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Business Comment

David Prosser: Regional airports' wings are clipped

Outlook The closure of Plymouth Airport, announced yesterday, is miserable for those workers now likely to lose their jobs, while local business groups also expressed their dismay. But the truth is that Britain has too many small regional airports for them all to be economically viable – sadly, Plymouth will almost certainly not be the last airport forced to shut up shop.

Most obviously, it is the state of the economy that threatens the future of the UK's smallest airports. In austerity Britain, fewer people are flying and airlines are cutting less popular routes, both domestic and international.

To combat that trend, some airports have been seeking alternative sources of revenue – premium fees for travellers prepared to pay to jump to the front of the security queue, for example, or drop-off charges at the terminal. But trying to milk more money out of passengers is a risky strategy – the risk is that people choose to fly from the airport 50 miles down the road (Plymouth, for example, competes with Exeter and Newquay).

The bigger money, meanwhile, comes from airport shopping, which is why airports such as Liverpool's John Lennon have expanded the number of commercial outlets on site. But this is an opportunity that only the largest players are in a position to fully exploit. Smaller airports do not have the footfall to attract big-name retail tenants.

Then there is the Ryanair factor. The budget airline business model is predicated on a ruthless attitude towards cost. Ryanair and co have taken an ever-tougher line with airports over charges, threatening to take their business elsewhere unless they get the cheapest deals possible. With so many airports in such close proximity to each other in Britain, that's a tactic the airlines can pursue without fear of inconveniencing passengers.

Meanwhile, the airports' own costs continue to rise. Higher security standards and new safety rules – for better radar facilities, for example – are unaffordable.

Local authorities and chambers of commerce like the prestige of having their own airports. But unless they are prepared to subsidise these operations, many of them will suffer the same fate.