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Freed Shannon Airport facing industrial unrest


On Wednesday evening, SIPTU official Tony Carroll said their members are already balloting for strike action. “We’re balloting because no assurances have been given to anyone and nobody knows what’s happening,” he commented.

He said they want their members to be allowed to remain employees of the DAA. “We’re looking for the staff to be seconded to Shannon Airport rather than transferred to Shannon Airport. They’d remain DAA staff but be working in Shannon.”

Shannon should have been left with the DAA he claimed. “What we are saying is that all they are planning to do could be done under the DAA. One of the problems is that the DAA has had a mixed mandate as to what it was supposed to be doing.”

At the separation announcement in Dublin on Monday, guarantees were given that there would be no compulsory redundancies but the prospect of negotiated changes to terms and conditions was raised.
The report of the Aviation Business Development Taskforce was published this week after the announcement and it would have offered little comfort to employees, as several times it stressed the importance of the airport having a competitive cost base.

While the report stated that a recovery at Shannon Airport is possible, it notes traffic could actually decline if it doesn’t become more competitive, while it states that up to 3,500 jobs can be created locally through the creation of an international aviation services centre.

The taskforce was set up in late May after the decision in principle was taken to separate Shannon from the DAA. It was headed by Clare woman and Bord Gais chairperson, Rose Hynes and the final report contains 52 recommendations.

With regard to competitiveness, it found that Shannon has much work to do.

It stated the airport’s “cost base is currently higher than its industry peers. Productivity improvements and flexible work practices can help to reduce this disadvantage. Unless the new entity can align its cost base with that of its competitors, it will be unable to compete and to develop its activities.”

Some details of the targets set in the business plan for the “newco” combination of Shannon Airport and Shannon Development are included. The report said that while they are obtainable, airlines would have to be offered good deals.

“The taskforce notes that the business plan projects 2.3 million passengers within five years and 2.5 million passengers by 2021. It is the view of the taskforce that these targets are entirely achievable, potentially even earlier than provided for in the business plan. In conjunction with continuing cost control and an improvement in commercial revenue per passenger, attainment of the business plan passenger targets would bring the airport’s operation to sustainability. The taskforce report notes the achievement of this level of increased passenger traffic will require the airport to be able to offer a competitive charging structure to airlines.”

It states that on leaving the DAA, Shannon will be able to offer incentive deals, something that makes addressing the cost base even more urgent. “Airports are under increasing pressure from airlines to offer highly competitive commercial terms. Airlines are increasingly influenced by airport charges in their new route decisions and for Shannon Airport to attract significant additional traffic, it will have to be able to offer a highly competitive charging structure to airlines. This in turn underlines the importance for the airport of being competitive in terms of its cost base.”

The taskforce spoke to aviation-related companies, securing agreement with some on bringing a substantial amount of new jobs to Shannon. It also spoke to airlines, with announcements on new services expected in the new year, following Shannon’s separation from the DAA.

In its executive summary, the report claims a huge number of jobs can be created in Shannon in the medium term. “An international aviation services centre (IASC), as outlined in this report, is conservatively projected to create and maintain 3,000 to 3,500 new direct jobs within five years, not including construction jobs.”

It said it already had success in obtaining commitments to create jobs. “The taskforce has been able to obtain specific commitments from two existing Shannon companies to expand their employment there in the context of an international aviation services centre. These commitments account for almost 1,000 jobs in the next three to five years and are contingent on the separation of Shannon Airport from the DAA.”

At Monday’s launch, it was claimed that companies have already given commitments to create 1,000 jobs in Shannon.

While is no official word as yet, it is understood one of the companies creating these jobs will be with Russian airline, Transaero.

Transaero acquired Air Atlanta Aero Engineering’s Shannon base earlier this year and are carrying out work on aircraft there. It is understood they have expressed an interest in taking over the maintenance hangar currently owned by Aer Lingus at Shannon.

Transaero are also seeking what are called fifth freedom rights, which would allow them to bring passengers from Moscow to Shannon, collect more passengers at Shannon and use the US preclearance service there, before continuing onwards to Miami, where the service would terminate.

According to the report, the commitments already received “demonstrate the feasibility of the overall job-creation scheme” and are also contingent on the separation of Shannon from the DAA.

The landbank around the airport offers an advantage that few other airports enjoy and the report says sites for development have been identified. “Shannon Airport’s extensive land holding [about 850 hectares in SAA ownership plus a further 250 hectares in the adjacent Shannon Free Zone] gives a potential for aviation-related industrial development, which is lacking in the majority of airports. While sites for half a dozen large aircraft maintenance hangars have already been identified, further expansion of airside facilities would be possible either by building to the north of the main runway [necessitating some extension of local services] or by extending the airside boundary to encompass some parts of the current Shannon Free Zone, which could be developed.”

It acknowledges that some of the buildings in the free zone “are legacy light industrial facilities in a relatively poor state of upkeep and which were already earmarked for demolition and redevelopment in the existing Shannon Development Master Plan.”

While the report is quite upbeat, it notes there are a number of risk factors that could derail Shannon’s prospects.

It says it is crucial that a dedicated and effective marketing effort be made in parallel with the existing industrial development bodies and an appropriate package of incentives be provided. “Failure to put both these elements in place will mean that Shannon and IASC fail to live up to their full potential,” the report warns.

It also warns that providing the necessary infrastructure is absolutely vital. “The provision of infrastructure such as hangars, specialised terminals and parking areas is essential to attract business in many of the aviation industry sectors discussed here. This provision is in turn dependent on the ability to attract external funding and to complete both planning approvals and construction without delay.”

It concludes by stating increasing competitiveness is another must and warns that if this isn’t done, things could start getting worse rather than better. “The new IASC entity will be formed from a merger of Shannon Airport and a restructured Shannon Development. In a highly competitive marketplace, the new entity will have to deliver conspicuous value for money, whether to be able to attract new airline business or to win new industrial developments. This in turn will require a manageable opening balance sheet and a nimble, commercially focused and lean organisation, with a cost base on a par with Shannon’s and the IASC’s peers and competitors. We note that Shannon Airport’s costs are currently higher than industry peers. Failure to move progressively to reduce this disadvantage will impair the new entity’ ability to compete successfully. In particular, an inability to offer competitive charges to airlines will result in Shannon being unable to meet its passenger growth targets, or in the worst case, to the airport being unable even to maintain its existing passenger numbers.”

 

 

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