Moroney claims Ryanair reneged on deal

SHANNON Airport Authority’s (SAA) five-year deal with Ryanair made in 2005 came sharply into focus this week amid claims from airport director, Martin Moroney, that the airline had reneged on the deal.

During an address to the Mid-West Regional Authority, Mr Moroney claimed one of the reasons for the dramatic decline in passenger numbers at Shannon Airport was Ryanair’s failure to meet its commitment to deliver two million passengers in the fifth year of the deal.
Responding to claims about the Dublin Airport Authority’s lack of support for Shannon Airport, he stressed that in the region of €100 million has been spent in Shannon on new facilities and restructuring of its cost base over the last three years, including €21m on the new pre-clearance facility.
Despite being hit by the recession, the ending of the compulsory transatlantic stopover and the dramatic reduction in Ryanair flights, he projected Shannon would have in region of 1.7 million passengers by the end of the year, something he claimed is reasonably satisfactory in the circumstances.
Reacting to the claims, Ryanair’s Stephen McNamara said, “Shannon Airport’s traffic over the past three years has collapsed from 3.6 million to just 1.5m, while Ryanair has grown from 51m to 73.5m passengers. Shannon’s response to this collapse has been to hike passenger fees by 33% from November, when inflation is 0%, which will be the final nail in Shannon’s coffin. Perhaps Martin Moroney should explain why Ryanair is booming while Shannon is collapsing.”
Commenting on the Ryanair deal, Mr Moroney recalled the company revised their annual target from two million to 1.2 million, which it “hadn’t any right to do” and confirmed the airport is pursuing legal action in terms of adherence to the contract between the two parties.
He told councillors that while Ryanair blamed the Government’s €10 travel tax for the reduction in its targets, he personally believed the global recession and drop in people’s incomes had led to a dramatic reduction in the use of flights worldwide. He felt the €10 tax is not a major deterrent for prospective passengers.
In year five, he claimed that 70% of the passengers on Ryanair flights out of Shannon Airport were on outbound flights, with only 30% on inward flights.
During the first few years, he claimed the majority of passengers on Ryanair flights were coming in from the United Kingdom and European destinations but this moved to a different model with more and more Irish passengers going abroad to these locations.
Once the five-year deal ended, he claimed Ryanair was only prepared to pay half of the airport charges to provide in the region of 600,000 passengers annually.
He claimed that while airlines are willing to pay a reasonable amount to use Shannon Airport, Ryanair seem to want to be able to use an airport for next to nothing.
He added that Ryanair is the only airline who made a “hullabaloo” about the recent €1.58 increase in airport charges, which would not buy a half-pint of alcohol.
He confirmed Shannon Airport is still interested in providing an incentive scheme to airlines, including Ryanair, over a five-year period with the full airport charge only being applied in the fifth year, once certain targets are met and if a route isn’t profitable within three years, it isn’t sustainable.
“We are extremely happy that Ryanair are still in Shannon, providing 400,000 passengers annually paying full charges. If we were to apply the charges Ryanair wanted across the board, it would decimate our revenue base. There are carriers willing to pay proper rates. Even if we were in a position to pay nothing to staff, it still costs money to run an airport,” he explained.
In his wide-ranging presentation, Mr Moroney admitted Shannon Airport is also hit by the removal of the transatlantic stopover, which was introduced over just 17 months without any major financial support.
He also hit out at the “negativity” expressed by business people, public representatives and the media about the future of the airport.
“Shannon Airport is facing a fight for survival like many airports in the current economic climate. Shannon Airport is no different from any other business in that it has to be able to sustain its activities. It is very difficult to see all this negativity in the media and among business people about the airport.
“Shannon Airport is not in terminal decline and statements that grass will be growing on the runway are ridiculous and very dangerous. Shannon Airport, as a facility, is second to none in terms of its runaway and terminal, which we hope to make even better,” he said.
“Shannon Airport is a commercial entity. It should be self-financing and profitable. It gets no Government subsidies, compared to some regional airports like Galway, which gets about €2.3m annually. Shannon’s charges are still cheaper than Dublin’s and are about the same as Cork’s.
“Shannon has reduced its staff by half, has got rid of a lot of business and have reduced our costs as low as we can. We still have to pay rates, insurance, energy and other costs,” he added.
Members of the regional authority had asked SAA chairman, Brian O’Connell, to address the meeting. However, regional director Liam Conneally confirmed he was unable to attend but had pledged to address members in the near future.
While Mr Moroney stressed he was not speaking on Mr O’Connell’s behalf, he pointed out he and other members of the SAA were fully committed to providing a viable future for the airport.
While open skies is now in operation for over two years, he confirmed Delta and Continental are happy with their performance in Shannon and the airport is working with them to try and expand services.
Acknowledging the withdrawal of Aer Lingus transatlantic services from January to March next is very difficult for the airport, Mr Moroney noted the national carrier is not a private company, which has to make commercial decisions. He noted the company wishes to be in a position to provide flights all year round, which airport management support.
Although Ryanair managing director, Michael O’Leary, has claimed Shannon would not be able to sustain its transatlantic traffic, Mr Moroney expressed confidence the airport would be able to attract more transatlantic carriers.
Councillor Gerry Flynn asked if Shannon’s over-dependence on Ryanair was a mistake? Mr Moroney replied in hindsight it was easy to look back and make this assertion but in the midst of the economic boom, Ryanair was the only airline that could expand routes and passenger numbers so quickly over a relatively short period.