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Transport / Air Discount Scheme savings redirected to support HIAL

Claims to the Scottish Government’s discount scheme are down by over £4 million this year as fewer islanders fly

Sumburgh Airport. Photo: HIALSumburgh Airport. Photo: HIAL

FEWER people travelling on planes during the coronavirus pandemic has seen the Scottish Government spend more than £4 million less on the Air Discount Scheme than last year – with this money being redirected towards Highlands and Islands Airports Ltd (HIAL) to keep its airports operational.

Figures released to Shetland News show that during the five months from April and August 2020 Air Discount Scheme reimbursement claims totalled only £346,048 – a 92 per cent drop from the £4.38 million paid out during the same period the previous year.

Under the scheme the government pays for a discount of 50 per cent on air fares for residents of the Highlands and Islands.

A spokesperson for government agency Transport Scotland said the money saved is going towards a much-increased subsidy for the government-owned HIAL.

As the scheme is demand-led there is no defined figure on how much the government was due to spend on the Air Discount Scheme, but the comparison figures highlight the sizeably smaller bill in 2020.

It also brings into sharp focus the huge impact the pandemic has had on the aviation sector.

“HIAL’s commercial income has dropped dramatically due to the impact of Covid-19 on passenger numbers,” the Transport Scotland spokesperson said.

“In order to ensure HIAL’s airports remain operational throughout this period, we have had to significantly increase our subsidy to HIAL to offset the impact of the lost income.

“This increased subsidy includes any savings from the Air Discount Scheme due to fewer people travelling.”

The level of HIAL’s subsidy will only formally be known at the end of the financial year, with the government funding offsetting the airport operator’s losses so that it breaks even.

The budgeted subsidy for 2020/21 is £24 million.

The news comes after chairman of Shetland’s transport partnership ZetTrans councillor Ryan Thomson suggested that money saved on the Air Discount Scheme could be used to support Loganair if there was a significant risk to the viability of the airline.

The company recently confirmed that it was stopping flights between Shetland and Glasgow and Inverness over the winter months due to low demand.

Thomson, who also chairs Shetland Islands Council’s environment and transport committee, said neither ZetTrans or the local authority were aware of the movement on subsidy towards HIAL.

Loganair chief executive Jonathan Hinkles. Photo: Shetland News

“ZetTrans has formally requested to meet the minister for transport regarding this. Neither the local transport partnership, nor the local authority, have been involved in decision making which directly affects us here in Shetland,” he added.

“The directly elected members of Shetland must be around the table regarding the discussions and decisions which affect us locally. This is something we will look to put on the agenda for when we meet the minister.”

Loganair chief executive Jonathan Hinkles said the airline and HIAL are working collaboratively on the issue of reduced income.

“Loganair, HIAL and Transport Scotland have been working as closely together as ever during the Covid-19 pandemic to ensure that vital regional air connectivity remains in place,” he said.

“We have focused on delivering a good service on essential routes: this cannot extend to keeping every single air route open throughout times of significantly reduced demand, for it is neither economically viable nor environmentally sensible to do so, but we have ensured that Shetland’s links to Aberdeen, Edinburgh and Kirkwall retain frequent flights.

“The reduced income from far fewer customers flying poses a distinct and equal challenge for both HIAL and Loganair.  We’re working to address this jointly through the commercial discussions that routinely take place between the airport group and airline.”