Challenges ahead for newly independent airport

APPOINTING a new CEO and board, increasing passenger numbers, reducing costs, developing an International Aviation Services Centre and developing Shannon’s wider property portfolio are all important challenges, as is getting support from the public and business, according to Rose Hynes.

 

The chairperson of the new Shannon Airport Authority identified these matters as the key tasks looming when she spoke to the Oireachtas Joint Committee on Transport and Communications on Wednesday morning.

She said the process of recruiting a CEO is underway and the “timely and successful conclusion of this CEO search is one of my immediate priorities”.

Getting the right board in place is something that must be done soon, she added. “The new dynamic in Shannon means that we require a strong, cohesive, committed and internationally experienced board. The board will also have an important role in the transfer and integration of the property portfolio and employees from the restructured Shannon Development.”

Shannon has lost over 60% of its 2007 passenger numbers and bringing about some sort of recovery in this area has to be a priority. Ms Hynes said there are some grounds for optimism about 2013 but much needs to be done.

“A number of airlines have already announced new Shannon services for this coming summer: United Airlines will operate a Shannon-Chicago route, US Airways will serve Shannon-Philadelphia, while Aer Lingus will add a Shannon-Faro service to its existing network. While these new services are very welcome and while I am confident they will be successful, they are not sufficient. The airport’s focus has to be on developing our commercial passenger numbers to a sustainable level.”

She said a range of new services need to be brought to Shannon and added that talks with certain airlines are at an advanced stage.

“In order to increase our passenger numbers, Shannon will have to attract a range of airlines, for short and long-haul routes, and also airlines making transit stops en route to North America. We are in discussion with a range of airlines and a number of those discussions are particularly advanced. The committee will understand that I am unable to be more precise for reasons of commercial confidentiality.”

Costs will have to be cut to bring Shannon into line with competitors, she stated. “We will be working hard to boost revenues but we also have to look carefully at our costs and that’s one of our challenges.

“The task force report noted that the new Shannon entity will have to deliver conspicuous value for money, whether to win new airline business or to attract new industry and this will require a competitive cost structure. The airport’s cost base is currently higher than its industry peers, partly because of its reduced traffic levels. Productivity improvements and flexible work practices can help to reduce this disadvantage.”

She claimed Shannon has the potential to be a major global aviation cluster. “We need to be out there selling Shannon and the opportunities it offers. We need to be attracting businesses, attracting airlines, giving people a reason to fly to and from Shannon, and also developing our wider property portfolio and working with its existing businesses.

“We will also work closely with the IDA and Enterprise Ireland to win new job-creating investments, boost opportunities for our existing businesses and develop our property portfolio.

“Shannon has advantages as an aviation cluster that do not exist at competing locations abroad. It has ample space. It has a skilled workforce. Some 1,600 people already work in aerospace companies in and around Shannon, so this cluster is not being created from nothing. Shannon also has strong links with the aircraft leasing community.”

With regard to getting support from the public and businesses, she said, “One further challenge facing us, is that of winning buy-in from people and businesses who want to believe but who have perhaps witnessed the decline of Shannon over the years. My task, and that of the CEO, the board, the management team and the staff of the new Shannon entity, will be to create the foundation for that belief.”

Last year, Ms Hynes chaired the Government-appointed Aviation Business Development Task Force on Shannon.

She said that in the course of her work on the taskforce, she found there was huge support for Shannon and an appreciation of its potential.

“In the course of my taskforce’s work, we met with over 100 stakeholders, including local councils, public representatives, international airlines, aircraft manufacturers, indigenous and multinational businesses and educational institutions. I and my colleagues on the taskforce were repeatedly struck by the level of stakeholder support for a reinvigorated Shannon, not just as an airport but as a broader centre of aviation excellence.

“It is important to emphasise that what I and my colleagues repeatedly heard was not some romantic nostalgia for Irish coffee and thatched cottages but a measured appraisal of the global opportunities in aviation and a recognition of how Shannon is well situated to grasp and benefit from some of these opportunities.”

Sligo senator seeks ‘proportionate support’ for Knock
AFTER the separation of Shannon from the DAA, Knock Airport representatives were quickly out of the blocks to claim the Clare airport was being given an unfair advantage and Sligo Fianna Fáil Senator Marc Mac Sharry jumped on the bandwagon this week, lodging an official complaint with the European Commission.
In an interview with The Clare Champion on Tuesday, Senator Mac Sharry outlined his thinking and claimed he is not an opponent of Shannon.

