National Audit Office: FCDO’s £285 million investment in St Helena Airport has not yet achieved expected benefits

The construction of the airport on the island of St Helena has not yet increased the island's self-generated income, expected mainly through tourism, to enable the island to become financially self-sufficient by 2043 as FCDO set out in the business case, a new NAO report says.   

The airport has led to a small increase in the number of tourists, however, FCDO acknowledges that the increase in tourist numbers it expected the airport to attract was over-optimistic and is now unlikely to be achieved within the original timeframe. 

The construction of the airport was completed in May 2016 and, after a delay of 17 months due to the discovery of severe wind shear and turbulence, commercial flights started in October 2017 with a schedule of at least one flight per week from South Africa. 

The airport has provided benefits to the island including improved access to healthcare for residents and consequently improving quality of life for many, as well as saving some residents' lives. The airport was vital in delivering Covid-19 vaccines in 2021. 

FCDO considers the COVID-19 pandemic to be the main reason the airport has so far failed to increase tourism and income to St Helena to the extent set out in its business case for the airport investment, as the pandemic resulted in the cessation of commercial flights, and therefore tourism, for two years. 

There were 2,112 visitors to the island in 2023, fewer than the pre-pandemic peak and around a quarter of the 8,000 target for the same year. In addition to the impact of the pandemic, the frequency of delayed or cancelled flights due to difficult weather conditions remain a challenge to attracting more tourists. On average 11 per cent of all flights were delayed, with a higher proportion delayed during 2023 and 2024.

Due to low numbers of flights and passengers, the airport's income is not covering its costs and FCDO is currently providing almost £3 million per year to meet this shortfall.  

Additionally, the airline receives a subsidy when flights are delayed, cancelled or not profitable due to low passenger numbers. Between June 2023 and May 2024, this amounted to over £800,000.  

FCDO has acknowledged that due to low tourism numbers and the lack of income growth, self-sufficiency for St Helena is unlikely to be achievable within the timeframe it originally expected.   

Since the airport opened, UK Government aid to the island has increased from £27 million in 2015-16 to £33 million in 2023-24 (in real terms), despite the overall population of the island decreasing by 10 per cent between 2016 and 2024 to around 4,000 people. 

FCDO attributes the increase in the amount of aid required in part to the St Helena Government's rising health and social care expenditure associated with an aging population, which rose to £16.4 million in 2022-23. 

Private inward investment to the island has not materialised to the extent anticipated in the business case.  FCDO is also providing £39 million to support economic development. This is comprised of £30 million of capital funding from 2018-28 to fund economic development projects, and £8 million between 2012-21 to fund Enterprise St Helena, which supported around 85 business start-ups. 

As part of the airport construction, FCDO is also funding the construction of a replacement bulk fuel installation, originally intended to store the fuel required for generators to supply the island's electricity, fuel for vehicles on the island as well as aviation fuel required for the airport.  

However, due to contractor failure and the COVID-19 pandemic the bulk fuel installation is nine years overdue and remains unfinished. The installation's design has now changed as less aviation fuel is required than originally anticipated due to the lower number of flights to the island. By May 2020, FCDO had spent £78 million on the construction of the bulk fuel installation, more than twice the original budget of £31 million. 

The FCDO also provides funding for other key assets on the island, which may attract more tourists and grow the economy. For instance, FCDO has committed £3.7 million between 2021-22 and 2024-25 for the restoration of the St Helena Cloud Forest. 

FCDO is committed to support St Helena to become self-sufficient, and it still regards increasing tourism as the main way to achieve this. FCDO provided £1 million of ring-fenced funding over 2023-25 to support the St Helena Government increase tourism. 

ENDS

Notes to Editors: 

1. St Helena, together with Ascension Island and the archipelago of Tristan da Cunha, form one of the UK's 14 overseas territories. St Helena is self-governing and autonomous as set out in its constitution. The Governor is the representative of the King on the island and the de facto head of state. The Foreign, Commonwealth & Development Office (FCDO) has lead responsibility for the constitutional relationship between the UK and its overseas territories. 
2. The annual amount of aid the St Helena Government receives from the UK government is based on FCDO's assessment of “reasonable assistance needs”. It is the difference between the budget the St Helena Government needs to deliver public services, and its income, mainly generated through taxes. 
3. The construction of the airport in St. Helena was completed in 2016, after the FCDO entered a £285.5 million contract with a South African company, Basil Read, in 2011 to design and construct an airport. It opened to commercial flights in October 2017 and has since been operating one commercial flight to South Africa every week.