By Peter Tremayne

Auditors hoping to find out why Eastern Airways went bust owing Cornwall’s taxpayers more than £1.6 million could do worse than to study the minutes of a Corserv board meeting  held on 10th March 2025.

The document suggests that an answer given by council leader Leigh Frost at a full council meeting last month, when asked why Newquay Airport's credit controls had been so woeful, was far from the whole story.

Councillor Frost said that Newquay Airport took no action against Eastern Airways because it feared interruption of the daily flights to Gatwick.

In fact, according to the secret Corserv board minutes, the airport had been keen to take legal action against Eastern at least six months before the airline went bust.

It was Cornwall Council, and not Corserv or Cornwall Airport Ltd, which allowed Eastern’s debt to rise.  By the time the company finally collapsed it had debts of £28.7 million.

By March 2025, Eastern’s failure to pay its creditors was having a serious effect on Newquay Airport’s cash-flow.  The council responded by paying the taxpayer’s Public Service Obligation subsidy direct to the airport rather than to Eastern Airways.

Cornwall Reports would welcome the opinions of any suitably-qualified readers as to whether or not this was lawful.

The significance of how the PSO came to be paid direct to the airport is that it sheds a fascinating light on the relationship between the council and its arms-length companies.

That relationship is, theoretically, governed by a shareholder board comprising the chief executive, the council leader and the council deputy leader.

In practice the shareholder representative is the chief executive, Kate Kennally.

Cornwall Reports understands that neither the former council leader (former councillor Linda Taylor) nor deputy leader (former councillor David Harris) knew anything about the arrangement by which the PSO subsidy (now known as the “Gatwick Tax”) was being paid direct to the airport.

The heavily-redacted three-page minutes were issued to Cornwall Reports in July as part of our inquiries into the “Gardner-gate” scandal.

Having now learned how to turn a redacted PDF document into an accessible Word document, albeit with some "untidy" formatting, we publish the full (legible) minutes here: corserv minutes

There was never any genuine reason why the document should have been so heavily-redacted.  The minutes are certainly embarrassing, politically, but contain nothing which deserved such “Above Top Secret” treatment.

The next meeting of the council’s audit committee is scheduled for 22^nd May.  Councillors who are members of that committee might usefully seek records of all communications concerning Eastern Airways and its huge, rising debt to Cornwall's taxpayers, between Ms Kennally, Corserv and Cornwall Airport Ltd, during the first four months of 2025.

“PSO payments are now coming to CAL direct from the council, rather than via Eastern, given the ongoing challenges with Eastern.  Corserv are required to underwrite the debt owed by Eastern (approximately £500k).  This risk is not therefore a risk shared by the council.

Decision:  • Given the current position with CAL and that a deal has yet to be agreed under Project Corduroy, it was agreed that the legal route regarding outstanding debt with Eastern, should now be taken and appropriate colleagues at the council should be made aware of this decision.”