HIAL LOOKS FOR NEW BUSINESS OPPORTUNITIES IN “TOUGH” ECONOMIC MARKET

13th November 2012

Scottish regional airports operator HIAL is determined to seek out new business opportunities, despite “tough” economic conditions, according to its Managing Director.

He was speaking as the company published its annual report and accounts for 2011/12.

Despite the challenging economic backdrop, the company recorded a 9% increase in passenger numbers over the period, up from 1,158,041 in 2010/11 to 1258,452 in 2011/12, with a number of HIAL airports – Campbeltown, Sumburgh and Tiree – enjoying double digit growth.

During the period, the number of aircraft movements increased by 9%, from 116,930 in 2010/11 to 127,805 in 2011/12.

At Inverness, the group’s busiest airport, passenger numbers increased by 13% - up from 538,742 to 607,507 – fuelled by the success of the city’s Amsterdam service, launched in September 2011. In its first year, the route handled almost 24,000 passengers and provided a significant boost to the region’s inbound tourism industry. A new codeshare agreement with Dutch airline KLM has increased demand on the route and opened up access from Inverness to more than 150 destinations in the KLM network via Amsterdam.

HIAL Chairman Grenville Johnston said the new service had “vastly improved the connectivity for local leisure and business passengers to the world. The route has exceeded initial expectations and we continue to work with Flybe and its new code share partner, Air France KLM, to make the most of this service.”

HIAL Managing Director Inglis Lyon said the group was determined to work with local funding partners to “increase the frequency of the service and thus provide even better connectivity for the region.”

The HIAL group, which is wholly owned by Scottish Ministers and receives a public subsidy, recorded an operating loss of £969,000, a significant improvement on the previous financial year, when the group recorded a £2.56 million operating loss. A £1 million saving on winter operations – as a result of a milder winter – helped reduce overall costs.

Inglis Lyon added: “Operating conditions have been tough due to high oil prices and well documented global credit issues. The need for everyone to revisit their budgets and to rebalance the books has resulted in some challenging debates and these will continue through the short and into the medium term. However, the investment by the company in the new Inverness – Amsterdam route is an indication of the need to go out and create growth opportunities.”

Mr Lyon said one area with growth potential was renewable energy, and the company was in discussion with several large renewable energy companies regarding support for future offshore turbine installation and maintenance work. In addition, the group has development sites and property at a number of airports that could meet the needs of offshore supply and maintenance providers.

Mr Lyon expressed disappointment at the recent decision by Loganair to withdraw its scheduled services at Dundee as a result of declining passenger demand, but confirmed that talks were taking place with other airlines regarding the possibility of replacement services.

During the period, HIAL invested more than £8.3 million on capital projects across its 11 airports. Major projects included:

• A £1 million runway, taxiway and apron rehabilitation project at Dundee.
• A new £1 million airfield ground lighting control system at Inverness, and £800,000 investment in Islay’s airfield and runway.
• A £2 million upgrade in the airfield and runway at Wick John O’ Groats, including a £900,000 project to refurbish the runway.

Copies of the HIAL Annual Report and Accounts are available to download at www.hial.co.uk