Glasgow Prestwick Airport
Frequently Asked Questions
Who owns Glasgow Prestwick Airport and what is Infratil's investment?
Infratil owns 100% of Glasgow Prestwick Airport's shares. Infratil's investment was GB£28,035,545 (NZ$85,311,177).Who are the directors of Glasgow Prestwick Airport?
Glasgow Prestwick Airport directors are: Chairman, Lloyd Morrison (Executive Chairman of Morrison & Co, Director of Infratil), David Newman (Chairman of Infratil), Paul Ridley-Smith, Phil Walker and Bill Barr.How are fees set for landing for airlines at Glasgow Prestwick Airport?
As with most businesses, Glasgow Prestwick Airport negotiates fees for its various services, as well as publishing a standard set of charges that pertain to those airlines that are not party to an agreement. For instance, Glasgow Prestwick Airport has entered into a long-term agreement with its major passenger airline customer, Ryanair.Does Glasgow Prestwick Airport have any price regulation?
Glasgow Prestwick Airport is not price or rate of return controlled. The only airports which have such controls in the United Kingdom are Heathrow, Gatwick and Stanstead.Over the longer term what are the key determinants of Glasgow Prestwick Airport's profitability and hence returns to Infratil?
Three things are critical for Glasgow Prestwick Airport's long term profitability and hence value to Infratil:
A. The key determinant of the Airport's long term value is the number of people using it. Passenger growth in recent times has come mainly from the rapid expansion in the low-cost airline sector, in particular the activities of Ryanair and Wizz. Glasgow Prestwick Airport believes there is considerable potential to further expand the domestic and international low-cost market and is actively working with airlines and local Scottish tourism development groups to promote these opportunities. Glasgow Prestwick Airport is also implementing strategies to expanded the range of both scheduled and charter airlines operating through Glasgow Prestwick Airport.
B. Glasgow Prestwick Airport's commercial income per visitor is also an important ingredient of overall financial success. Commercial income is derived from retail and trading activity including duty free, food and beverage and other retail sales, advertising, car parking, or other traveller services. Continued refinement and expansion of services offered can lead to continued enhancement of financial performance.
C. The quantity of freight passing through the Airport is also an important determinant of Glasgow Prestwick Airport's profits. Over the long term, Glasgow Prestwick Airport's utilisation of its surplus land holdings will become more important to the Airport. At present rental income on the Airport's extensive property holdings are not a substantive contributor to profitability.
Is Glasgow Prestwick Airport too dependent on Ryanair? Has Ryanair picked up all the market share it can expect?
Only 30% of Glasgow Prestwick Airport's current income comes from passenger related activity (i.e. landing fees and retail income linked to passenger flights). The balance is derived from freight related activities (34%), military, general aviation, training and other aviation services (16%) and property related income (20%).
Ryanair is important to Glasgow Prestwick Airport, but the relationship is of mutual benefit to both parties. Glasgow Prestwick Airport provides highly competitive handling charges to Ryanair consistent with its business model of low-cost operation. This has allowed Ryanair to become one of the most successful low-cost operators in the Scottish market.
Ryanair has enjoyed remarkable growth over the last five years as it has helped redefine what "low fares" means. Ryanair has consistently demonstrated that markets that we once considered to be mature have been able to be grown dramatically (often by three or four fold) once low-cost fares are introduced into the market. Ryanair is not simply picking up market share from other carriers, it is generating whole new markets of significant size. Furthermore, Ryanair is not just limited to the size of the Scottish outbound market. Over half of all passengers on current Ryanair international flights into Glasgow Prestwick Airport are inbound tourists. This is expected to continue to be an area of major growth for Ryanair as international travellers respond to the appeal and accessibility of the Scottish tourism products and labour markets open with new EU membership.
What is the future of air freight at Glasgow Prestwick Airport?
Past experience suggests that air freight grows as multiples of around 3x GDP (compared to 2x for passengers). Specialist courier/express air freight can grow even faster at around 6x GDP.
As the growth in the global passenger aircraft fleet (and hence its belly-hold capacity) has not kept up with freight demand, the market for dedicated freight aircraft is growing rapidly. Market observers expect that this market will continue to grow in the foreseeable future.
Glasgow Prestwick Airport is the only Scottish airport geared to serve these large dedicated freight aircraft (typically Boeing 747s), offering 24 hours a day, uncongested operation and fast turn round times. Glasgow Prestwick Airport currently has 23 weekly B747 freight services, more than any other airport in the UK.
Currently only a third of Scotland's air freight arrives or departs through Scottish airports (most is road freighted to and from London). Glasgow Prestwick Airport is well placed to benefit from further market growth as well as any increase in its market share.
Is there a chance that Glasgow Prestwick Airport might get long-haul flights in the future?
