Decision on future of airport delayed

SPEAKING in Shannon last Friday, Transport Minister Leo Varadkar acknowledged that he wouldn’t meet the Easter target he had set for a decision on the airport’s future.
Minister Varadkar wouldn’t say when exactly a decision would be announced.
“That’s not a question I can answer because what we’re doing at the moment is with due diligence. As I’m sure you can understand, Shannon Airport is involved in this, the DAA is involved in this, Shannon Development, four Government departments and various other entities as well, so we have to go through all sorts of things like loan agreements and debt issues and you name it.
“The plan is to go to Government for a decision in principle in April and to carry out the process from there. It’d be silly for me to put a deadline on it.”
During his address to the Shannon Chamber’s spring lunch, the minister noted he had never intended to make a significant announcement on the day.
“I’m not here, and it was never my intention to be here, to make a dramatic announcement about the future of Shannon Airport. If that is made, when it will be made, is after a Government meeting or in the Dáil, which is the appropriate place for such an announcement.
“What I can perhaps do is give you some insight into what has happened since I was last here and how my thinking and Government thinking has developed in that regard.”
He told the meeting that after the Government reaches a conclusion, a lot of preparatory work will still need to be done.
“It is still my intention to bring a proposal in principle to Government in April but not before Easter, unfortunately. From then on, if the Government makes that decision, [there will be a need] to then spend a few months after that with an interim board or task force developing a detailed business plan and working out the necessary legislation changes that have to be made and all the other consents.
“I want to be able to do that very quickly because I am conscious that the uncertainty about Government policy is not good for business. People say it to me all the time and I accept that,” he concluded.

Shannon may follow IFSC example

DUBLIN’S IFSC provides a model that can be followed to revitalise Shannon’s flagging fortunes, Minister Leo Varadkar stated.
The minister said developing an international centre for aviation at Shannon, which would mean bringing in new and cutting-edge industries, is something that is being looked at closely.
“I think what we need really in Shannon is a major initiative to turn the airport and the airport complex around, in order to bring investment and jobs into the region. What is now envisaged, probably the closest example I can think of is the IFSC in Dublin. That was a place near the Dublin Docklands that was in decline during the last severe recession and a decision was made by the government of the time to develop it as an International Financial Services Centre and to put in place the structures and tax incentives necessary to attract investment into that international financial services centre, which is now a phenomenal success, raising loads of revenue for the State and employing tens of thousands of people.
“ I think probably that’s the model we are most likely to propose for Shannon, the development of an international aviation-based services centre in the region based around Shannon Airport and the lands around Shannon with a view to attracting new industry. Cargo is the obvious one but not just that, also industries that don’t currently exist in Europe, things like aircraft refitting and aircraft recycling.”
Minister Varadkar said both public and private sectors would be major factors. “To work it will need some private sector involvement and certainly investment but I do agree that overall public ownership should remain in place and that the Government will need to have step-in powers, allowing us to intervene in the unlikely event that things go badly wrong. Working on this proposal has taken a little bit longer than I thought.”
Later in his speech, he said the intention is to deliver something very innovative. “Our main intention, as a Government, for Shannon is to do something very innovative and very exciting and something that is very much in tune with the early pioneers of aviation in this region.”
He also claimed separation from the DAA would allow Shannon to become much more competitive. “If Shannon was independent it could be more aggressive in attracting airlines because potentially it would be allowed to steal business from Dublin and Cork in the way that Knock steals business from Shannon. Shannon can’t do that really because it’s part of the overall deal.”
He also indicated that if it is to succeed, Shannon would not be able to carry a debt of anything like €100 million and it would need to have access to some capital.
He said passenger numbers show the need to remove Shannon from the DAA umbrella. “It’s long been my view that the halfway house that has existed between Cork and Shannon and the DAA, where there are independent boards but they have little autonomy or power, is not a situation that has worked. It’s something that is going to change. I’m of the view, and the Booz Report backs this up, that the ongoing decline in Shannon will not be reversed while it’s tied to Dublin and Cork. It will continue unless there are big changes.
“As you know, passenger numbers in Shannon are down a lot. They’re back to where they were in the late ’90s, which is going back very far, whereas Dublin and Cork are down to where they were five or six years ago.”
The minister said cost cutting at the State airports will continue, while he also said work on military and cargo pre-clearance is continuing.
“The DAA will continue to implement its cost-cutting plans across the airports as it has to do. The department is continuing its efforts to negotiate military pre-clearance. That’s now happening at quite a high level. We hope to make real progress on that sooner rather than later. Of course, we’d like to move onto cargo pre-clearance as well but as things stand, the US authorities aren’t particularly interested in talking about that.”

Knock passenger numbers still on the up

THE minister wouldn’t stand over an earlier claim that Shannon is in danger of being overtaken by Knock in 2012 but he did express a view that Knock could win more passengers than Shannon quite soon.
In an interview on local radio earlier this year, he said it was “reasonably likely or a fairly good chance that Knock will overtake Shannon this year”. This was despite Shannon having well over twice as many passengers as Knock in 2011.
Speaking to the media last Friday, he changed tack slightly. “I think if the trends continue it will happen. It may not happen by the end of 2012 but if the trends continue as they are, it will happen because the [Shannon] numbers are down 20% this year on this time last year and Knock is still growing, so it’s only a matter of time without a change of policy.”
While some of his rhetoric, which has frequently championed Knock at Shannon’s expense, has caused anger at the airport, he claimed he does not want to see Shannon being overtaken.
“The trend at the moment isn’t good. Shannon has less passengers now than it had back in 1997, for example. In that same period, Knock has increased its passenger numbers by 350%. Even though both airports operate in the same economy in the same country, the trend in Shannon is down and the trend in Knock is up. So if nothing is done, of course that will happen sooner or later but that’s not what I want to see happen. It’s a State-owned airport, it’s a huge asset and it’s very important to the region and the objective is to arrest the decline and make Shannon once again a centre for growth and investment and employment.”
Knock has received significant funding in recent years and in the week the minister visited Shannon, Minister Michael Ring announced an international marketing campaign for its Knock routes. In addition, at the end of last year it was pledged €4.1 million in capital funding over the next three years.
However, in Shannon, the minister refused to concede that Knock has received preferential treatment. “I suppose it depends how you look at support. Knock does receive exchequer support and Shannon doesn’t but Shannon indirectly receives support from the DAA group. The financial transfers from the DAA group to Shannon are nearly three times the exchequer’s contribution to Knock so you could argue that Shannon is getting a lot more support.”
The claims regarding support are on shaky ground however, as it arrives in the form of a subvention, which needs to be paid back, rather than a simple grant, which does not.