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No ‘for sale’ sign at Shannon…yet

SPECULATION that the Review Group on State Assets and Liabilities would call for the privatisation of Shannon Airport proved to be inaccurate but the sale of Shannon should be “considered” sometime in the future.

The report, published on Wednesday, did recommend that the Dublin Airport Authority (DAA), which controls Shannon Airport, dispose of non-core assets, primarily those abroad, in order to reduce its debt exposure. If that is achieved, then the practicalities of the privatisation of the airports could be revisited.
The sale of non-core assets would almost certainly impact on Aer Rianta International, which has its headquarters at Shannon but has duty-free businesses in a number of countries.
The report is dubious about attempts to keep a number of small airports going, several of which are in competition with Shannon, while it also states Dublin Airport has an excess of terminal capacity, following the opening of T2.
It recommends disposing of the State’s remaining 25% share in Aer Lingus and states the airline’s valuable Heathrow slots “would be deployed to their optimum use in absence of restrictions”.
While it maintains that Dublin-Heathrow would still be well served even if restrictions on Aer Lingus are relaxed, it doesn’t state what the likely impact on the Shannon-Heathrow service would be.
Regarding the smaller airports, it notes they have always struggled. “There are 12 airports in total on the island of Ireland that offer scheduled passenger services, as well as some private aerodromes and military facilities. These 12 include two airports in Belfast and one each in Dublin, Cork and Shannon, which could be regarded as full scale commercial airports, as well as seven others regarded as regional airports. These are at Derry, Donegal (Carrickfin), Sligo, Knock, Galway, Kerry and Waterford. Only two of these, Knock and Kerry, have runways able to accommodate the standard jet aircraft, such as the Boeing 737, commonly used in short-haul commercial service.
“Both of the Belfast airports are owned by private companies, as are the six regional airports in the Republic, while Derry Airport is owned by the local authority.
“Both Derry and the six regional airports in the Republic have been the recipients of public subvention from the Irish Government in various forms, including capital grants, subsidised flights and in some cases operating subvention.
“These airports have been operating passenger services for varying periods dating back to the 1980s and 1990s, but they have always struggled to achieve stand-alone financial viability.”
The report indicates the Government should consider the wisdom of continuing with services at nine airports in the Republic, in addition to three in the North, particularly given Ireland’s improved road network.
While Shannon’s passenger numbers have declined greatly over the last few years, the report doesn’t mention this but does note that Dublin now has far more capacity than is required.
“In the three years since 2007, total passenger numbers across all three airports (Cork, Dublin and Shannon) have fallen by almost 25% to 22.6 million, with numbers at Dublin Airport declining by almost 21% to 18.4m. With the addition of the second terminal, Dublin Airport now has the capacity to cater for some 35m passengers annually.”
It notes that both Dublin and Cork have excess terminal capacity, which is forcing higher charges onto passengers. There is a need to keep capital expenditure decisions free from political interference, it concludes. “The Review Group recommends that, whether DAA’s airport assets are privatised or retained in State ownership, the regulatory arrangements need to be reviewed and, in particular, the scope for political intervention in capital investment decisions curtailed.”
While the report recommends the disposal of the DAA stake in Aer Lingus, it states this need not happen very soon. “The disposal of the Aer Lingus stake is not urgent and the objective should be the realisation of maximum value.”
The report also states the DAA “needs to pursue a retrenchment programme aimed at protecting the long-term interests of its core operations”.
Fine Gael TD Pat Breen said the report has little to say about privatisation and that it doesn’t make mention of it taking place any time soon.
“When it mentions privatisation, it says it could be considered down the road. The report doesn’t make much reference to it,” he told The Clare Champion.
He said the recommendations are rather clear about what the DAA needs to do. “It’s a wake-up call for the DAA and it says that it needs to pursue a programme of retrenchment and to concentrate on its core operations.”
Mr Breen said he would be speaking to Transport Minister Leo Varadkar, who met with the Shannon Airport Authority last week, to impress on him the importance of the airport to the Mid-West.
“It’s a huge economic driver and it has a huge role to play in economic recovery. There needs to be an innovative plan for the airport and I will be saying to him that it has to be kept under State control.”
His party colleague Deputy Joe Carey said what is contained in the report needs to be considered by Government.
“It hasn’t recommended the sale of any of the State airports but it does recommend selling overseas assets. It has to be remembered that there are a number of options and it is the task of Government to consider them,” he acknowledged.

 

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