LOSS-MAKING regional airports are changing hands for as little as £1 and surviving on bail-outs from taxpayers. Business Editor Andy Richardson looks at the race to keep the regions flying.

REGIONAL airports took a battering during the recession.

From Prestwick to Newquay passenger numbers plummeted after 2007 as airlines withdrew flights and consolidated services at the major hubs in response to a reduction in both leisure and business traffic.

The controversial UK flight tax Air Passenger Duty (APD) had a disproportionate effect on regional operations.

Since 2007 it has increased by up to 260 per cent for short-haul flights and 360 per cent for long-haul flights.

Larger regionals, such as Newcastle International, Leeds/Bradford and Manchester managed to weather the worst effects of the downturn, but Durham Tees Valley (DTV) was among the hardest hit, suffering a 77 per cent drop in passenger numbers.

It will record losses of about £4m this year, and owners Peel expect the operation will continue to haemorrhage cash unless its latest rescue bid takes off.

Peel has repeatedly insisted that it regards DTV as a long-term investment. Other regional operators have lost patience and cut their losses.

This week, New Zealand firm Infratil wrote-off the assets of its UK airports, Glasgow Prestwick and Manston in Kent.

The company said it had reduced the value of both sites from £14.5m a year ago to zero.

The announcement came as the Scottish government entered talks with Infratil over buying the unprofitable Prestwick operation.

Manston Airport is being bought for £1 by Ann Gloag, who co-founded the Stagecoach Group.

Prestwick, where Elvis Presley touched UK soil for the first and only time, in 1960, is also expected to be sold for £1.

Ministers hope to conclude negotiations with the company next week in a deal that will re-nationalise a piece of Scottish infrastructure that possesses strategic and economic significance.

Official figures predict that passenger numbers will recover slowly as the economy edges into recovery mode, prompting regional airports to look for other means of generating income.

The model that Peel is proposing at DTV, which incorporates a business park with housing, is becoming commonplace.

Peel has already launched similar plans at Robin Hood Airport near Doncaster, which includes a pub, offices, industrial buildings, along with new roads and footpaths.

Manchester's proposal for an airport city is well underway.

Backed by investment from the Chinese government it will create more than 400,000 sq m of business space as well as a hotel, conference centre and shops.

Newcastle International's masterplan aims to almost double passenger numbers, and create thousands of jobs by 2030 via two business parks.

Cambridge International has a scheme to build up to 1,500 homes on land adjacent to the airport, and Kent International has plans to develop a campus with student accommodation.

Southend Airport, backed by a £100m cash injection from owners the Stobart Group, is one of the few regional operations which has seen an increase in passenger numbers. Peel has insisted that a mixed use site is the best way forward for DTV, and that no Plan B is in reserve if its latest rescue bid fails to get off the ground.