Developments in the air network serving the Highlands and Islands of Scotland and improved financial performance are highlighted in the annual report and group accounts for 2005/06 published by Highlands and Islands Airports Limited today (Friday 4 August).

HIAL operates 10 airports which range from the region’s four largest at Inverness, Kirkwall, Stornoway and Sumburgh to those at Barra, Benbecula, Campbeltown, Islay, Tiree and Wick.

In the year ending 31 March 2006 HIAL’s airports handled a record 1,152,895 passengers, up 14% on the previous year, and more than 93,234 aircraft movements. All 10 airports saw passenger growth in the year as a result of enhancements to the region’s air services and the introduction of new routes.

Receipts from traffic and other charges amounted to £11,766,000 which was £940,000 more than the previous year’s figure and reflected increased income at Inverness, the region’s largest airport.

The subsidies received from the Scottish Ministers amounted to £58,902,000; made up of revenue subsidy of £14,747,000 and capital subsidy of £44,155,000. The revenue subsidy was 15% less than the previous year as a result of efficiency savings and increased income. The capital subsidy included £28,333,000 which was used to purchase the entire share capital of the terminal Private Finance Initiative concession company at Inverness Airport, Inverness Air Terminal Limited, and £6,624,000 which was used to repay a long term loan that existed at that date.

Maintaining and upgrading airport infrastructure required capital investment of £9,560,000 in fixed assets during the year. The largest project was the first phase of the extension of the 09/27 runway at Sumburgh Airport in Shetland. Other capital investment included environmental works and an apron extension at Inverness and work to upgrade the terminals at Benbecula and Wick to meet National Aviation Security Programme requirements.

HIAL’s chairman Sandy Matheson said: “Access to effective air connections remains a high priority for the region. Our airports deliver business and social links and support inbound tourism. Good scheduled air connections serve to encourage inward investment and migration; mitigate remoteness and low population density; and help to make the Highlands and Islands a more attractive area in which to live and work.

“Within this context we achieved efficiency savings in revenue operating costs and increased the amount of income we earned while investing to ensure that our airports meet fit for purpose standards.

“Providing positive outcomes for the region while employing best business practice are fundamental to achieving value for money across our operations. Last year therefore laid a strong foundation for delivering against this agenda in the years ahead,” said Mr Matheson.

HIAL’s managing director Inglis Lyon said: “We have worked with the airlines to deliver increased frequency and new routes to improve air services for local residents and those travelling into the region. The continuing demand for this development is evident in the increased use of flights seen during the year.

“At the same time we have implemented a range of business modernisation initiatives. This will ensure that we get best value from our available resources and can meet the commercial and operational pressures that we face.

“Commercial innovation is assisting us in developing new and existing revenue streams to offset the requirement for revenue subsidy in the business and this will be especially important at Inverness. Following the buy out of the PFI we have full control of the asset and will continue to develop the airport with the aim of reaching a break even financial position and ultimately profitability.”

Copies of the annual report are available on request from HIAL's Head Office at Inverness Airport or can be downloaded in PDF format from the Corporate section of this website.