The Airport's infrastructure could easily accommodate long-haul scheduled operators although, to date, long-haul scheduled carriers have tended to concentrate their transcontinental flights through their international hubs such as London and Amsterdam. Given that the European low-cost carriers are yet to show any interest in the long-haul market, it is not expected that long-haul scheduled passenger services will be introduced in the near term.
Is property income a big source of income for Glasgow Prestwick Airport and how much potential is there for growth?
Property currently is a relatively small contributor to Glasgow Prestwick Airport's income at around 20% of total. However, given its sizeable land holdings (850 acres), some of which are fronting on one of Scotland's busiest roads, and the expected continuing growth in aviation activities at Prestwick, there is significant potential for growth in these areas. Long haul charter services are considered to be the best opportunity for growth in the immediate future.
How does the military operate out of Glasgow Prestwick Airport?
819 Naval Air Squadron provides 24 hour search and rescue services from Naval Air Station HMS Gannet at Glasgow Prestwick Airport, using three Mk5 Sea Kings and approximately 75 personnel.
HMS Gannet has an agreement with the airport, providing special terms for landing/departure and air navigation charges as well as leasing land from the airport on a long-term basis. In addition, Glasgow Prestwick Airport provides a range of aeronautical services (including landing/parking, refuelling, etc.) to a wide variety of itinerant military aircraft on both programmed and ad hoc operations.
Since the Second World War Glasgow Prestwick Airport has provided logistical support for military and freight flights moving troops and cargo. That support involves allowing crew to rest, providing food and water, refuelling aircraft and providing any other technical support that may be necessary. As shown when Glasgow Prestwick handled huge volumes of traffic for the G8 Conference in 2005, the Airport has both the facilities and the space to handle military traffic without it affecting commercial passenger and freight activities. The Airport is fully compliant with the regulations laid down by government agencies and requirements from Customs, Immigration and the Department of Transport for aircraft passing through Glasgow Prestwick Airport. Access to UK airspace and border controls is a matter for the UK Government and the Airport does not have the right or powers to deny use of its airfield to aircraft or the right to search the inside of aircraft using the airport. Customs, Immigration and Special Branch Police are stationed at Prestwick Airport.
Fees from military aircraft operations currently represent around 5% of Glasgow Prestwick Airport's income.
How does Infratil treat the currency risk implied in the investment?
Infratil's investment in Glasgow Prestwick Airport was made on 19 January 2001 and cost GB£14,800,000 or NZ$48,569,178.
Since then Infratil has invested to acquire 100% of Glasgow Prestwick Airport. The total invesment amount at 31 March 2004 was GB£28,035,545 (NZ$85,311,177).
At present Infratil has no hedges against fluctuation in the NZ$/GB£. The actual risk from currency movements will depend on the local currency value of the investment (which may be quite different to what Infratil has paid). In respect of the impact on Infratil's results and value, fluctuations in the value of the NZ$ against GB£ will:
o impact on P&L when annual earnings from GPIA are converted into NZ$. The earnings from GPIA are consolidated by Infratil and are taken into Infratil's accounts at the average NZ$/GB£ rate for the relevant accounting period.
o impact on Infratil's value as the NZ$ value of the offshore investments changes due to currency movements. This has no P&L consequence as such changes in value are taken to the Foreign Currency Translation Reserve (FCTR).
Infratil has hedged its foreign currency risk in the past and may do so again in the future.
How does Glasgow Prestwick Airport compare/compete with Glasgow Abbotsinch?
BAA's Glasgow Airport at Abbotsinch is 8 miles from west of the city centre and located on a very constrained land holding bound by two rivers and motorway with restricted runway length (2650 metres compared to Glasgow Prestwick Airport's 2987 metres). Abbotsinch also restricts its night time operations due to noise issues. It handles around 8.8m passengers per year and approximately 40 airlines.
Glasgow Prestwick Airport has the advantage of an unconstrained operating environment and the ability to process all aircraft types, 24 hours per day and without the fog and other weather and operational restrictions faced by the airport at Abbotsinch. Glasgow Prestwick Airport also offers airlines significant pricing advantages and a very flexible operating environment with no runway, apron or terminal congestion issues.
Glasgow Prestwick Airport is connected to downtown Glasgow by a direct rail link accessed via the Airport's own railway station which is integrated into the main passenger terminal. Services run every 30 minutes with a journey time of 40 minutes. All of Glasgow Prestwick's passengers benefit from a 50% discount on their rail fare anywhere in Scotland. Glasgow's other airport at Abbotsinch has no rail link requiring an expensive taxi ride into the City or a convoluted shuttle bus to Paisley Station and then a connection using the same railway services that connect to Glasgow Prestwick Airport. Glasgow Prestwick has also benefited greatly from the recent upgrading of the main A77 Glasgow link dual carriageway to Motorway status for much of its length. This cuts the journey time to the City Centre to 30-35 minutes.

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