Council chiefs accuse airport owners of broken promises (From The Northern Echo)

Council chiefs accuse airport owners of broken promises

8:00am Saturday 28th January 2012 in News By Joe Willis

ANGRY council bosses last night accused the owners of Durham Tees Valley (DTV) airport of “reneging” on their promises ahead of a crunch decision on the loss-making airport’s future.

Peel Airports bosses are expected to decide in days whether to continue offering the business for sale or to call in administrators – a move that could spell the end of flights from the airport, at Middleton St George, near Darlington.

The airport’s mounting problems, and Peel’s reluctance to act, have stoked growing concern among the five local authorities with a minority shareholding in the business.

Last night, those frustrations boiled over when Stockton Borough Council issued a statement expressing the authority’s “deep disappointment”

that Peel had put the airport on the market when, 18 months earlier, the firm was planning to invest in the business.

Stockton Borough Council deputy leader Councillor Jim Beall said the council shared the views of many local businesses and residents who thought that no significant developments at the airport had been made since then.

Coun Beall also revealed that only days before the airport was put up for sale, Peel assured council bosses it had exciting plans for the future.

Five local authorities, Stockton, Darlington, Middlesbrough, Hartlepool and Durham County Council, sold a 75 per cent stake in the airport to Peel just over ten years ago. The deal, worth £500,000 as well as £100,000 towards the councils’ costs, was welcomed because a private operator would be able to invest more and redevelop the former RAF base into a passenger hub.

Peel agreed to spend £20m on the airport over five years.

The recession saw major airlines abandon the airport and a plunge in passenger numbers. Despite this, Peel assured councillors that it had a plan to rebuild the business, while at the same time quietly drawing up plans to sell it.

Coun Beall said: “We had been encouraged to hear a presentation about exciting turnaround plans from the regional director of the airport last December – and so were particularly disappointed to hear, less than a week later, that Peel Airports Ltd had put their shares up for sale.

“We hope that Peel Airports Ltd will find a buyer for their shares who will be able to commit to providing a busy and vibrant airport for the Tees Valley.”

Darlington council leader Bill Dixon said he shared Stockton council’s concerns.

He said: “Peel made certain commitments that have not been honoured. I would expect the company to either honour those commitments or sell the airport to someone who will.”

The Northern Echo understands that in July, the chief executive of Stockton council, Neil Schneider, wrote to Peel Airports on behalf of council shareholders asking a range of questions as to why the fortunes of the site did not match those of the group’s other airports, in particular airports in Doncaster and Liverpool.

He asked what efforts were being made to establish routes to popular, profitable destinations.

Local enterprise partnership Tees Valley Unlimited also invited Peel to a meeting to discuss its efforts to make the airport a success. No one from the company attended.

Last week, no one from Peel Holdings’ board attended Durham Tees Valley Airport’s consultative committee’s quarterly meeting.

It is believed a decision on the sale process will be made within a week, with the options including an extension of the sales period or the airport being placed into administration.

Alternatively, Peel Airports may try to buy back its shares from Vancouver Airport Services, putting it back in complete control.

When councils sold their majority stake, it was agreed that the councils’ remaining 25 per cent stake could be reduced if Peel invested money into the airport. Before Christmas, Peel said it planned to issue a shares dilution notice – increasing its shareholding at the councils’ expense as per the original agreement.

Mr Schneider said: “The local authorities believe that the process to find a buyer has now reached a critical point.

“I expect a dilution notice to be effected in a matter of weeks. I understand that the Peel Airports board is meeting on a weekly basis to make progress in trying to find a buyer. I would also expect that there is a limit to how long Peel Airports will carry on with their funding.”

Peel Airports did not respond to requests for a comment yesterday.