Glasgow Prestwick Airport: economic impact assessment

1. Introduction and background

1.1 Purpose of this report

PricewaterhouseCoopers LLP (PwC) has been commissioned by SG to develop an evidence-based report of the economic and broader social impact of GPA. The purpose of this report is to provide SG with an understanding of the economic, social and wider value GPA supports in Scotland, and within the Ayrshire region, and enable them to communicate this value to key stakeholders. The analysis provides SG with a range of quantitative and qualitative measures through which GPA can estimate its socioeconomic impact. Whilst SG commissioned and financed the work, and commented on draft reports, the final report represents the independent analysis of PwC, unless otherwise indicated.

1.2 GPA’s strategic and economic context

GPA is an international airport located in the South Ayrshire local authority area in Scotland. Owned by SG since 2013, the airport has historically played a significant role in the development of aviation in Scotland and serves as a key driver of economic growth and employment in the surrounding areas. With a catchment area^[7] for outbound travel of 2.2m people within a 60 minute drive of the airport, and 4m within 120 minutes, GPA reported handling 459,000 passengers,^[8] 13,000 metric tonnes of freight, and 44m litres of fuel in Financial Year (FY) 2022-23. Spanning over 860 acres, it has the longest commercial runway, (at 2,987 metres) in Scotland. GPA operates 24/7 and maintains a good weather record.

Figure 1.1 provides a site map of the airport, highlighting the key businesses present on its site and in close proximity to it. The airport lies at the heart of Scotland’s largest aerospace cluster (the Prestwick Aerospace Engineering and Aviation Cluster), and has two long runways and six large aprons.^[9] As seen in Figure 1.1, the terminal building (1), cargo facilities (2), GPA Fixed Base Operator (FBO) (4), North Side Aprons (6), Air Traffic Control (8), and Civilian Gannet site (9) predominantly drive GPA’s FBO, passenger, cargo and aerodrome services. The Maintenance Repair and Overhaul (MRO) Hangars (5) relate to MRO service providers. In addition, the activity of the airport has attracted aviation related businesses on land surrounding the airport (at the Prestwick Aerospace Campus) such as aircraft part manufacturers and designers (Spirit and BAE) as well as aircraft engine specialists GE Caledonian who are all employers of highly skilled and highly paid employees. Land for development (3) relates to GPA’s future property development plans.^[10]

GPA’s road and rail link connection has made it a hub for aerospace and aviation-related industries in and around South Ayrshire. The airport has direct motorway access and is the only airport in Scotland with an on-site railway station, enhancing the accessibility and attractiveness of the airport to both passengers and businesses. Several companies and military organisations are also based in the surrounding area. The nearby Sandyford

Business Park^[11], is situated on the B742 approximately 7 minutes away from the airport site. The Business Park provides a variety of commercial and warehouse rental spaces for local Ayrshire businesses and serves as a hub of innovation for business start-ups and small and medium sized companies seeking to leverage the accessibility to international markets the airport offers.

Map of Glasgow Prestwick Airport’s 860-acre site with yellow boundary outlines and numbered key for facilities.

Key:

• 1. Terminal building and Prestwick International Railway Station
• 2. Cargo facilities
• 3. Land for development
• 4. GPA FBO
• 5. MRO Hangars (Ryanair PAM, Storm Aviation)
• 6. North Side Aprons
• 7. Fire Service
• 8. Air Traffic Control
• 9. Civilian Gannet Site
• 10. Second Runway
• 11. Fuel Farm

Entities within the map include: Collins Aerospace, Spirit AeroSystems, Ryanair, GE Aerospace, Woodward, FL Technics. HMS Gannet site also marked.

Source: GPA

The airport also plays a key role in enabling the achievement of the Ayrshire regional economic goals.^[12] It not only attracts inward investment, but also plays a key role in driving innovation, skills generation and employability for the region, particularly through its contributions to the Ayrshire Growth Deal.^[13] Furthermore, the airport plays an integral role in providing access to key international supplies and creating employment opportunities for local businesses and residents.

