Council favours Shannon Airport ownership role

CLARE County Council has recommended that Shannon not be privatised and has instead identified a preferred option of the airport being run by local public sector agencies.

The Government has appointed Booz & Co as consultants to identify alternative models of control and operation for Shannon and on Monday, the council agreed a submission to be given to the consultants, which argues against privatising Shannon or offering a long-term lease without public sector involvement.
In its submission, the council also acknowledges, “the option of retaining the status quo is not a realistic option”.
With regard to privatisation, the submission states, “Divesting ownership of the airport and the transfer of the airport and its assets to private, profit-driven operators would be a matter of serious concern for the region.
“In the event that the airport and property were transferred to the private sector, there would be the danger that asset stripping would occur and that the operation of the airport and the development of the airport land bank would be driven solely on the basis of maximising short-term profit, rather than ensuring the sustainable development of the airport and land bank as a strategic asset for the region.”
It also states that terms and conditions attached to any disposal of the airport “would be critical”. The submission also states that enforcing any such terms and conditions would be very difficult.
With regard to offering the airport on a commercial lease, it states there may be similar issues to fully privatising Shannon. It also found that a leasee wouldn’t have an incentive to make improvements.
“As in the case of privatisation, a commercial lease without public sector involvement would be profit driven, rather than public interest driven and this could lead to a concentration on financially lucrative routes at the expense of routes that would meet the needs of the people and businesses in the region.
“In addition, as ownership of the airport and the adjacent landbank would not transfer to the leasee, there would be no incentive for the leasee to invest in the facility or to develop the landbank.”
The option the council favours is keeping State ownership of Shannon and its landbank by vesting them in local public sector authorities, who could involve regional private sector interests and/or issue concessions for operational services.
“This model would have a number of distinct advantages in that the public sector authorities have a vested interest in the sustainable development of the region. In addition, the public sector authorities, particularly the local authorities, are statutory bodies, which have been and will be in existence for the foreseeable future, therefore, authority for the airport and adjoining landbank would be vested in the people of the region through the democratically elected local authorities on a long-term basis.”
The submission states the proposal would inspire confidence in future investment and that the ability of public sector authorities to work together is shown in an initiative to develop a Strategic Integrated Framework Plan for the Shannon Estuary.
Shannon Airport is believed to be losing in the region of €150,000 a week and the submission states taking on Shannon couldn’t come at a cost to local public sector bodies, many of which are already facing significant difficulties.
Speaking to The Clare Champion, county manager Tom Coughlan said the council members had been solidly behind the proposal. He also said a number of different agencies could be involved.
“The airport would remain in State ownership, through the public sector authorities in the region. Now that isn’t just Clare County Council necessarily, that could be the local authorities in the region, the local authorities with Shannon Development, it could be the local authorities, Shannon Development and Shannon Foynes port. It’s the public agencies operating in the region.”
He said all relevant figures would have to be made available before the council’s proposal could be acted upon. “You’ll see in the report that it’d be imperative that the airport not become a financial liability for the local public sector agencies. The next question is how do you achieve that? The first thing is that there would have to be due diligence.
“If the airport was going into private ownership there would be due diligence. In other words, the private sector operator would sit down with the department and want all the facts and figures on the table.
“They’d want to know all the transfers between Shannon and Dublin; they’d want to know how much Shannon is paying by way of capital debt repayment, what that repayment is for and what the levels of depreciation being charged against Shannon are. There are all these financial questions.
“I know it’s being reported that Shannon is making a loss but we don’t know how that loss is being made up, there may be ways of reducing or eliminating the loss. It depends on what type of an arrangement the local public sector authorities enter into with the department as regards debt write-off. If that were agreed and Shannon were to go on its own with a clean balance sheet, that immediately gets rid of debt repayment,” he concluded.