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Birmingham Post
Birmingham Post
Business
Tom Keighley

Covid prompts massive fall in passenger numbers at loss-making Teesside International Airport

Teesside International Airport has reported a £13.4m operating loss as the pandemic caused a massive fall in passenger numbers.

Passenger numbers fell by 90% in the year to the end of March 2021 in what director Phil Forster described as a “devastating” time for the aviation industry.

Turnover for the year fell 38% to £4.8m, down from £7.7m from the previous year as passenger numbers tumbled to just 14,521 from 139,448.

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Accounts for the airport show costs of £2.73m were incurred relating to contract termination. In July, airport operator Esken - then called Stobart Group - exited its role and transferred its 25% ownership of the airport to a new Teesside Airport Foundation for a nominal consideration. And in the same month, the airport severed ties with Close Security Protection in a move branded 'disgraceful and underhand' by the firm but one that Tees Valley mayor Ben Houchen said would save £100,000 a year.

During the year, a total of £20m was drawn down from two loan facilities - a £34.4m facility from Tees Valley Combined Authority and a further £23.6m set up last year to fund development of the airport’s Southside business park, part of the Teesside Freeport, which will cater for logistics and manufacturing companies across a 3.4million sq ft site.

Writing in a report accompanying the accounts, Mr Forster said his team took the strategic decision not to close the airport, a move he said ensured the support of key businesses on site.

He added: “During this challenging time, we have maintained a strong focus on operational performance, improving the passenger experience and investing in new and upgraded facilities.

“A focus has been to diversify our revenue streams and expand the routes offered for future years. Loganair continue to grow their network from TIA, now serving London Heathrow up to three times daily, with a British Airways codeshare agreement enabling passengers to connect seamlessly to hundreds of BA destinations. In August 2020, a new five-year deal was signed with KLM to continue operating its flights to Amsterdam.

“The seven-year agreement signed with Ryanair commenced this summer with the planned flights to Alicante and Palma. Two new additional routes have already been added and commenced in July 2021 to Corfu and Faro.

“In May 2020, Willis Asset Management Limited, a leading global aviation firm, signed a long-term contract to lease hangar space at TIA as its location for a European aircraft maintenance base. TIA continues to develop other revenue sources to reduce reliance on the passenger-related elements of scheduled and charter flying. These sources include ground-handling and felling to commercial, general aviation and military customers.”

A business plan for the Airport published by Tees Valley Combined Authority in August last year said that prior to the impact of the pandemic, passenger numbers were “highly encouraging” and were exceeding expectations at an early stage of the airport’s 10-year turnaround plan.

That plan forecast revenues to be £30.5m by March 2025 and a return to EBITDA profitability by 2023/24. It also confirmed a target of one million passengers by March 2026.

Progress, it said, would be “driven by a combination of increased revenues derived from both aeronautical and non-aeronautical income streams, new revenue streams and reduced unit costs arising from growth in passenger numbers. “

However, in these latest accounts Mr Forster said passenger confidence was still lower than pre-pandemic levels.

The airport benefited from Government support packages to the tune of £886,278 including £407,439 from the Coronavirus Job Retention Scheme and £478,839 via the Airport and Ground Operations Support Scheme run by the Department for Transport and used to cover business rates during the period.

The accounts show that at the end of March 2021 the airport had liabilities of £27.48m and net assets of £1.8m.

Tees Valley mayor Ben Houchen said: “These figures are from two years ago and relate to 2020/21, when Covid first struck. Airports across the country have made losses and I am confident that Teesside Airport will be back in profit in the next few years.

"The last two years have been unprecedented for the travel and aviation industries with stop-start lockdowns and restrictions making it impossible for both the aviation sector and families to plan with any certainty. This, of course, has a huge impact on airports as highlighted in the recent AOA report, which highlighted revenue losses of £10bn across the UK."

He said 2022 would be "the airport’s busiest year in almost a decade with a full roster of holiday flights".

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