Summer recess started with a Welsh Government announcement of its proposed £206m additional investment in Cardiff Airport (“the Airport”) over ten years. The funding is subject to regulatory approval by the Competition and Markets Authority (CMA) whose report is due on 2 October.
In a statement on 22 July 2024, the then Cabinet Secretary for the Economy, Transport and North Wales, Ken Skates MS, said:
To improve connectivity, the Airport will seek to develop routes to those parts of the world identified in the Welsh Government’s international strategy as being important for economic growth, such as the Middle East and South Asia, the European Union … and North America.
This article explains what we know so far and links between the investment and the International Strategy.
How much has the Welsh Government invested so far?
The Welsh Government said in August 2024, it had invested a total of £179.6m in the Airport. This includes the cost of the Welsh Government’s acquisition in March 2013 and its subsequent purchase of additional shares (£67.9m). It also includes grants (£41.9m) and loans (£69.8m, which comprises the loan balance, with accrued interest at May 2021, of £27.2m and £42.6m the Welsh Government wrote off in March 2021 as part of its rescue and restructuring plan).
In our article ‘Cardiff Airport – what’s the latest view?’ (June 2021), we included a timeline of the Welsh Government’s investment in, and loans to, the Airport. We also set out information about the financial support it provided under the rescue and restructuring plan.
Since we published that article, the Welsh Government has allocated further support for the Airport. In October 2023, it announced an additional £6.6m equity investment for the cost of the Next Generation 3-D Security Scanners the Airport must install to comply with UK Government aviation security regulations. This increased the total cost of the Welsh Government’s acquisition and equity investments (its ‘shares’) to £67.9m. In August 2024, the Welsh Government valued its shares at £17.8m.
International Strategy and Cardiff Airport
The Welsh Government’s International Strategy (2020-25) aims to:
- raise Wales’s global profile;
- grow the economy by increasing exports and inwards investment; and
- for Wales to be a globally responsible nation.
How might the investment contribute to these aims?
Cardiff Airport is referenced twice in the Strategy – first, to describe Wales’s connectivity to the rest of the world (“including the fast-growing Cardiff Airport, with regular flights to Doha and to European cities”) and second, in the context of sustainable adventure tourism (its “ambitions for Cardiff Airport to become a UK centre for low carbon aviation”).
Despite not being among the Strategy’s 250-plus listed actions, these commitments are still noteworthy and are explored below.
Connectivity to the rest of the world
The July 2024 announcement doesn’t confirm the new routes for development where the Welsh Government hopes to achieve greater connectivity.
Its international arrangements are shown on the infographic below, including in the regions identified as being important for economic growth.
The Airport operates 33 direct routes and 145 indirect routes via Amsterdam.
Qatar Airways hasn’t resumed direct Cardiff-Doha flights since they ceased in March 2020 during the pandemic. The airline’s since resumed all of its other UK routes. In September, the Welsh Government told the Public Accounts and Public Administration Committee (PAPAC) that negotiations to resume are ongoing and “discussions remain positive but are commercially sensitive”.
A UK centre for low-carbon aviation
The Airport didn’t meet the target to commit, by 31 March 2023, to become carbon-neutral, included in the rescue and restructuring plan it agreed with the Welsh Government. The target comprises five commitments, including those for a solar farm, sustainable aviation fuel development and electric or hybrid vehicles.
In May 2023, a Welsh Government official told PAPAC:
The Airport committed to achieving several targets by the 31 March 2023 to put the airport on a pathway to becoming carbon neutral. However due to the current economic climate it is extremely challenging for any regional airport to achieve the objective of achieving Net Zero by 2050 across all of its operations.
In August 2024, the Welsh Government confirmed the Airport had not yet committed to achieve Net Zero.
Scrutiny of the International Strategy
The former First Minister, Vaughan Gething MS, appeared for annual international relations scrutiny at the Culture, Communications, Welsh Language, Sports and International Relations Committee (CCWLSIR) on 19 June 2024, roughly a month before the investment announcement.
He didn’t mention the Airport despite being questioned specifically on future international priorities and activity in the regions earmarked for new flight routes. The Airport wasn’t mentioned in previous annual scrutiny sessions as an international relations priority with the former First Minister, Mark Drakeford MS (in 2022 and 2023).
The Welsh Government’s entire international relations budget for 2024-25 is £8.1m. The Strategy and its accompanying action plans contain clear lists of over 250 actions. That the government doesn’t report on progress against delivery is an ongoing scrutiny issue for CCWLSIR in assessing outcomes, delivery and value for money (as it was for its predecessor committee).
The Welsh Government publishes an annual report on the activities of its 20 overseas offices but commentary isn’t linked to specific Strategy aims or actions. Mentions of the Airport in the three reports to date focus on the resumption of the Cardiff-Doha route.
CCWLSIR has written to the Welsh Government asking questions about the investment’s links to the International Strategy. A response was due on 17 September but had not been received at the time of publishing.
Scrutiny of the investment so far
On its ownership of the Airport, on 3 July 2024, the then Cabinet Secretary for Economy, Energy and Welsh Language, Jeremy Miles MS, told Plenary the Welsh Government had:
…commissioned consultants to provide updated estimates of the airport's both current and potential economic benefit, so that we have that long-term trajectory ...
In announcing its proposed long-term strategy and financial package on 22 July 2024, the Welsh Government said:
… whilst the Welsh Government and Airport do have a plan for how the new investment money would be targeted, we will not be providing a public breakdown of the figures.
However, on 19 September, Welsh Government officials told PAPAC they would, subject to commercial sensitivity, “definitely be able to share more information” about the long-term plan and the funding package. However, they could not do so while the CMA considers its proposal.
All eyes on the CMA’s report
While noting it was confident it had a “robust case for subsidy”, the Welsh Government confirmed it was developing advice for Ministers on alternative approaches should the CMA process “not align fully with Ministers’ ambitions for the Airport”. No information will be available about these until after the CMA has reported and Ministers have agreed a way forward. It seems we may need to wait until the New Year to find out more.
Meanwhile, Cardiff’s nearest regional competitor, Bristol Airport, has responded to the announcement, describing the investment as “substantial” and setting out that it operates “with no cost to the tax payer” and helps to “significantly support the Welsh economy without the need for any state financial contribution”.
Article by Sara Moran and Joanne McCarthy, Senedd Research, Welsh Parliament
