Prestwick Airport ‘waiving’ fees for US military aircraft

The state-owned Glasgow Prestwick Airport is waiving service fees for inbound US military aircraft as part of an alleged practice designed to increase traffic at the beleaguered airport and safeguard its lucrative commercial relationship with the US Defence Department, multiple sources familiar with its operations have told The Scotsman.

By The Newsroom Thursday, 3rd October 2019, 10:50 pm

The heavily-indebted airport, which is at the centre of a US Congressional investigation over the US military’s financial ties with Prestwick and President Donald Trump’s nearby Trump Turnberry resort, is alleged to have waived the so-called service fees for several hundred flights by branches of the US Armed Forces.

Sources with direct knowledge of US military business at Prestwick said the cost to the airport and, as a result, Scottish taxpayers, runs into seven figures. “Scottish taxpayers are picking up the tab for the largest and wealthiest military force on the planet,” one explained.

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The airport, a publicly-owned asset which is operated on a fully commercial basis, has repeatedly declined to answer a series of questions put to it by The Scotsman regarding the allegations it is waiving the service fees.

The US miltiary's use of Glasgow Prestwick Airport and nearby Trump Turnberry is the focus of a Congressional investigation. Picture: Andy Buchanan / AFP/Getty

The US Embassy in London also declined to confirm whether it was aware of the allegations.

But Patrick Harvie MSP, co-leader of the Scottish Greens, called on the airport’s relationship with the US military to be “suspended at once.”

He said: “In light of these staggering allegations that the Scottish Government owned airport is giving freebies to the US military, ministers must urgently explain how on earth they have allowed this to happen.”

The hub was put up for sale by the Scottish Government in June. A new buyer is expected to be announced shortly. It is running at an annual loss of £7.6m and is reliant on £38.4m in loans from Scottish ministers. The US Armed Forces budget stands at £563bn.

US military stopovers at Glasgow Prestwick Airport have increased sharply since Donald Trump became president. Picture: John Devlin

Congressional investigation

The South Ayrshire airport does not publicly disclose the exact cost of the service fees it ordinarily charges, but several sources indicated the charges in question would reach around £2,000 for larger aircraft such as Boeing C-17 Globemaster III military transports, with the fee falling to around £750 for smaller aircraft such as C-37 Gulfstream jets.

The allegations facing the airport will likely draw increased scrutiny from both sides of the Atlantic at a time when the powerful House Oversight and Reform Committee in the US Congress is investigating US military payments at both Prestwick and Trump Turnberry amid concerns of “serious conflicts of interest” and potential violations of the foreign emoluments clause of the US constitution.

Sources with knowledge of Prestwick’s in-house fixed base operations (FBO) business said the alleged waiving of the service fees has been taking place since around 2016 to 2017 with the full knowledge of senior management.

One senior source familiar with the airport’s military business said that the decision to waive the fees was made to ensure the troubled hub was seen as competitive in the eyes of the US military, and protect a lucrative multimillion pound refuelling deal with a US Defence Department agency.

As revealed by The Scotsman in June, the Defence Logistics Agency (DLA), a Virginia-based body which manages the global supply chain for the US Army, Navy, and Air Force, has paid Prestwick nearly £14m to refuel aircraft since October 2017.

The House committee launched its investigation in June, writing to Pentagon to demand the release of spending records and communications between the US Defence Department and Prestwick and Turnberry.

The Defence Department has in turn referred the request for its communications with Prestwick to the White House.

In recent weeks, The Scotsman has also revealed how Trump Turnberry was the only hotel named in literature distributed by Prestwick at closed door meetings with US military, despite the fact it is one of 13 hotels used to accommodate aircrews. The airport’s website was subsequently edited to remove several mentions of Mr Trump’s property, including in a section dedicated to military customers.

Taxpayers ‘picking up the tab’ for US military

One source familiar with Prestwick’s military business explained: “I would suggest what’s happening is the Scottish taxpayers are picking up the tab for the largest and wealthiest military force on the planet. The US military crews pick up the fuel as part of the DLA contract, and that’s it.

“It’s unnecessary. The US military budget is colossal and they don’t care what they spend. It’s just done to try and encourage as much traffic as possible to Prestwick.”