1.3 GPA’s ‘economic footprint’ and impact areas

Compared to most commercial airports in the UK, GPA's activities extend beyond passenger services. The airport’s main activities include FBO and fuelling services, passenger services, cargo services, aerodrome services and rental activities as outlined in Table 1.1. It also facilitates pilot training and occasionally serves as a film shooting location. More recently, it has been involved with plans to facilitate the development of a new training facility for aviation engineers on its premises. For the purpose of this economic impact assessment, GPA’s activities have been classified under the three broad pillars of core, secondary and wider activities, as follows:

Table 1.1: Categorisation of GPA’s activities^[14]

Core Activities: Constitutes direct benefit to the economy from GPA’s activities

• FBO and fuelling services (incl. refuelling services to military aircraft, military and executive FBO)
• Passenger services (incl. PAX^[15] aircraft landing, navigation and parking services, income from car parking, and rental income from retail concessions)
• Cargo services (incl. Cargo handling, bond storage, transhipment and Customs Clearance)
• Aerodrome services (incl. landing, navigation and parking services related to aircraft training, private aircraft and radar services, commercial services such as film shooting and advertising)

Secondary Activities: Constitutes indirect benefits to the economy through the activities of businesses operating on, or near, the airport’s premises

• Prestwick Aerospace Campus related activities via MRO and aircraft component providers such as (Prestwick Aircraft Maintenance and Storm Aviation) and other aviation related businesses
• Search and Rescue services provided by Bristow Helicopters
• Rail connection provided by ScotRail at GPA owned railway station

Wider Support: Support to the local region stemming from clustering benefits that GPA unlocks through its core and secondary activities

• Tourism supported through GPA passenger services
• Training activities through upskilling opportunities offered by GPA and companies located in close proximity
• Wider cluster benefits stemming from infrastructure development, training and employment, etc. via the Aerospace Engineering and Aviation Cluster

To inform this economic impact assessment, a Theory of Change (ToC) has been developed. A ToC presents a comprehensive and structured approach that articulates the underlying pathways through which an initiative reaches its outcomes. The ToC presented in Figure 1.2 provides a simplified overview of the impact pathways through which GPA’s resources are utilised for its activities, as categorised in Table 1.1, and how these generate economic benefits. This framework was developed based on a review of publicly available information on GPA’s activities and was refined through discussions with GPA Management between April and May 2024. In addition, a comprehensive profile of South Ayrshire and neighbouring local authorities reported by the SG is provided in Appendix 3 of the Technical Appendix for further context.

Inputs

• Plant, runway and equipment
• Motor vehicles
• Freehold land
• Investment property
• Staff resources

GPA Activities
Core aviation services:

• FBO & Fuelling services
• Passenger services
• Cargo services
• Aerodrome services
• Rental income

Secondary aviation services:

• MRO service providers
• Search & rescue services
• Leasing of railway station

Wider services:

• Tourism support
• Training activities
• Wider development plans

Economic Benefits
Direct benefits:

• Create value through its operations, captured by the margin between input costs and the selling price of its services.
• Employ people for the day-to-day running of the airport (direct employment).

Indirect benefits:

• Generate business-to-business purchases in the supply chain.
• Supports employment opportunities in other organisations within the airport cluster.

Induced benefits:

• Stimulate the economy through employee spending.
• Creates induced employment through employee spending.

Secondary & Wider benefits:

• Generate economic benefits from secondary aviation services.
• Stimulate the economy through wider channels such as tourism, land value appreciation, skills development etc.

1.4 Approach

This report uses information and data provided by GPA and publicly available sources to estimate the direct, indirect and induced economic impacts of GPA’s activities. This approach and related secondary data sources have been discussed with SG analysts.

