THE current Aer Lingus ownership structure gives no guarantees on the provision of Shannon-Heathrow services, group strategy director of Shannon Group, Patrick Edmond said at the Oireachtas Joint Committee on Transport and Communication.
Various political interests have called for the State’s shareholding in Aer Lingus to be retained, claiming it ensures connectivity for the Clare airport. However, Mr Edmond said that is not the case, pointing out that in 2007, Aer Lingus management, under the same ownership structure as exists now, transferred all of the Heathrow slots serving Shannon to Belfast.
While Clare TD Timmy Dooley challenged him, Mr Edmond stood firm on his observations.
In his first contribution to the sitting, Mr Edmond said that if the Government does opt to dispose of its 25% holding, it should make sure it gets some guarantees around connectivity.
“We would, therefore, expect that any Government decision to sell the State’s Aer Lingus stake to IAG would be conditional on an enforceable agreement, which would have at least three key elements. First, it would safeguard service levels, with frequency of flights and their spread throughout the day, between Heathrow and Irish airports, including Shannon. Second, it would ring-fence these slots on an airport-specific basis, rather than as an aggregate number for the whole country. Third, it would provide long-term clarity, for example, for 15 years or until a new runway is in operation at Heathrow, whichever is earlier.”
Following on from his contribution, Deputy Dooley said he was “disappointed” and that he hoped Mr Edmond’s ambivalence about a sale with some conditions isn’t shared by the airport’s board.
“Perhaps it may not be Mr Edmond’s fully thought-out position but I would hope that all of the witnesses who have an interest in this would seek appropriate legal advice and develop a position that understands the limitations of any such guarantees and binding warranties.
“To be honest, when it is gone, it is gone and one has little chance of exercising control over it and now is the time to deal with that.
“Generally in any takeover, for example by a bigger company of a smaller company, it is usually the seller, not the buyer, that issues the warranties. There is a wish list being exercised here that nearly expects that the tooth fairy will appear and resolve the problem. This does not happen in the real world. Let us be honest about that,” said the East Clare man.
He added, “Mr Edmond has spoken clearly on the importance of regional connectivity. The only way that such can be achieved is by the State’s retention. There are complications and there are difficulties. We have seen it in Shannon in the past even with a State shareholding in how management were able to orchestrate a certain strategy that saw Shannon deprived of slots for a period of time and a lot of work had to be done since, in terms of ensuring that the board had the appropriate level of representation and was in a position to prevent that happening.”
Later in the sitting, Mr Edmond reiterated that Shannon Group want to retain connectivity and said it doesn’t have any guarantees under the status quo.
“I wish to be very clear that our position is that the preservation and retention of our slots and connectivity is foremost in our minds. We recognise that the existing Aer Lingus shareholding structure does not give that reassurance, as those in the Shannon and Mid-West regions know very well from the experience of 2007. In the event of any change of ownership of Aer Lingus and as a precondition of any potential sale of the Government’s stake, we would look for enforceable agreement to preserve that and would not be in favour of any sale which did not protect the slots. We are very clear on that.”
Following a question from Deputy Joe Carey, he outlined the importance of Heathrow connectivity to the Mid-West.
“In terms of the risks involved for the Shannon Region, on Heathrow Airport services there were 234,000 passengers last year. Of these, about 75,000 were business passengers; therefore we can reflect on the significance of that number for the region in terms of the volume of business traffic. Some 60% of all passengers are inbound. They are business people coming into the region to promote economic activity or tourists coming to travel along The Wild Atlantic Way or make use of other tourist facilities in the region. The risk of losing that economic activity and the ability to develop is extreme.”
He also spelled out the importance of Shannon having links to America.
“Regeneron, the US pharmaceutical company, which recently established in Limerick its first non-US operation, has been explicit in stating that, to some extent, connectivity with Shannon Airport was fundamental to its decision. As my colleagues from the chambers of commerce will be able to tell the deputy, the area in the arc from Mayo and Galway through Clare and Limerick is home to a large number of pharmaceutical, medical devices and ICT companies, many of which are US multinationals, which make extensive use of transatlantic services.”