ARI is essential to Shannon

AER Rianta International (ARI) was the brainchild of Shannon-based executives in the 1980s and has proved a huge generator of revenue over the last 24 years.

 

It was established in Shannon, under the old Aer Rianta structure, which had all airports as part of one entity, but all were of equal status. However, after the State Airports Act of 2004, ARI came under the control of the Dublin Airport Authority and, rightly or wrongly, Transport Minister Leo Varadkar has said that it will stay with Dublin after the separation, something expected to happen early next year.

The importance of ARI should not be underestimated. In the last eight years it has recorded profits of €164 million. This amount is understood to be way more than the sum of Shannon’s debt.

Also, after the DAA got its hands on the ARI assets, it quickly turned them into cash. In 2006 it sold the Great Southern Hotel Group for €265 million. In 2007 ARI’s 24.125% shareholding in Birmingham Airport was sold for €315 million.

It’s claimed by some Shannon interests that this money was used for the development of Terminal 2 at Dublin Airport. While a US Customs and Border pre-clearance facility was developed in Shannon at a cost of €21 million, it’s clear that Shannon hasn’t seen much of a share of the hundreds of millions realised.

While the leading executives in ARI were always based in Shannon, within the last two years, the chief executive has transferred to Dublin, a move certain Shannon interests believe was an attempt to change the optics around giving the DAA all of ARI.

The DAA’s annual report for last year illustrated the type of profits that ARI has been making.
“ARI’s overseas business made a profit of €31.8 million in 2011, compared to €18.8 million in the previous year, as one-off factors such as the disposal of its shareholding in three Russian businesses boosted its financial performance.”

The report also said that the Irish division had done well, recording total retail sales at Irish airports of €225 million, an increase of 2% on the previous year.

Shannon is clearly losing out badly through the loss of ARI, which was developed locally and which would give it a far better chance of success following separation.

However, Transport Minister Leo Varadkar has been adamant that DAA will hang onto ARI in its entirety.

While he has claimed that ARI was developed in Shannon, he has said that this was done with funds from Dublin, something that is hotly disputed by former airport executives.

Allocating ARI to Shannon, something that those involved in setting up the company in the first place argue is the obvious and fair thing to do, would give the new Shannon a much better chance of being viable.

The reality is that if Shannon fails to turn a profit in the years after separation it’s very future will be at risk. Under EU regulations, Government support of airports is restricted and a number of European airports have been investigated, so if business at Shannon doesn’t improve following separation, it may ultimately close down, after decades as the beating heart of the Mid-West’s economy.