Adjournment Debate : Shannon Airport

The Government’s position on Shannon Airport as provided for in the State Airports Act 2004

The following is my Dail contribution from the 5th Oct on Shannon Airport. I do believe that the structure of governance through the DAA is quickly becomming untenable for Shannon particularly so because of the imminent opening of Terminal 2 at Dublin Airport.

The present business model as operated by the Dublin Airport Authority is sucking the life out of Shannon Airport. We have witnessed a sharp decline in passenger numbers, airline carriers and destinations available through the airport. Ryanair, which once accounted for 1.9 million passengers and offered 53 routes, now bases just a single aircraft in Shannon Airport. Aer Lingus has withdrawn all its transatlantic flights for January, February and March of next year. The empty car-park and lack of activity at Shannon Airport highlights the low political priority given to the airport by successive Fianna Fáil Governments. There is a sense of utter hopelessness among business people, tourism interests, job creators, airport workers and the general population in County Clare. In response to this crisis the sole initiative of the Shannon Airport Authority in conjunction with the DAA has been to increase its airport charges. To add insult to injury, the only action offered by Government was to impose a €10 travel tax on passengers.

What Shannon Airport offers to the mid west and the western seaboard from an economic point of view in terms of jobs, connectivity for companies and a gateway to the west of Ireland is in real danger of being totally eroded unless a new model of governance is created. That the DAA continues to call the shots on Shannon Airport is no longer sustainable. We need a new beginning, a fresh start with a new business model. Any new structures will need to have adequate resources and strong political and financial support from Government.

The initial major challenge for any new airport authority is to put in place a five-year plan with realistic growth expectations. It also needs to engage with all current carriers who utilise the airport, including Ryanair. Any European airport would welcome such an airline yet Ryanair claims that it has been hindered repeatedly in its development at Shannon Airport because of Government-DAA policy. The challenge for the present Government and any new administration will be to respond to the needs of any such new authority and to reasonable requirements from carriers which want to do business in Shannon.

For an island nation it is a fallacy to tax people who want to travel here. This fallacy should be comfortably exchanged for increased employment and the knock-on revenue and taxes that could be generated from such passengers. The dead hand of the DAA must be removed from Shannon Airport before it is too late.

Minister of State at the Department of Agriculture, Fisheries and Food (Deputy Seán Connick):      The State Airports Act 2004 provides for the separation of Cork and Shannon Airports into independent autonomous airports and Dublin, Cork and Shannon airport authorities submitted business plans on this objective in 2008. Following consideration of these plans and the recommendations of the boards of the three airport authorities, in late 2008 the Minister announced the deferral until 2011 of a decision on the separation of the airports given the current very difficult circumstances in the aviation sector. In the meantime, new governance arrangements were agreed by the boards and have since been put in place. The new arrangements provide for appropriate delegation of responsibility for the management and promotion of the airports, subject to the necessary accountability to the DAA board in respect of annual budgets, airport charges policy and capital expenditure. The arrangements also provide for reciprocal membership of the boards of the Dublin Airport Authority, DAA, the Cork Airport Authority, CAA, and the Shannon Airport Authority, SAA, whereby the chairman of the CAA and SAA are members of the DAA board and the DAA has a senior executive nominee on the boards of the CAA and SAA.

In recent years, passenger traffic at Shannon Airport has fallen significantly. In 2009 it totalled just under 2.8 million, a reduction of 12% on 2008. Most medium-sized European airports reported a reduction in passenger numbers of between 10% and 20% in 2009 owing to the economic downturn and its effect on airline travel. In 2009 Ryanair stated that it was unwilling to provide the level of services agreed under a five-year arrangement with the Shannon Airport Authority. As a result it withdrew a number of its aircraft and routes from Shannon which directly led to the loss of approximately 600,000 passengers in 2009. That loss was partly offset by the restoration of the London Heathrow service by Aer Lingus.

However, the full annual impact of the reduction in Ryanair services has only begun to be seen in 2010. In addition, traffic this year has been adversely impacted by generally weak demand resulting from the prevailing economic conditions worldwide and by exceptional circumstances such as the volcanic ash disruption. On an ongoing basis, the airport management is in discussions with airlines to encourage the introduction of new services from Shannon. Already this year, services to four UK cities were introduced from July 2010 by the Aer Lingus regional-Aer Arann franchise. Marketing efforts are continuing with a number of airlines on other short haul routes.

In addition I expect both the DAA and the Shannon Airport Authority to exploit the opportunities available with the US preclearance facility at Shannon to increase passenger traffic through Shannon Airport. Currently, Shannon Airport is the only airport in the world outside the Americas which offers full preclearance services. US preclearance has the potential to deliver significant new business for Shannon Airport.

