Also with reference to the route development fund its stated that it would be a targeted fund with certain criteria for a route that the airport would have to apply for.
Precisely. It was never designed to be a blanket £205m handout as so many state it is. The package is designed to be a maximum annual pot of £20.5million available for drawdown against certain criteria with ringfenced sub-pots according to the area of the business applying for funding. All applications are vetted and controlled against a set of parameters by WGC Holdco, the holding company and governance body sitting between Welsh Government and CIAL.
There's a few further nuggets within the transcriptions that are of interest:
- Welsh Government Ministers (WGM) couldn’t make their mind up if the money formed a subsidy or a subsidy scheme. There's a difference between the two regards the rules that need to be followed.
- The CAT has no jurisdiction to demand the recovery of money already paid under the subsidy so this is a test case as to how far they can go in that respect if they find in BRS’s favour.
- As we know, WG / CIAL practically bankrolled the Flybe base 2015-19 and paid the leases on 3 based aircraft. It seems the deal was supposedly a 10-year contract which implies CWL lost a lot of money when Flybe decided to remove its based aircraft ahead of the 2020 summer season yet collapsed anyway the immediately before lockdown.
- BRS appeared to deny WGM’s claim that upfront payments to airlines was the norm which, as we all know, is b******s. That’s precisely how Ryanair works for example. EasyJet admittedly might have a different incentive program in place but it still amounts to airlines receiving money or other favours, either directly or otherwise, amounting to financial incentive in some form.
- BRS challenged WGM’s characterisation that they were not a long-haul airport and had no immediate plans to enter the market as unfair. They claimed they were “already” a long-haul airport, having previously operated transatlantic flights as far back as 2007.
- WGM seemed to play down their ambitions for CWL in the low-cost leisure market and claimed they were happy for BRS to continue mostly unchallenged as that was their bread and butter. Instead, they want to focus on low-cost European city targets that offer a more substantial mix of leisure and business, as well as long haul hub routes to North America and the Middle East. The route expansion was positioned as an enabler to enhance business links and inbound tourism as well as being able to contribute greater passenger income for the purposes of reinvestment into the non-passenger business.
- BRS’s argument that WGM routinely failed to assess competitive impact on business or entities outside Wales and that the impact assessment of the subsidy on BRS was treated in the same way and was not open to due scrutiny was disputed by the chair, given the subsidy system was UK-wide and therefore open to scrutiny on a national basis.
- BRS also argued WGM decisioning routinely and unfairly impacted non-Welsh businesses because they didn’t have a say in their policy or decisioning. The chair countered that even if the business was located in Wales, it would be ineligible to vote or determine policy because it was a business, not a member of the voting public.
- WGM’s argument that the CAT outcome could influence the Senedd election or result in a forced response from an outgoing government seemed to fall on deaf ears. BRS want the outcome to be made public ASAP, the chair was minded to do the same but has opted to seek counsel on the matter. Should the CAT go ahead regardless it is possible a judgement could be made public before the last day of Senedd business on 27th March.
- Even if the decision goes against WGM, it seems all is not lost (asides political and reputational credibility). WGM have three choices - either withdraw the subsidy and enter into a commercial funding agreement (loans or cash/equity swap), look for commercial backing via private enterprise or partial sale (the latter of which would mean relinquishing direct control over its future) OR nationalise under the emergency powers of the “operator of last resort” legislation (as they did with TFW).
Neither side appeared to completely cover themselves in glory with the chair having to go round the houses to clarify some of the cack-handed arguments and positioning, especially the subsidy/subsidy scheme point and BRS's complaints about the amount of CWL information it could discuss without falling foul of commercial confidentiality.
It'll be interesting to see which way the CAT judgment falls. It’s a cliche of course but based on the transcripts and evidence presented the ruling could feasibly go either way.