Wednesday 20 May 2020
Business case on the extension of the runway at Guernsey Airport
Sir, as Members will recall, following a successful requête laid by the late Deputy Jan Kuttelwascher at the end of 2019, the Committee for Economic Development is required by a States resolution to develop a business case and cost benefit analysis for the extension of the runway at Guernsey airport to create a runway of at least 1,700m and to report back to the Assembly by May 2020.
Sir, I am pleased to report that prior to the Covid-19 crisis, the Committee for Economic Development made good progress on developing the business case and cost benefit analysis on extending the runway at Guernsey airport to between 1,700m and 1,799m.
The Committee commissioned Frontier Economics to undertake an Economic Impact Analysis of the runway extension, as well as a high-level Social and Environmental Impact Analysis. Consultancy firm RPS was commissioned to undertake a high level cost and engineering analysis.
The total cost of these three pieces of connected work is £181,650, funded from the Capital Reserve, which is significantly less than the £360,000 approved by the Assembly. All three connected pieces of work have been completed.
The research was completed prior to the Covid-19 pandemic so clearly the findings and recommendations of the report will need to be reviewed in light of the current situation. However, in summary, the report found that over a 40-year payback period, the extension of the Guernsey runway could help stimulate additional visitor growth and new business to deliver a significant net economic benefit to the economy.
The report's findings are that an additional 8,200 visitors would be needed each year in order to break-even. In other words, for the economic benefits to outweigh the investment costs and any social and environmental costs, the runway extension would need to lead to an additional 8,200 visitors per year and this could generate additional net economic benefit of £21 million over the 40 year period.
To put this figure in perspective Guernsey Airport had over 858,000 air passengers in 2019. An additional 8,200 visitors is less than the number of passengers who flew to or from London Southend when that route was trialled during 2019.
If the number of additional visitors were to increase to an additional 20,000 visitors per year, then the report suggests that the net economic benefit would rise to approximately £200 million over the 40 year period.
Nevertheless, it is the Committee for Economic Development's view that, in the light of the recent events in relation to the Covid-19 pandemic and the travel restrictions and other measures that it has been necessary to implement, now is not the right time for the Assembly to debate a potential extension to Guernsey airport's runway.
As part of the economic recovery plan for the Bailiwick of Guernsey and, after checking whether the assumptions underpinning the reports are still valid, or whether the conclusions would change if the assumptions were varied in the light of the Covid-19 experience, the Committee for Economic Development, will decide on the terms of a Policy Letter to bring to the Assembly, with a full business case and cost benefit analysis for an extension of Guernsey airport's runway to at least 1,700m, once the Covid-19 pandemic is under control and the future of the local and UK airline industry is clear.
Clearly the implications of the Covid-19 pandemic on the findings and recommendations of the cost benefit analysis report already completed will need to be considered. Nevertheless, investment in critical infrastructure to improve and future proof sea and air connectivity will be essential to the fast recovery and sustained growth of the economy, when the short-term crisis caused by Covid-19 is over.
Sir, I hope that this update to Members has been useful and I am happy to answer any questions that Members may have.