Solid Performance for Airport Operator in a Challenging Environment

The company manages and operates 11 airports within the Highlands and Islands and Tayside on behalf of the Scottish Ministers at: Barra, Benbecula, Campbeltown; Dundee; Inverness; Islay; Kirkwall; Stornoway; Sumburgh; Tiree and Wick. It is responsible for providing safe and cost-effective airport operations, security and supporting economic and social development in the regions.

More than 1.2 million passengers made their travel connections through our airports in the year, reflecting the essential role fulfilled by air transport in the communities we serve. This reflects a decrease of 3% compared to the previous year and was primarily due to the withdrawal of bmi’s Heathrow service in Inverness in March 2008. The national trend shows a similar decrease and demonstrates that all airports are subject to the same pressures in the current aviation climate.

Total traffic movements for the group increased by 2% and freight tonnage increased by 4%.

The subsidies received from the Scottish Ministers for the year totalled £26,828,000, being 8% less than the previous year and reflects the ongoing focus on business efficiency and robust financial planning. These subsidies are made up of £17,381,000 revenue and £9,447,000 capital.

Revenue earned from traffic operations and other activities increased by 12% to £17,057,000. This was achieved through a combination of increased receipts from air traffic at our airports and more income generated from non-aviation streams such as property and concessions.

Although the industry has seen a consolidation on new route development HIAL has continued to make progress on the introduction of new routes.

Dundee – services to Belfast City and Birmingham were secured with Loganair

Inverness – scheduled service to Jersey for Summer 2009 and also from Dundee

Sumburgh – Loganair operates a successful programme of flights to Bergen in Norway and from Summer 2009 introduce from Kirkwall to Bergen too

Flybe increased its services from Inverness from Spring 2008 to include; Birmingham and Manchester

A weekly service to Dusseldorf from Inverness was introduced from summer 2009 operated by Lufthansa working closely with VisitScotland and the local hospitality industry. This will help establish Inverness as an important inbound destination for the German market.

Safety and security remained the focus of the operations across the group and we maintained close working relationships with our regulators, the UK Civil Aviation Authority and Department for Transport. Investment in security measures formed a significant part of our capital investment programme.

Our Chairman, Mr. Grenville S Johnston, emphasised the Board at HIAL is mindful of its responsibilities and role in ensuring that the company is best equipped to meet current and future challenges. He added his appreciation for the performance of the company’s airline customers especially because of the market challenges they have coped with during the year.

He commented, “Their commitment to providing air connections at our 11 airports is of huge importance to communities across Scotland. As the airlines are our customers we have worked closely with them to ensure we take a collaborative approach to maintaining, and where possible, developing the air network.” “The support of and engagement of the Scottish Government and our other many partners is an important factor to our work in our continued development. And, most of all the dedication and professionalism of our employees is fundamental in everything we do and enables the company to fulfil its remit and is very much appreciated.”

Inglis Lyon, Managing Director for HIAL added, “As highlighted by the Chairman we have devoted much time in the past 12 months to matters of governance both at Board and management level, ensuring our commitment to good stewardship of the business.”

On the performances over the last twelve months Mr Lyon commented, “The year presented a number of distinct challenges which we have been able to manage while continuing the development of the business. We have provided our airports to the appropriate regularity standards and provided the communities we serve with access to air services that are essential to their socio-economic well being” He continued, “I would like to thank my fellow directors, management team and our employees across the group for the part they played in achieving this during the year”

HIAL’s targets for the current year are set out in the annual report and include:

Developing new routes and revenue streams for the HIAL group of airports thus reducing further the need for subsidy from the Scottish Government

Safety and security remain key priorities within the organisation and in July 2009 the company will assume complete responsibility for the Company’s security services following many years of outsourcing. This will allow a greater degree of management autonomy

Some of the major capital projects for this year include the development of a smaller more appropriate sized aerodrome at Capbeltown and to replace the ground lighting at Islay and to resurface the main runway at Kirkwall.

 (c) Centre for Asia Pacific Aviation. Date posted: 3-Aug-09