Another source with knowledge of Prestwick’s operations confirmed: “The only charges the US military get are fuel costs. Everything else is waived. That’s on the basis the DLA contract is fairly lucrative and those fees should be waived.”

The Scotsman can also reveal a series of other fees chargeable to US military aircraft are being picked up by UK taxpayers via the Ministry of Defence (MoD) as part of a longstanding reciprocal deal with the US Defence Department. While this specific arrangement - confirmed by the MoD - is little known, even within defence circles, there is no suggestion it is improper or flouts any laws.

It is unclear exactly how many inbound US military flights have stopped at Prestwick in the past three years, but figures compiled by the US Air Force (USAF) after it emerged the Congressional investigation was underway show its aircraft made 841 stopovers since the start of 2016 through to August this year.

The frequency of those stopovers have increased markedly over the period, rising from 145 in 2016 to 180 in 2017 and 257 in 2018. There were 259 stopovers in the first eight months of this year.

Last month, The Scotsman revealed how in August, a new, even more lucrative deal struck by the DLA with Prestwick to provide it with approximately 12.4 million gallons of aviation fuel through to the end of September 2024 had been postponed.

Costs run into seven figures

A source familiar with the deal said it had been “kicked into the long grass” as a result of the Congressional scrutiny. The DLA said the decision was unrelated to the committee’s inquiry.

The alleged waiving of the service fees by Prestwick covers a range of goods and services that are routinely charged by the airport and provided by its FBO team. They include providing marshals, placing and removing chocks and crew steps, and transporting crews and freight.

The exact amount that has been picked up by the MoD for the other fees is unclear, although those familiar with the costings claim the bill for the USAF flights that have stopped off at Prestwick in recent years alone would also run into seven figures.

That arrangement sees the MoD picking up the cost of so-called landing, navigation and parking fees, and forms part of a reciprocal deal struck with its counterpart in Washington DC which sees authorities in the US pick up the bill for landing, navigation and parking fees whenever UK military aircraft use US airports.

However, the economic parity of the arrangement is unclear, and depends largely on the amount of military traffic, and the types of aircraft.

The Scotsman has also obtained information prepared by senior management at the airport as it attempts to stem losses before being returned to private ownership.

It includes details of discussions to sell off property to a range of interested parties, including the MoD and the housebuilding firm, Persimmon Homes.

Prestwick executives have also held talks with Sierra Nevada Corporation, the US firm behind the Dream Chaser space plane, as part of the airport’s ambitions to host a spaceport.

A spokesman for the MoD confirmed it was picking up various fees for US military aircraft at Prestwick.

‘Reciprocal arrangement’

He said: “The UK does not pay handling fees for US military aircraft however, under a reciprocal arrangement, the MoD pays landing, parking and navigation fees for US military aircraft and likewise the US Department of Defence pays such fees for UK military aircraft in the US.”

Asked about the alleged service fee waivers, a spokesman for the Civil Aviation Authority said airport charges in the UK were discretionary, and that individual airports could apply “whatever charges they think appropriate to their various customers” through commercial arrangements.

He added that with the exception of Heathrow, airport charges are not subject to regulation.

Glasgow Prestwick Airport declined to answer a series of questions put to it by The Scotsman about the alleged service fee waivers, including how it provides value for money to taxpayers, and whether any similar arrangement is in place with other military or commercial customers.

Asked if it or the Scottish Government was aware, or had any oversight over, or input into, the alleged waiving of service fees at Prestwick, a spokeswoman for the executive agency, Transport Scotland, said: “Glasgow Prestwick Airport is operated on a commercial basis and at arm’s length from the Scottish Government, in compliance with European Union state aid rules. Ministers do not intervene in the commercial discussions at the airport.

“The senior management team at the airport has been tasked with all aspects of taking the airport forward, including building on existing revenue streams. Glasgow Prestwick Airport has handled military and private flights since the 1930s and it remains an important part of the airport’s business.”

The USAF referred The Scotsman’s enquiry about the alleged service fee waivers to the US Office of the Secretary of Defence, who referred it to the US Department of Transportation. It was subsequently passed to the US State Department and the US Embassy in London.

A spokeswoman for the embassy did not directly address the question of whether it was aware of the allegations that Prestwick was waiving the fees.