A council decision to raise fuel prices to tackle losses at cash-strapped Haverfordwest airport led to fuel sales “falling off a cliff” with a near-total collapse.
At the July meeting of Pembrokeshire County Council’s Cabinet, members heard the financial position at the council-supported Haverfordwest/Withybush airport deteriorated in 2022/23, with an out-turn position for 2022/23 of £238,000, and a deficit of £180,000 expected for this financial year.
At that meeting, members backed a series of proposed changes to charges and costs, estimated to generate some £232,000.
The largest single source of revenue, fuel, was expected to net some £175,000 on its own by increasing the existing mark-up of Avgas by 55p per litre and jet fuel by 45p a litre.
Members of the November 14 meeting of the council’s services overview and scrutiny committee heard there had been “significant management changes in the administration and oversight” of the airport in the last six months, but the sale of fuel had “fallen off a cliff,” after the increases.
In prior years the council would sell around 350,000 litres of jet fuel and 50,000 litres of avgas, the rises bringing the costs of jet fuel to the second-highest of airfields in the UK.
A report for members said: “The consequences of this agreed pricing strategy are apparent in that the sales of jet fuel almost completely ceased, including through the single biggest customer, accounting for 80 per cent of fuel sales, who have instigated their own direct purchasing arrangements.
“The pricing strategy of effectively increasing the margin apparently irrespective of market conditions with the key focus of generating income to cover the deficit is not going to resolve the situation in the current for financial year.”
Under the delegation to the Assistant Chief Executive Richard Brown prices have now been revised, based on benchmarking against the six most local airports.
All other increases backed at the July meeting, such as landing fees, have been implemented.
At the November meeting, Mr Brown said: “Whilst the financial position is somewhat better than last year the fundamental element we were pinning our hopes on was the fuel prices, it’s had quite the opposite effect, it’s put visitors off buying fuel.
“The market for fuel has a degree of sensitivity, the sensitivity for Withybush has fallen off a cliff.”
He said the airport would not be brought back to a cost-neutral position by rising the price of fuel, with “complex options” to be worked through to make it so.
Members were told details were expected in the next few months, a formal report is anticipated before the end of the calendar year, or the first quarter of 2024.
Deputy Leader Paul Miller said the airport was “an important asset for the county,” but that subsidy levels “are not in line with where I think we can continue to subsidise”.
Cllr Viv Stoddart said: “Cllr Miller has said it’s a very important asset for the county; it’s a very expensive holding, taxpayers have been subsidising Withybush since I’ve been a councillor. I don’t think we’ve actually ever resolved why this council has an airport, it’s not statutory.
“Are we holding it because it’s a benefit? There’s an argument it’s too expensive when councils’ budgets, and people’s budgets, are under strain at the moment.”
Cllr Stoddart said there was scepticism about whether the airport had ever been “cost-neutral,” with a debate to be had about “why we have this in our portfolio”.
Mr Brown said there was “clearly an option” not to continue with the airport.
Cllr Huw Murphy reflected: “Would we buy our own airport? No, we wouldn’t, but we have one. We’ve got to work towards full cost recovery, but I don’t think that’s anything we can achieve soon.”
Members agreed to note the report, with a report on recommendations expected at a future meeting.