Highlands and Islands Airports Limited

Increases in traffic and income and the transfer of Dundee Airport to its ownership are highlighted in the 2007/08 annual report and group accounts published by Highlands and Islands Airports Limited today (Friday 1^st August 2008).

The company’s work with airlines to deliver growth in the region’s air network saw passenger volumes in the Highlands and Islands increase for the seventh consecutive year.

Total passenger numbers at HIAL’s 10 airports increased by 3% to a record 1,270,023 while aircraft movements rose by 2% to 103,014. The greatest gains in passenger numbers were achieved at Kirkwall (+9%) and Sumburgh (+13%) with nine of the company’s 10 airports showing year on year increases in traffic.

At Dundee Airport, which transferred from Dundee City Council to HIAL on 1 December 2007, the operating year to the end of March 2008 saw passenger numbers increase by 22% to 64,639 and aircraft movements drop by 9% to 35,439.

Subsidies from the Scottish Ministers received for the year totalled £29,217,000, made up of revenue of £15,277,000 and capital of £13,940,000.

Revenue earned from traffic operations and other activities totalled a record £15,174,000, an increase of 11% on the previous year. This was achieved through a combination of increased receipts from air traffic and the generation of more income from non-aviation streams such as property and concessions.

HIAL’s responsibility for maintaining and upgrading airport infrastructure required investment in new fixed assets during the year of £31,292,000 which included, for accounting purposes, the assets of Dundee Airport at a fair value of £21,040,000 at 1 December 2007.

Capital investment at HIAL’s airports included:

• Work continued on the project to provide a dedicated airport radar service at Inverness a cost of £1,110,000 during the year. The airport is now providing its own radar control service for the first time using data feeds from Ministry of Defence radar heads. This is the interim step until the airport’s own radar head is brought into service at the end of 2008.
• At Stornoway, a project to replace the Airfield Ground Lighting commenced at a cost of £2,634,000. A further £674,000 was spent on a surfacing overlay of the northern taxiway.
• Tiree’s runway was resurfaced at a cost of £2,251,000 and a project to refurbish the terminal building, mainly to accommodate enhanced Department for Transport security requirements, commenced at a cost of £275,000.
• Across the group, a total of £547,000 was spent on security enhancements including landside vehicle traffic management measures, upgraded CCTV systems and other equipment.

Speaking in advance of the company’s annual general meeting today, HIAL’s chairman David Sutherland said: “Effective air transport links are essential for economic growth, social inclusion and the attractiveness of our communities as places in which to live, work and invest. Our continuing strategic priority is to provide a safe and efficient group of airports while pursuing development opportunities which improve the air transport network serving the region.

“Our results for the year demonstrate that we have delivered against these targets and ensured that our airports have continued to play a central role in the economic and social life of the Highlands and Islands and Tayside.

“While much progress has been achieved at HIAL in recent years, as a management team and a business we are focused on the challenges of the current financial year and longer term,” said Mr Sutherland.

Inglis Lyon, managing director of HIAL said: “We continued to work hard on maintaining and developing strong commercial relationships with our airline customers. This focus has delivered enhancements across the air network, many of which came on stream in the spring and summer of 2008. The airlines’ commitment to our airports and the regions they serve is strong despite the challenge of high fuel costs which is impacting on the entire industry.

“Our wider community of customers benefited from both the increased air connectivity and investment in our airport facilities to improve the quality of travel experience.

“We worked in a number of areas to develop new income streams for the business through concessions, property rental and asset disposal and made good progress on this front as part of the ongoing commercialisation agenda within HIAL. This is an important aspect of managing the business in terms of costs, available subsidies and revenue earned.

“Effective stewardship of resources and awareness of our impact as a business on the environment were core aspects of our work. Preparations for the company-wide roll out of our Environmental Management System (EMS) culminated with the production of a Carbon Management Plan which provides a benchmark against which our future performance can be measured and sets out the actions we will take to reduce our carbon footprint.

“To support EMS we established an Environment Working Group and designated representatives at all our sites to drive the delivery of our Environment Policy commitments which include energy efficiency, waste reduction and carbon saving initiatives.

“During the year £50,000 was invested in energy saving technology to reduce electricity and water consumption at our airports. We also introduced company-wide use of recycled paper and established recycling collection points in our terminals and offices for paper, plastics and metals.

“Our employees’ engagement in this work included the launch of a Cycle to Work scheme for the company which saw one third of staff take up the opportunity to purchase bikes and safety equipment via the Government’s Cyclescheme.

“These initial steps are part of a longer term initiative to ensure that our business processes and operations minimise, wherever possible, our impact on the environment, our use of resources and our carbon footprint,” said Mr Lyon.

HIAL’s targets for the current year set out in the annual report include ongoing work with airlines on route development and enhancements to the existing air network and the further development of non-aviation income streams to offset subsidy requirements. Capital investment during the year will include coastal protection works at Benbecula, a rehabilitation of the main runway at Stornoway and the replacement of the airfield ground lighting at Sumburgh.

Copies of HIAL’s Annual Report & Group Accounts 2007/08 can be downloaded from the corporate section of its www.hial.co.uk website from Friday 1 August 2008.