A government report to create an arm’s-length organisation to run the airport will be presented to Tynwald today (Tuesday).

Tynwald would be approving the second step of the transition process and the purpose of it is to identify an operating model that finds the right balance between ‘competing objectives’ and political accountability for the airport.

The report assesses the airport’s current position and makes the case for the change, as well as examines various options available before making its recommendations.

It also determines how an alternative operating model could result in less public subvention.

Rather than recommend an immediate move to a fully arm’s-length entity, the government has recommended that some initial changes be made.

This is being done by applying ‘modifications’ to the existing model within government.

The government says this is the ‘easiest option’ as the structure of the airport operating from within a government department will ‘remain unchanged’.

Modifications could be agreed that would grant the airport a level of flexibility in relation to the regulations, if funding was granted from the Treasury.

The report suggests: ‘If agreement could be reached, moving to step two of the transition process would allow more flexibility in terms of organisational agility.

‘The cost and resource implications of a move from step one to step two are lower than other options which is important as the project is being resourced from within the department as a transition project rather than a full transformation project, like healthcare.’

Under the move to step two, a framework agreement would be agreed between the board and Department of Infrastructure and a level of ‘prescribed delegation’ would be granted to the board to allow some discretion in decision-making.

The report says: ‘This initial step would provide some separation from the department, and allow for some decisions to be made independently, as well as begin to remove the DoI from the day to day operational functions of the airport, whilst still providing high level political oversight.’

Another report by York Aviation LLC, released in 2018, found problems.

In section two of the government’s report entitled ‘The case for change’, it responds: ‘The York Report identified issues around commercial opportunity at the airport, and the low level of non-aeronautical income, as a key driver for change.

‘That report suggests that the current operating model is characterised by a lack of focus on revenue generation, with income being seen as a “contribution to covering the cost base, rather than as a primary business driver”, concluding that the airport has little ability or incentive to control costs.

‘The report benchmarked the Isle of Man against airports with a similar level of passenger throughput, selecting regional airports with two million passengers a year or fewer, in order to compare proportions of aeronautical and non-aeronautical income.’

focus

It is currently difficult to focus on commercial outcomes, according to the report, so the government should remove bureaucracy around decision-making at the airport.

It’s believed Ronaldsway could make better use of its commercial potential with the creation of a shadow board, which was established in 2022, and move to an arm’s-length operating model.

However, the York report explained that within five years the airport ‘could see a reduction in the deficit of up to £995,000’.

The government’s report says in response: ‘Any reduction in subvention would not be immediate, however if changes were made it would at least begin the process of reducing the potential amount paid in future years.’

Infrastructure Minister Chris Thomas said: ‘The Isle of Man Airport is a critical gateway for our island, connecting us to the UK and beyond for work, for pleasure, for tourism, for medical reasons and for so much more. It is essential that the airport operates in a way that allows it to reach its potential, and enhance its provision of air services so that they meet our needs.

‘Therefore I welcome an incremental approach and a transition based on an examination of how things are working.’