The Government’s position on Shannon Airport as provided for in the State Airports Act 2004

The present business model as operated by the Dublin Airport Authority is sucking the life out of Shannon Airport. We have witnessed a sharp decline in passenger numbers, airline carriers and destinations available through the airport. Ryanair, which once accounted for 1.9 million passengers and offered 53 routes, now bases just a single aircraft in Shannon Airport. Aer Lingus has withdrawn all its transatlantic flights for January, February and March of next year. The empty car-park and lack of activity at Shannon Airport highlights the low political priority given to the airport by successive Fianna Fáil Governments. There is a sense of utter hopelessness among business people, tourism interests, job creators, airport workers and the general population in County Clare. In response to this crisis the sole initiative of the Shannon Airport Authority in conjunction with the DAA has been to increase its airport charges. To add insult to injury, the only action offered by Government was to impose a €10 travel tax on passengers.

What Shannon Airport offers to the mid west and the western seaboard from an economic point of view in terms of jobs, connectivity for companies and a gateway to the west of Ireland is in real danger of being totally eroded unless a new model of governance is created. That the DAA continues to call the shots on Shannon Airport is no longer sustainable. We need a new beginning, a fresh start with a new business model. Any new structures will need to have adequate resources and strong political and financial support from Government.

The initial major challenge for any new airport authority is to put in place a five-year plan with realistic growth expectations. It also needs to engage with all current carriers who utilise the airport, including Ryanair. Any European airport would welcome such an airline yet Ryanair claims that it has been hindered repeatedly in its development at Shannon Airport because of Government-DAA policy. The challenge for the present Government and any new administration will be to respond to the needs of any such new authority and to reasonable requirements from carriers which want to do business in Shannon.

For an island nation it is a fallacy to tax people who want to travel here. This fallacy should be comfortably exchanged for increased employment and the knock-on revenue and taxes that could be generated from such passengers. The dead hand of the DAA must be removed from Shannon Airport before it is too late.

Minister of State at the Department of Agriculture, Fisheries and Food (Deputy Seán Connick):      The State Airports Act 2004 provides for the separation of Cork and Shannon Airports into independent autonomous airports and Dublin, Cork and Shannon airport authorities submitted business plans on this objective in 2008. Following consideration of these plans and the recommendations of the boards of the three airport authorities, in late 2008 the Minister announced the deferral until 2011 of a decision on the separation of the airports given the current very difficult circumstances in the aviation sector. In the meantime, new governance arrangements were agreed by the boards and have since been put in place. The new arrangements provide for appropriate delegation of responsibility for the management and promotion of the airports, subject to the necessary accountability to the DAA board in respect of annual budgets, airport charges policy and capital expenditure. The arrangements also provide for reciprocal membership of the boards of the Dublin Airport Authority, DAA, the Cork Airport Authority, CAA, and the Shannon Airport Authority, SAA, whereby the chairman of the CAA and SAA are members of the DAA board and the DAA has a senior executive nominee on the boards of the CAA and SAA.

In recent years, passenger traffic at Shannon Airport has fallen significantly. In 2009 it totalled just under 2.8 million, a reduction of 12% on 2008. Most medium-sized European airports reported a reduction in passenger numbers of between 10% and 20% in 2009 owing to the economic downturn and its effect on airline travel. In 2009 Ryanair stated that it was unwilling to provide the level of services agreed under a five-year arrangement with the Shannon Airport Authority. As a result it withdrew a number of its aircraft and routes from Shannon which directly led to the loss of approximately 600,000 passengers in 2009. That loss was partly offset by the restoration of the London Heathrow service by Aer Lingus.

However, the full annual impact of the reduction in Ryanair services has only begun to be seen in 2010. In addition, traffic this year has been adversely impacted by generally weak demand resulting from the prevailing economic conditions worldwide and by exceptional circumstances such as the volcanic ash disruption. On an ongoing basis, the airport management is in discussions with airlines to encourage the introduction of new services from Shannon. Already this year, services to four UK cities were introduced from July 2010 by the Aer Lingus regional-Aer Arann franchise. Marketing efforts are continuing with a number of airlines on other short haul routes.

In addition I expect both the DAA and the Shannon Airport Authority to exploit the opportunities available with the US preclearance facility at Shannon to increase passenger traffic through Shannon Airport. Currently, Shannon Airport is the only airport in the world outside the Americas which offers full preclearance services. US preclearance has the potential to deliver significant new business for Shannon Airport.