying in and out of Prestwick. Around 90% of passengers described the cost of the flight as an "important" or "very important" reason for taking the trip.
Around 42% of passengers used the service to go on holiday, 38% were visiting friends and relatives, with a significant minority -14% - using the flights for business.

At the start of the survey, Ryanair served six destinations from Glasgow Prestwick - London Stansted, Dublin, Brussels Charleroi, Paris Beauvais, Frankfurt Hahn and Oslo Torp. Since then, Ryanair has added daily flights to Bournemouth, Stockholm, Barcelona and Gothenburg, and will shortly commence two more - to Shannon in December 2003 and Milan in January 2004.

This brings to twelve the total number of Ryanair routes from Glasgow Prestwick, doubling the number of destinations since research started last year.

Ryanair expects to fly 1.9m passengers through Glasgow Prestwick during 2003/2004 - that's around 8000 a day. The airline currently has 21 flights a day from the Ayrshire airport, growing to 23 in the next two months, and is in the final stages of converting all its flights onto the larger state-of-the-art Boeing 737-800 aircraft with 189 seats. It expects passenger numbers to experience double-digit growth over the next five years.

A steering group was formed by Scottish Enterprise Ayrshire to study the survey findings, including key people from Ryanair, Glasgow Prestwick International Airport, Ayrshire & Arran Tourist Board, Ayrshire & Arran Tourist Forum and South Ayrshire Council.

Ryanair welcomed the findings of the survey. Michael Cawley, Ryanair's Chief Operating Officer and Deputy Chief Executive said: "Ryanair is delighted this survey has taken place. We have known for some time that we bring major economic and tourism benefits to Prestwick, Ayrshire and Scotland. This survey has confirmed our belief, and we are delighted to be such an important factor in the growth and development of Scottish tourism.

"These results will enable Ayrshire businesses and tourism bodies to develop a clear strategy on how to maximise the opportunities that Ryanair is delivering at Glasgow Prestwick, particularly since by January we will have twelve great European destinations that will double the benefits outlined in the survey.

"The survey is entirely consistent with Ryanair's beliefs - that Ryanair services generate inbound travel that would not have happened without the routes; that Ryanair generates additional short breaks in addition to main holidays; that price is the main reason for travel; and that the Internet is the most dominant booking source for flights.

"The results are very positive. We are very committed to Glasgow Prestwick International Airport and committed to growing routes and destinations from this excellent base."

Scottish Enterprise Ayrshire Chief Executive Evelyn McCann also welcomed the survey's interim findings. "The presence of budget airlines like Ryanair at Prestwick is a key economic success factor both at a local and at a national level.

"This survey has thrown up some fascinating results, and it is gratifying to see that Ryanair's services from Glasgow Prestwick are responsible for contributing so much to Scotland and up to £18 million to the local economy.

"Without a low-cost carrier such as Ryanair flying from Prestwick, the evidence provided by this survey suggests that a significant proportion of passengers would not be setting foot in Scotland or Ayrshire at all.

"Having a high-profile operator like Ryanair based at Prestwick also contributes to the reputation and credibility of Ayrshire as a business location. The research shows that inbound passenger awareness of Ayrshire itself is increasing since the introduction of these routes."

The main methodology of the survey has been face-to-face interviews with passengers. In total, 831 interviews were held between August 2002 and July 2003.

Over the twelve-month period, just over half Ryanair's passengers - 53% - were outbound Scots.




Now that looks to me like a small amount of subsidy exceedingly well spent !! :D :D :D

[kpiko3]

Indeed!!!

Can I just ask,I know that the Milan-PIK service is part of the route fund,but does Shannon classify as a route for it and is it getting funding?

Cheers
kpiko

[Frankfurt_Cowboy]

Findo, no, really can't be @rsed any more!!! Moved on to bigger and better things in Scotland. Miss Hoolie from Balamory to be precise. It's not often I wish I was Scottish but as it appears you get subsidised jollies then maybe it's time I considered giving it a go.