Time for a reality check... Prestwick Airport must go
PINSTRIPE
Telling it straight
APOLOGISE for returning to the scene of a tragedy but I drove past Prestwick Airport last weekend. Other than the old plane with no engines which they practise fire drills on, there was not an aircraft in sight.
The dream of a Prestwick Spaceport seems to be over as the UK Government has followed scientific logic rather than caved in to lobbying and has designated Sutherland and Cornwall as our potential Spaceports. We don’t need another one.
A quick look at the Prestwick accounts – the latest available are for the year to March 31, 2017 – shows the impact of few passengers and planes: a loss for that year of £8.6 million and loans from you and me, via the Scottish Government, of £30.4m, enough to employ perhaps 1,000 nurses or teachers for a year?
The red ink will not stop. Prestwick is, very sadly – because I have fond memories of it – a commercial failure. Prestwick is using scarce financial resources that could be better used to fund public services or infrastructure and is not helping the economy of the West of
Scotland – it damages Glasgow Airport.
Economic gravity will eventually prevail and Prestwick will close when some politician is sufficiently courageous or new in their post to do the right thing.
The real lesson of Prestwick Airport, however, is to remind us of the hubris of politicians and the capacity of Governments and their public relations advisers to spin a story to the point where the narrative offered is not a downright lie but paints a picture that is at odds with the truth.
Here’s how the game works.
Each year when the disastrous accounts are released and sensible people challenge continued support for Prestwick, the lines trotted out by a spokesman for the Scottish Government are the same: Prestwick Airport is a standalone company with its own management and board with a business plan that shows it can have a successful profitable future, independent accountants found that plan to be sound and all the money lent to Prestwick Airport – which the business plan shows will be repaid – is being lent at a commercial rate of interest.
Each of these statements is technically true, but in aggregate they present a picture so distorted that it is an insult to taxpayers and voters.
Of course Prestwick Airport has a plan that shows how it can become profitable, all companies have such a plan, Carillion and BHS would have had such plans. What matters is whether the plan is realistic or fanciful.
Accountants looking at the plan can say whether it adds up, they can point to issues but they cannot say that the commercial assumptions made by the directors in the plan are rubbish, that is simply not their job.
To stop Governments propping up lame ducks with interest-free loans, the EU sets parameters for the rate of interest that Governments who dish out the loans must charge and they label this a commercial rate of interest. This term is laughable, the word “commercial” is a misnomer here, a commercial rate of interest is what HSBC or RBS would charge – and such lenders are nowhere to be seen at Prestwick.
This sort of behaviour, wasting taxpayers’ money at a time of austerity, does not bode well for the proposed new Scottish Investment Bank. Politicians making decisions about what businesses to invest in have a truly awful track record worldwide. If the Scottish Government wants to show us it is financially responsible it should take the tough, but right, decision to pull the plug on Prestwick.
Economic gravity will prevail and the airport will close