'Deeply concerned' Bristol Airport issues statement on £200m-plus Welsh Government subsidy plans for rival Cardiff Airport

Cardiff Airport insists the funding is required to turn around its fortunes and doesn't believe it would negatively impact rival Bristol

Bristol Airport said it is "deeply concerned over plans by the Welsh Government to provide over £200m in subsidy support to its nearest rival, Cardiff Airport. It warned that the proposed state aid would put it at a commercial disadvantage.

Over the summer, the Welsh Government’s Cabinet Secretary for Transport, Ken Skates, announced a proposed funding package of £205m over a decade for Cardiff Airport, which the Welsh Government acquired for £52m in 2013. The funding would be used to attract new airlines and routes, with the aim of increasing passenger numbers to exceed two million annually over the next decade.

The finance would also support the airport’s strategy of diversification, aiming to generate non terminal related revenues in areas such as aviation training, sustainable aviation fuel, cargo, and maintenance, areas where Bristol is not a significant player. Any investment would be made on a case-by-case basis, focusing on grant support that leverages private sector investment.

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However, the growing gap in passenger numbers between the two airports is stark, with 2023 figures showing that Bristol handled 9.8 million passenger -its busiest year on record - compared to just over 841,000 at Cardiff. Welsh passengers accounted for around 20% of Bristol’s total, with 1.96 million.

Cardiff Airport is aiming to reach its pre-pandemic annual passenger number of 1.6 million by 2026.

The Welsh Government submitted details of the proposed investment package for Cardiff Airport to the Competition and Markets Authority (CMA), with an assessment explaining why they believe the plans comply with new UK public sector subsidy rules. The CMA, through its Subsidy Advice Unit (SAU), has now published a non-binding evaluation report of the Welsh Government’s assessment.

The SAU is not a regulator of the subsidy control regime, so it is the responsibility of public authorities to ensure compliance with legislation. However, any subsidy funding could potentially face legal challenges from rival airports, such as Bristol, under the UK’s new post-EU subsidy regime. If there is a legal challenge, it would be considered by the Competition Appeals Tribunal.

Bristol Airport’s full submission to the CMA has not been made public, nor have submissions from other airports. However, in a statement, it confirmed its concerns about the scale of the Welsh Government’s subsidy plans. It said: “Bristol Airport employs more than 4,000 people, including many from South Wales, and significantly supports the Welsh economy without the need for state financial contribution.

“The CMA report highlights that there is little evidence showing how the Welsh Government’s proposed substantial state subsidy for Cardiff Airport would minimise market distortion. It’s suggested that incentive payments would be made to airlines, which is deeply concerning as it could affect competition between airports and airlines, potentially harming the economy and private investment in transport infrastructure.

“We have offered to work with Cardiff Airport in non-competitive areas to explore ways to reduce costs and the burden on taxpayers. We have also asked for greater clarity on how the proposed subsidy will be allocated across airport activities, which remains unclear.”

Bristol Airport noted it had previously collaborated with the Welsh Government and Cardiff Airport to support major events in Wales, such as the Ryder Cup, NATO conference, Champions League final, and Rugby World Cup, all of which boosted the Welsh economy.

The CMA considers Bristol Airport as the market operator most likely to be affected by the subsidy, with any adverse effects primarily expected in the passenger business.

The Welsh Government’s assessment claims that its competitor’s larger size and different growth strategy, which focuses on high-volume tourist and low-cost carriers, reduces the risk of competition or investment impacts. In contrast, Cardiff Airport’s growth plan targets a small number of routes, including long-haul flights to major economic centres and global air hubs, served by major carriers.

However, the CMA states that the Welsh Government’s assessment should more systematically present evidence of potential competition and investment impacts.

Their review adds: “While the assessment identifies some potentially affected competitors in the air passenger market, including Bristol Airport as the most affected, third-party submissions from other competitors suggest that the analysis could be more comprehensive. In particular, the analysis of the impact on Bristol Airport makes some unevidenced assumptions about how Bristol factored Cardiff Airport’s potential growth into its strategy and why those considerations should mitigate competition distortions.

"The assessment should also provide more evidence regarding the non-passenger markets, such as the size of relevant funding compared to the sales volume or service value in each affected market. Further, the assessment should consider the forward looking impact on competition, for instance, whether other airports might compete for similar activities in the future.”

The CMA said that several other UK airports, including Birmingham Airport and Regional and City Airports (RCA) - whose portfolio includes Exeter, Coventry, and Bournemouth airports -also expressed concerns about distortions to competition and investment. In contrast, Gloucestershire Airport did not anticipate any negative effects on its business.

Following the CMA report, Cabinet Secretary for the Economy, Rebecca Evans, issued a statement to MSs: She said: We will take the necessary time to fully consider the CMA’s assessment and determine whether we need to refine our proposed investment program based on their feedback. I will update the Senedd in due course once we have decided on the best way forward. Until then, the Welsh Government will not comment further on the proposed subsidy package.”

The Welsh Government’s position, as outlined in its assessment to the CMA, is that without the subsidy, Cardiff Airport would be significantly constrained in its ability to grow the business, as it would lack the funds to offer commercial incentive payments to airlines or to stimulate the creation and growth of non-passenger businesses.

However, the CMA report noted: “In our view, the assessment does not present a clear counterfactual. The assessment outlines the airport’s future challenges, but the extent of these challenges, and the airport’s capacity to undertake activities funded by the subsidy, are unclear.

"The assessment should clearly define the most likely counterfactual and provide appropriate evidence, such as financial projections and internal documentation from the beneficiary. It should then explain whether, without the subsidy, the airport would have undertaken any of the activities or contributed to regional economic activity.”

The Welsh Government acquired Cardiff Airport from Spanish firm Abertis in 2013 for £52m. Including the acquisition cost, it has since invested nearly £180m in the airport, through both equity and debt.