FF proposed amendment aims to bolster airport

FIANNA Fáíl held a press conference last Friday afternoon at which it launched the State Airports (Amendment) Bill 2012, which provides for Aer Rianta International to form part of a new independent Shannon Airport company.
Micheál Martin travelled to Shannon for the launch where he was accompanied by Clare TD, Timmy Dooley. Also there were Liam Skelly, a former director of Shannon Airport, and Michael Hanrahan who served as head of finance there.
The loss of ARI to Shannon has provoked outrage in some quarters, given it was started by Shannon executives.
ARI is a huge revenue generator and Mr Dooley said it must be kept in local hands, to secure a viable future for Shannon, which is critical to the entire Mid-West.
“We’re deeply concerned that the current Government have decided to proceed with separation without giving Shannon the protection into the future.
“We expect that they will announce the details shortly of arrangements with Ryanair and perhaps other airlines, but I think we’re all very clear that hitching your boat entirely to the Ryanair brand leaves you open to potential difficulties into the future.
“We accept that the Government are going to proceed with separation, we don’t agree with it, not at this time anyway, but if that’s the decision that’s taken then it’s imperative that Shannon be provided with the appropriate means to survive into the future, meet the challenges that are there, and put it in a position where it has an appropriate income base to survive and grow.
“That’s why we’re publishing an amendment to the 2004 State Airports Act, we’re calling it the State Airports Amendment Bill 2012, and it effectively assigns ARI to the Shannon Airport Company when and if it’s separated at some future time.”
He said that if Shannon had been in a separated environment and left without ARI, it would have had to close by now. “It’s clear even through the boom times, from 2005 onwards, where Shannon succeeded in doing a deal with Ryanair and increased traffic, it was still not able to reach a point where it was viable as an independent entity.
“For that reason the previous government never proceeded with full separation. It was the intention to give the airport more autonomy, it was tried, in a careful and phased way, by appointing an independent board, giving them autonomy to do their own deals which they did, but sadly even after a period of prolonged growth in the Irish economy, the airport was not a viable entity and we saw Ryanair pull out, which left Shannon in a perilous state.
“Were it not for the fact that Shannon was part of the DAA it certainly would have closed by now, had it been independent.”
While Shannon will be given debt free status after separation, Mr Dooley said this wasn’t an adequate substitute for the loss of ARI.
“The minister – and his party generally – are seeking to suggest that if you get a debt free situation at Shannon it’d solve the problem, but I think we’d be happy to take the debt if we had a revenue generator of whatever it is, €9-€10 million, which would more than deal with that and leave money in reserve to maintain the base and more importantly to provide a marketing fund.”
It’s expected that the new entity will be given the power to offer incentives to attract aeronautical industries to Shannon.
However, Mr Dooley said he doesn’t feel this is adequate and that the importance of Shannon as a piece of infrastructure needs to be realised.
“There is good work being done by the steering group and the business development unit that has been established and is looking to bring new business into the airport. But that’s very long term, they’re talking about special designated status for the airport and the region, to bring in more aircraft ancillary business, but there are already a number of companies in the region doing that anyway.
“It’s long term to get additional companies to provide revenue to assist the airport in its independent operation. Sadly, the Minister has said in the last number of days that Shannon has to be commercial, has to be able to survive on its own and his attitude has been to let it sink or swim.
“We don’t take that attitude with key infrastructure, with the tunnel in Limerick the State still provides funding to keep it operating, we don’t do it with the N18 or the Ennis bypass and I don’t think we can do it with this.”
He reiterated that the State will not necessarily be allowed to provide any support to Shannon, following independence.
“The difficulty when Shannon is separated is that under EU State Aid rules, the State will not be permitted to make any investment in it. It’s seen as a distortion of competition.”
The new entity that runs Shannon will also have what is now Shannon Development’s property portfolio. However Mr Dooley doesn’t feel this will make the airport viable.
“The difficulty is the property base that Shannon Development has. In 2006 and 2007 it might have been appropriate. The difficulty is they have taken a very significant hit on their rent roll. They have lost a number of tenants, they’ve had to rearrange their leases. Their stock of property is very old, it needs very significant investment even to retain its current rent roll.
“Quite frankly, Shannon Development as a cash generator is hugely compromised and will not be able to support Shannon Airport. It was barely able to meet the commitments it currently has.”
His party leader agreed that the importance of Shannon to the wider region is not being considered fully, and that profitability shouldn’t be the only consideration about its future.
“Fundamentally, I think airports have to be seen as strategic infrastructure. You can look something as a standalone commercial entity or as a critical piece of infrastructure. We’re an island nation, we’re in the worst collapse since the late 1920s.
“The origins of Shannon were about that notion of strategic infrastructure to facilitate regional economic development. I know there’s a balance between providing safety nets that breed inefficiencies, but from my perspective as leader of the party I see the airports, particularly the major airports as strategic infrastructure, without which we can’t operate regions from an industrial perspective and a tourism perspective, connectivity is everything.”