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Ryanair plane landing at Shannon. Photograph by John kelly.

New deal may generate €1.5 million in Shannon Airport revenue

By Dan Danaher

The delivery of 300,000 extra passengers from eight new routes announced by Ryanair could generate up to €1.5 million in income for Shannon Airport.

Michael Cawley, deputy chief executive and chief operating officer of Ryanair, told The Clare Champion that a typical airport like Shannon can earn between €9 and €10 on car parking and retail goods for each additional passenger departing the airport, with a net profit of about €5.

Mr Cawley claimed that larger airports in London made far more than the net profit of €5 per passenger, while Pisa airport earns €9 net profit per passenger.

“Shannon is where duty free started. Neil Pakey did a great job when he was in Liverpool Airport. He will get the last cent out of every passenger going through Shannon Airport by optimising this with good service, good product availability such as good coffee in the shops and efficient pricing to maximise the overall yield.

“The airport is like a shop and we are like the bus that brings people to that shop,” he said.
ACI consultants have estimated that 300,000 passengers generates up to €150 million for the local economy and 2,500 tourist jobs.  There are about 250 people directly employed at Shannon Airport and the latest Ryanair deal will generate an estimated extra 300 jobs at the airport. The provision of an extra aircraft will generate an additional 45 jobs in Shannon, according to ACI.

Shannon Airport chief executive officer, Neil Pakey, declined to divulge the exact net profit generated by every additional passenger when questioned by The Clare Champion, describing this as “commercially sensitive information”.

“An airport makes its revenues out of aviation income and non aviation income such as car parking, retail and catering. The numbers we have put into our business plan stack up,” he said.

Asked what the latest deal is worth to Shannon Airport, Mr Pakey stressed that management didn’t know on the eve of the announcement on Wednesday night last week how many new routes Ryanair was going to announce.

“We will go back and do our computations. We do know the new deal does work. The match has been made with the right locations, which bodes very well for 2014,” he said.

Commenting on the ACI figures, he explained this is an industry average across Europe and felt Shannon should be close to this. He stressed even the addition of sun spots to and from Shannon create jobs, as they needed travel agents and cabin crew to ensure they operate efficiently.

“Even an outbound destination where 90% of the passengers will be going on holidays, they still stimulate jobs in Shannon. It is not right just to think that only inbound flights create jobs. The inbound flights to create more jobs because you have the whole supply chain, tourism and hoteliers who will be really happy with this announcement.

“The number of Germans in this country without any new air services was quite strong last year. The new routes provide a very good variety for Shannon with the inclusion of some very strong European cities, which will bring in a lot of tourists,” he added.

Asked about concerns that Fáilte Ireland may put more of an emphasis on Dublin at the expense of Shannon during its marketing strategy, Mr Cawley responded, “Ryanair will always have more passengers in Dublin than Shannon but that doesn’t take away from people who want to come to the West of Ireland.

“Ryanair flies five times a week from Frankfurt to Kerry. Why can’t we fly three times a week from Munich to Shannon, or twice a week from Berlin to Shannon, why not? Of course we can. There are people who want those kind of holidays. A minority of them want to fly to Madrid or Barcelona, while the rest want to fly to the Costa del Sol.

“I wouldn’t worry about marketing. Shannon will get its share and Ryanair will make sure it gets its share,” he vowed.
Mr Pakey recalled that when he came to take up his new position as CEO in Shannon a few months ago, the US market was starting to pick up. He stated transatlantic is now a very good market for Shannon with lots of different carriers

“The European market was very weak so this Ryanair announcement helps strengthen that market. We are talking with UK airlines feeding Shannon as well. Overall, we are covering all the bases by developing different markets,” he added.

Mr Pakey pointed out this comes just a week after United Airlines announced 88% expansion of capacity on their Chicago route.
He confirmed the airport is actively engaging with other Irish carriers as well to increase their business in Shannon.

“Shannon has a long history with military transit traffic. We don’t really plan for military traffic because how can you, it ebbs and flows in terms of transits,” he outlined.

Mr Pakey stressed the Shannon Airport Business Plan doesn’t rely on military traffic because it is not a forecastable traffic. He pointed out the mainstay of the airport business had to be passenger, transatlantic and cargo.

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