1. What discussions has the Cabinet Secretary had with Cardiff Airport in light of reports that the airline Flybe is to be sold? 234

I've held discussions with airport executives myself, and my officials maintain regular contact with Cardiff Airport, and they're continuing to work closely with Flybe. All flights to and from the airport are operating normally and, of course, the sale of the company is just one option that the company is considering.

Cabinet Secretary, thank you for the answer. You'll understand the reason why I've raised the question. The airport, since it came into public ownership, has been remarkably successful. In the last year, there's been 9 per cent growth, which was on top of 16 per cent growth the previous year, and 15 per cent growth in passenger numbers since it was taken out of private ownership and into the public sector. It has recently been named as the best under 3 million airport in the UK. It has increased incoming passenger numbers from 24 to 30 per cent. There are new airlines, new routes. In July 2018, it was the second best time performance airport in the whole of the UK; and, in 2017, it was awarded a five-star status.

Of course, turning around an airport after years of decline is not easy, and I wonder what assurances the Cabinet Secretary can give us in terms of the Government's long-term strategy with regard to the importance of the airport as part of the Welsh economy, as a major employer, and also the long-term strategy to ensure that success continues in what are very, very difficult times for the airport industry, but to the benefit of the Welsh economy.

Well, can I thank Mick Antoniw for his question and also for recognising the remarkable success of Cardiff Airport since the Welsh Government purchased that particular asset? The aim, of course, the long-term strategy—which was outlined in the master plan during the summer—is to grow the airport to accommodate 3 million passengers annually. I'd also like to put on record my thanks to the incredible team at Cardiff Airport who are responsible for the success that Mick Antoniw has outlined.

It's worth stating with regard to Flybe that, based on discussions that have taken place between the airport and the company, we are aware that there are no plans for any radical changes to the route network. There are no plans whatsoever to ground planes, and there are no plans whatsoever either to cut the number of routes. Members will be aware that the company are in talks with potential strategic partners and, again, I should state that the sale option is one of several options that are currently being examined. If a sale went ahead, then it would be recognised that Cardiff international airport has been part of the successful story of Flybe over many years.

In addition to the services that are operated by Flybe, we've recently seen Cardiff international airport successfully work with TUI in introducing an expanded service through the addition of another aircraft; KLM are increasing capacity at Cardiff international airport; we know about the new route to Doha operated by Qatar Airways; and Cardiff international airport are also in discussions with Ryanair. We know that Ryanair intend to double the number of services next year, providing a huge opportunity, potentially, for Cardiff international airport. We will go on supporting this major asset, not just for south Wales, but for the whole of Wales. Our international airport is hugely important in terms of its strategic fit with our transport plans for the future of Wales. We are proud of its success, and we look forward to its success continuing for many years to come.

The news was alarming last week, obviously, that Flybe have put themselves up for sale, because, in some markets, they are a very successful airline and achieve real growth. In the early years of the Government's ownership, significant loans were made to Cardiff Airport, with the purchase price on the loans in excess, now, of £100 million, I believe the slate talks of. Part of that money was made available to secure Flybe to the airport, and if you look at Flybe's accounts, the aircraft are actually chartered to Cardiff Airport, which is quite a unique way of accounting for those aircraft.

What security has the Minister had given to him that no Government money is at risk should the worst-case scenario happen and Flybe cease trading? None of us want to see that happen, and, hopefully, the best option, which would be to secure the long-term viability of Flybe, either through a partnership or a purchase, will actually expand route development out of Cardiff. But there is a significant amount of public money being put on the table to secure the Flybe route, and it is incumbent on the Cabinet Secretary to give Members assurance that that money is secure and is able to be transferred to a new operator, should Flybe cease their routes out of Cardiff.

I can assure the Member that whilst, on the one side, the loan with Cardiff international airport is, of course, commercially sensitive, the airport is currently within its terms of the loan agreement, and that money is secure. But I think it's important that we don't talk down—and the Member is right to state that we should not talk down—the prospects for Flybe. It's been an incredibly successful company, and in terms of the services operating to and from Cardiff Airport, we've seen a good increase in the number of passengers using that particular air carrier.

I do think that Flybe and Cardiff Airport have worked exceptionally well together, and that's why talks have been so productive since last week's announcement. Of course, the sale may be the eventual outcome, but I believe, based on the performance of Flybe, that a strategic partnership, or a successful sale, is highly likely. We know that the factors that have contributed to the challenges facing Flybe have concerned issues such as information technology systems. These can be overcome with the help of a strategic partner, and that's what I hope we will see for Flybe.

One element of this that hasn't been given a great deal of coverage, if any, I believe, over the past week is the fact that Flybe, through its subsidiary Eastern Airways, runs the link between Anglesey and Cardiff, which is a service that's more popular than it’s ever been. And I congratulate the Welsh Government in that regard.

Can you, as Cabinet Secretary, tell us or share any concerns that you may have on the impact of the current Flybe difficulties on that contact, and inform us of any assurances that you have sought or received already in relation to that crucial service?

Well, can I thank the Member for his question? It's very timely, actually, because it's my intention to announce shortly the outcome of the tendering process for that particular air link. The Member is absolutely right: we have seen great success since the route has been operated by Eastern Airways. I believe that passenger numbers have increased by something in the order of 40 per cent, demonstrating the growing demand for the Cardiff to north-west Wales air link.

I will be making an announcement soon. I wouldn't want to pre-empt any announcement that I will make, but I am confident that the arrangements that have been in place are fit for purpose, have been successful and could continue into the future. I see no reason why Flybe, given its performance to date, would collapse. There is a strong interest in the company, both in terms of its fit with potential partners or as a potential purchase by another airline, and that could include—dependent on the outcome that I'll be announcing soon—inclusion of the Eastern Airways link between Cardiff and Anglesey.

Can I join the Cabinet Secretary and Members in praising the management of Cardiff Airport in my constituency? I welcome the latest passenger figures for the airport, which show that during the last financial year total passengers grew, year on year, by 9 per cent to reach 1.48 million. 

As it has been suggested that air passenger duty has been a particularly detrimental factor for Flybe, what representations is the Welsh Government continuing to make regarding devolving air passenger duty, which is clear would have a beneficial impact for Cardiff Airport and for Wales, and, of course, receives cross-party support in this Assembly?

It's very interesting—Jane Hutt makes a really important point about the role that air passenger duty could play in assisting and making Flybe more competitive, because it's my understanding that something in the region of 80 per cent of Flybe's flights are subject to the double whammy of domestic route APD. Clearly, if that were to be devolved and we could either abandon it or significantly reduce it, then that would assist Flybe and it would also make air services more competitive for passengers.

The UK Government has said that it is open to reviewing the devolution of APD if new evidence comes to light, and I think what we've learnt from Flybe in the last week is that if the removal of APD could be secured through devolution, then, clearly, that would be sufficient evidence to justify the devolution of APD, because it could assist in the company being more competitive. The Welsh Affairs Committee are currently looking at this issue, and the Welsh Government have contributed evidence to that inquiry. Also, we commissioned consultants, Northpoint, to look at the potential outcome of abolishing the tax on all flights. They found that it could raise the number of passengers using Cardiff Airport by more than 650,000 per year, in a very short space of time—in just seven years. That would be an incredible increase in the number of passengers and it would assist the airlines that operate from there, including Flybe.

Thank you, Cabinet Secretary. The second question is also to be answered by the Cabinet Secretary for Economy and Transport, and the question is to be asked by Rhun ap Iorwerth.