“The Clare narrative to me seems to be Mac Sharry is a bad guy, he wants to close Shannon down. Absolutely not. My statement doesn’t say that, the complaint doesn’t say that. What I’m saying is we need to take a strategic approach to aviation in this country and in doing that, while supporting Shannon to the full extent that has been outlined, proportionate support should be afforded to Knock; that’s all.”
He claimed the separation agreement benefits Shannon to the tune of €300 million but some of his reasoning was very questionable.

While Shannon’s debts, which were estimated at €100m, were left with the DAA after separation, it also lost all claim to the ultra-lucrative Aer Rianta International (ARI), which made a profit of €35m as recently as 2011. Many in the Mid-West have argued that Shannon would be in a stronger position if it retained both the €100m debt and ARI.

Senator Mac Sharry also stated that after having its debts written off, Shannon would save €5m a year in interest payments. While Shannon will obviously be spared interest due to the debt staying with the DAA, surely savings on interest can’t be legitimately added to the €100m debt relief in any analysis of how Shannon is benefiting.

While he also mentioned Shannon Development’s property portfolio going under the same structure as the airport, he didn’t mention that Shannon Development lost over €37m in the years from 2009-11.
He said that although Knock isn’t a State airport, it shouldn’t be considered a private operation either.

“The State’s position on Knock is that other than operational expenditure and capital expenditure supports, it’s a privately-owned airport. We don’t see it as a privately-owned airport, it’s a community trust. There aren’t people who profit from it.”

The Sligo man wasn’t expecting much of a hearing in Clare.

“Your readers probably want to see a particular line anyway, so what I say is probably irrelevant. Let me say, I am all for Shannon and supporting it but I also want to see Knock supported and I believe both can be and it’s only a proportionate level of support [that he is seeking] and I’ve used this mechanism to try and highlight that and to focus the minds of Government.”

Clare TD Timmy Dooley is Fianna Fáil’s spokesperson on Transport and he wasn’t a bit pleased with the complaint.

He said the senator was acting off his own bat. “It’s a solo run that’s in parallel with comments made by the people at Knock Airport. The management of Knock have been putting it out that Shannon has received favourable treatment. There’s nothing that could be further from the truth. The reality is that Shannon is being cut adrift without access to the kind of financial support that it had while it was part of the DAA. It no longer has access to the revenues of Aer Rianta International. Shannon is in a weakened position and will find it difficult to trade and survive. That’s why we’re all now committed to trying to get Shannon to a viable position.”

He said he had spoken to the senator on the matter. “I’ve already spoken to him and made it very clear that his position is at variance with party policy. He accepts that and that the position he has taken is in a personal capacity and doesn’t represent Fianna Fáil policy.”

Clare Fine Gael TD Pat Breen criticised both Senator Mac Sharry’s complaint and Fianna Fáil. “Senator McSharry appears to be pushing ahead with his plans to make a complaint to the European Commission regarding the Government decision to allow Shannon Airport to regain its independence. This is a very unhelpful development and I would urge Senator McSharry to consider withdrawing his complaint. The independence of Shannon is something that has been sought for years and the Government’s plan for the airport has been overwhelmingly supported by local interests.

“Fianna Fáil has attempted to distance itself from Senator McSharry’s endeavours but it’s time the party made up its mind on this issue. Does the party want a successful, thriving Shannon in the future? And if so, why do Fianna Fáil representatives continue to talk down and hamper the airport’s best possible chance to succeed?”

Senator Tony Mulcahy also strongly criticised Fianna Fáil. “I find it particularly hypocritical of the Fianna Fáil party to be lodging such an objection to an overwhelmingly positive move for the Shannon region. It is especially baffling considering the commitments made by the party while in government to enforce the exact same changes that the present Government has introduced.”

“It is particularly disingenuous that a party that subscribed to the changes that have been introduced at Shannon have accused Fine Gael and Labour of manipulating a process, which will ensure the demise of Ireland West Airport Knock.

“Senator MacSharry’s move represents the parochial politics that the people of this country have grown tired of. The simple truth is that Shannon is a special case and its future survival is critical to an entire region’s economic interests,” he said.