Specifically data as per the latest financial statements, FY 2023, has been used to calculate the core, secondary and wider benefits of the airport, as follows:

Core benefits:

• This is an assessment of GPA’s economic impact in terms of direct, indirect and induced Gross Value Added (GVA) and employment, both regionally and nationally.
• This is based on input-output (IO) values for the warehousing and support services for the transportation sector,^[16] from the 2019 IO data published by SG. Revenue and employment information on GPA’s core aviation activities is used to convert its activities into economic impact. The economic assessment includes a calculation of:
• direct contribution using GPA’s financial and employment information (FY 2022/23);
• indirect contribution by imputation of GPA’s supply chain spending to IO data using Type 1 multipliers;^[17] and
• induced contribution by the imputation of GPA’s supply chain spending and staff costs to IO data using Type 2 multipliers.^[18]

Secondary benefits:

• This is an assessment of the benefits generated by companies that operate on, or near, GPA’s site and includes search and rescue (SAR) services, MRO services, and other aviation related businesses e.g. MoD. Both qualitative and quantitative insights, including case studies, from relevant stakeholder interviews conducted as part of this analysis, and background research have been used to estimate the type and extent of benefits generated.

Wider benefits:

• This discusses the wider economic value of GPA. Areas of wider economic value contribution include: supporting tourism and upskilling of the labour force in the local region and engendering clustering benefits that boost innovation and business activity locally. These are estimated via data gathered through desk-based literature review, quantitative and qualitative analysis and insights and case studies gathered via engagement with GPA’s key stakeholders.

The qualitative analysis, insights and case studies provided in Sections 3 and 4 of this report has been gathered via discussions with 11 key stakeholders, including GPA Management as outlined in Table 1.2.

Table 1.2: List of stakeholders

Stakeholder engagement: Description

1. GPA Management

• Discussions with management team (commercial, financial, HR)

2. Prestwick Aircraft Maintenance Limited (PAML/Ryanair)

• MRO service provider

3. Storm Aviation^[19]

• MRO service provider

4. GE Caledonian

• Aerospace component manufacturer

5. Spirit AeroSystems^[20]

• Manufacturer of aerostructures and aircraft components

6. Scottish Enterprise

• Public body

7. Bristow Helicopters

• Search and rescue service provider

8. BP

• Fuelling service provider

9. Ministry of Defence

• Military service provider

10. Ayrshire College

• Training facilities provider

11. South Ayrshire Council

• Local Authority

1.4.1 Key limitations

This economic impact has been conducted in line with industry best practice and in consultation with SG analysts. As expected with any project of this nature, there were some limitations in undertaking this analysis. These included:

• The use of secondary data to identify and estimate direct, indirect and induced benefits for GPA’s core, secondary and wider benefits. For example, indirect and induced GVA and employment impacts have been estimated by applying IO table multipliers for the Warehousing and support services for the transportation sector as opposed to developing a bespoke IO model for GPA or analysing all GPA expenditure by Standard Industrial Classification (SIC) categories to create a unique sector weighted multiplier.
• The undertaking of the analysis on a gross basis is to assess the contribution GPA makes to the national economy (rather than on net basis including the counterfactual, and accounting for deadweight, displacement, and leakage etc. as per Green Book (2022) guidance which would be required if evaluating the impact of the SG intervention). This is consistent with industry practice where economic impact assessments are conducted to estimate the gross rather than net level of impact generated over time.

1.5 Structure of the report

This report presents the economic impacts generated by GPA in three key sections - core aviation impacts, secondary aviation impacts, and wider impacts, in alignment with the categorisation of the airport’s key activities.

Section 2 of the report examines GPA’s core aviation activities through a trend analysis of its main operations, specifically FBO and fuelling services, passenger services, and cargo services. This analysis aims to understand the impacts of recent external shocks, such as Covid-19 and Brexit, on these activities and compares them to GPA’s current operational volumes. Additionally, Section 2 delves into the direct, indirect, and induced economic impacts of GPA’s core activities, estimating both GVA and employment contributions.

Section 3 and 4 of the report focus on the secondary and wider activities of GPA respectively. Both sections draw upon qualitative and quantitative insights gathered from a literature review and stakeholder interviews, to estimate the economic benefits generated by GPA. In addition to providing a qualitative assessment of the economic advantages resulting from development plans of companies within the GPA Aerospace Engineering and Aviation Cluster. Section 4 also incorporates quantitative analysis of the broader impacts on tourism and training.

Finally, a set of technical appendices have been provided, detailing the methodological approach to estimating quantitative impacts undertaken by PwC and local economic profile of the Ayrshire region provided by SG.