2. Will the Minister make a statement in response to reports regarding Flybe's future and its impact on Cardiff Airport? 381

Yes, of course. I have to say it's encouraging to note that an agreement has now been reached with the UK Government that secures the ongoing operation of the airline. However, issues with regional connectivity remain and the UK Government need to intervene further in supporting the competitiveness of smaller airports.

Can I thank the Minister for his answer, and I would agree with him with regard to the welcome news that the UK Government has come to an agreement with Flybe's shareholders on a deal that will continue to allow Flybe to operate, at least in the short term? With regard to the future of Flybe, I wonder what discussions the Welsh Government has had, as owners of the airport, with both the UK Government and Flybe themselves. The Welsh Government has said in the past that Flybe would be a catalyst for the growth of the airport, so given the company's current financial status, can you expand on what discussions you've had with Cardiff Airport on the potential impact of Flybe reducing the number of routes out of Cardiff? And I wonder also if you could make an assessment of the implications for Cardiff Airport, should Flybe cease to operate, and the actions of the Welsh Government and Holdco that are taken to mitigate these.

As I understand, a 10-year arrangement or agreement was signed with Flybe when it opened its operations in Cardiff in 2015, so I wonder if you could set out any implications upon these contractual obligations and agreements, in the context of the difficulties currently being faced by Flybe. Has the Welsh Government considered, or Cardiff Airport considered, any offers of financial incentives to Flybe to attract them to remain operating at Cardiff Airport, for example fees or charges being waived for flying to and from the airport? And can I also ask what contingency plans does the airport have in place on future route losses, and what discussions have you had on other revenue-generating projects that will improve the financial sustainability of Cardiff Airport? I ask this in the context of Cardiff Airport's continued pre-tax losses, which we know have nearly trebled to £18 million and, of course, the other loan that was required of £21 million back in October. I wonder if you could also confirm what was the purpose of that loan of £21 million back in October.

And finally, in the Economy, Infrastructure and Skills Committee last week, you confirmed that the Welsh Government didn't really have an analysis of when the airport would start to make a profit, and you weren't able to rule out any further loans, and you didn't know when the current loan would start to be repaid back. So, in that regard, what assessment do you and your colleague the finance Minister make on the potential risk to the public purse in regard to the state of the loans already made to the airport? Can you just confirm that your assessment that you made last week to the EIS committee remains the same today as well, following the news of Flybe and the concerns around Flybe?

Can I thank Russell George and say at the outset, 'Yes, my assessment today is the same as it was last week, now that the UK Government has saved an airline, just as the Welsh Government, in years gone by, saved an important airport'? And I am delighted that the UK Government is now an interventionist Government, following in the footsteps of the Welsh Government. Discussions take place regularly between the airport directly and Flybe, and the Welsh Government and the airport. Something in the region of 310,000 passengers were carried from and to Cardiff Airport in the last year—that's 310,000 of the 1.7 million, so it has a considerable impact on the airport.

When we carried out due diligence on the offer of the loan, we factored in various scenarios, including the collapse of certain airlines, and we were confident, based on our assessment, that the loss of Flybe would still allow the airport to operate in a viable and sustainable way. However, it would be with much reduced passenger numbers, and we would wish to see passenger numbers continue to grow rather than to fall, and that's why I'm so very pleased by the outcome of the talks that have taken place between the UK Government and the airline.

But the Government at Westminster could do more to assist in terms of the financial incentives that Russell George has asked questions about today. Just as the Welsh Affairs Committee has recommended, the UK Government could devolve air passenger duty to Wales, and the Welsh Government could then make a decision on how it utilises APD in order to incentivise not just the use of Cardiff Airport and routes from it, but also the transition that airlines need to undertake from highly-polluting aircraft to lower-polluting aircraft. We could model an APD regime that allows us to incentivise the use of Cardiff Airport by airlines that operate those lowest-emitting aircraft. 

Further measures that could be undertaken to improve the range of journeys that are undertaken and offered from Cardiff Airport include support for the public service obligation routes that we have proposed to the UK Government, but which to date it has decided not to proceed with recommending to the European Commission. If it would support those public service obligation routes, then a significant increase in passenger numbers would be injected into the business model of the airport.

I am confident—based on a growth in revenue of over 34 per cent in the last year and a positive earnings before interest, tax, depreciation and amortisation for the second year running—that the airport stands in a very strong position. But the whole of the aviation sector right now is going through a difficult period, and that's why it's absolutely right that not just the Welsh Government but the UK Government, as demonstrated by yesterday, stands ready to help the sector.

It's absolutely vital in terms of economic growth. It's vital in terms of providing direct and indirect jobs, such as the 2,500 that Cardiff Airport supports in south Wales. And it's absolutely vital in keeping communities within Wales and the UK better connected than they would otherwise be without those airports. For example, would Anglesey Airport be viable without Cardiff Airport? I very much doubt it, Llywydd. 

I'm glad you've finally got around to discussing or mentioning Anglesey Airport, because Flybe is important to Cardiff Airport because it is a link to a number of important destinations, but Flybe also have flights that begin and end in Wales—the flight between Cardiff and Ynys Môn. And that flight, in itself, has become very important for individuals, for businesses, but also for the governance of Wales, which is very, very important here. Shrinking Wales and making it easier for Government Ministers, as you will well know, to travel to and take a direct interest in what's happening on the ground in other parts of Wales is very, very important and we shouldn't forget that. 

I think many of the questions have been asked already, but I'm eager to know, given the importance of Flybe to Wales, what role you will seek to play now in this review of regional connectivity that UK Government is promising, because we would want that to be an active role. And also, what will you do to increase the urgency of the pursuit of the devolution of APD? We're in agreement that it needs to happen, but how do you use this particular juncture as a way of upping the stakes, if you like, and making the case even stronger for an early move towards devolution of APD? 

Can I thank Rhun ap Iorwerth for his questions? He's absolutely right that we need to be shaping the future of air passenger duty in the UK. And, as part of the review that will be carried out by the UK Government, we would expect them not just to consider how APD is applied but by whom. And what is good for Scotland should surely be good enough for Wales and we should have responsibilities for APD devolved.

I've already written to the UK Government regarding yesterday's announcement, stressing the importance that the Welsh Government is part of the review on regional connectivity and the future of APD. I think the decision of the UK Government demonstrates how APD can be used as an enabler to incentivise passengers not to have to travel great distances in order to board their planes and instead use more local and regional airports. And so we'll be, I would expect, right at the heart of discussions and deliberations over the future of APD. 

And with regard specifically to the Cardiff to Anglesey public service obligation, I'm pleased to say that the PSO would have been unaffected if Flybe had collapsed, because it's Eastern Airways that is contracted to support the route. However, Members will be aware that current bookings for that particular service are made via the Flybe bookings service. So, even though it's Eastern Airways that has a backup bookings system, that would, in all probability, have been switched on without delay had Flybe indeed collapsed. 

The Brexit Party welcomes the intervention by the UK Government to enable the airline Flybe to continue its operations, as we recognise its importance to Cardiff Airport. There are some who seek to criticise the Government for their support for Flybe, pointing out that no such support package was forthcoming to Thomas Cook. However, do you agree there is no huge cash injection from the Government for Flybe? They have simply agreed to defer debt sold for air passenger tax for some three months, said to amount to some £100 million.

And it is also true that a proper analysis of the two companies' operations shows why this intervention is justifiable, in that Flybe is almost exclusively a European and British internal passenger carrier, primarily serving British regional airports, giving these regional airports, including, of course, Cardiff, vital access to UK and European airports. Will you also agree with the assertion that the overall debts of Flybe, being only a tenth of the size of Thomas Cook's, are also small in comparison and, therefore, it has a viable future?

The Flybe operation facilitates not only internal holiday travel but also acts as a vital business link, especially where time is of the essence. A trip from Cardiff to Edinburgh, for instance, is possible in a day by air, but virtually impossible by train or car. Flybe is also crucial to other parts of the UK, which include the Channel Islands, the Isle of Man, Belfast, and New Quay in Cornwall, which all, of course, link into Cardiff in one way or another. Passengers say that other ways of travel are not an option, with one quoting a trip from London to Newquay by train would take some five hours.

Again, returning closer to home, of course Flybe is a crucial airline for Cardiff Airport, being one of its biggest carriers. So, do you agree it is essential from a Welsh perspective to keep the airline in business? The possibility of cutting air passenger duty could also provide a boost for Cardiff.

Can I thank David Rowlands for his questions and his comments? I'd agree that the situation faced by Flybe is very different to the situation that Thomas Cook faced. It's absolutely vital that Flybe was assisted in the way that it appears it has been. We don't know the details of exactly how much APD has been deferred. I've also seen reports suggesting that it's in the region of £100 million. This is not a cash giveaway to Flybe; this is vital support that will give it breathing space and enable the owners to be able to inject capital into the business in order to make it viable for the long term. 

It's a rather interesting fact that there has never been a year in the history of passenger aviation in which the aviation industry has actually made a profit on the whole. Every single year sees winners and losers, sees losses and profits, but not in a single year has there been a net profit within the passenger aviation history. That shows how difficult an area of activity passenger aviation is. It shows how competitive it is as well. And it also demonstrates why intervention is, sometimes, required by Governments. 

It's also interesting that, generally, I think British people believe that airports should be in private ownership and only in the hands of private owners, but the fact of the matter is that 86 per cent of the world's airports where passengers are able to fly in and out of are owned by the public sector, and 14 per cent have a private interest in them. It demonstrates, therefore, why the Welsh Government again was right to save Cardiff Airport and maintain its interests in this crucially important piece of infrastructure.

With regard to the support offered to Flybe, it will enable that particular airline to offer services, not just in terms of flights from the UK to Europe, but also flights that ensure communities within Britain are better connected with one another, to ensure that people from more distant parts of the UK are able to travel long haul from our key strategic hubs like Manchester, Heathrow and other major airports. It's absolutely vital, I think, that as we consider the future of air passenger duty, we do so in a way that shows respect to devolved functions and the ability of the Welsh Government to utilise APD in order to inspire and support further growth at Cardiff Airport.

Thank you, Minister.