Getting Shannon back on track

In a three-part series, Owen Ryan speaks to some of Clare’s leading business figures, beginning with Shannon Airport chief executive Neil Pakey. Next week, Irish Hotels Federation president Michael Vaughan of Lahinch will be featured

 

SHANNON’S performance is important for everyone in Clare. Many of us wouldn’t even live in the county but for it.

If it weren’t for the tourists it brings to the county, huge numbers of jobs and businesses wouldn’t exist. Its Heathrow and US links have helped make the Mid-West of Ireland a hub for multi-national companies.

The decline of the airport, which had its worst year since the ’80s in 2012, is a serious problem and a Scot has been brought in to get it back on track, 52-year-old Neil Pakey, the new chief executive, who was appointed in May.

At the moment, he is commuting to Clare and heading back to Britain at the weekends, where his family are based.
“My two boys are 16 and 13 and we were living in France up until last November. I took them back to Manchester, where they had spent time growing up and they kind of resettled there, so at the moment I’m commuting. I come over on the 9pm flight from Manchester on the Sunday night and I go back on the Friday night at 7.25pm,” he says.

He has some form in turning airports around. In his time at Liverpool John Lennon, traffic levels increased by nearly 800%, going from 700,000 to 5.5 million.
His CV is glistening, having held senior management positions at Manchester Airport, with Peel Airports Ltd and the airlines British Caledonian and Air Seychelles.

While he has been very successful in aviation, he originally wanted to write and studied English and history after finishing school.
“I was hoping to be a journalist. I wrote sports articles for my local newspaper, The Troon and Prestwick Times. I was writing some of the football and cricket articles. They hadn’t edited my articles too much. I was enjoying it, so that was what I wanted to do.”

Just as many young people in Clare have done over the years, he got a job at an airport near his home to fund third-level education and says he picked up the aviation bug there.

The experience at Prestwick showed him the lower levels of the industry. “My first day at work, I changed 450 pillowcases on a 747. The second day at work I was pushing wheelchairs and checking in bags and stuff. I started doing all the passenger services, finding lost bags and all those things. Then I went into the ramp services and got to know how to load the planes and do the flight plans and stuff like that.”

He worked with the airline British Caledonia for around 18 months and when he decided he’d like to get involved in route planning, he opted to study transport planning and management.

“After a while, I thought I want to be the guy who decides where the planes go and that’s going to take a bit of further education.”
With another qualification under his belt, he got a job at Manchester Airport, which involved planning new facilities. He went on to work in operations planning there, which involved staff rostering and dealing with the various trade unions.

Pakey held a number of other roles before going to Peel Airports, who bought up Liverpool airport and turned it around.
When he arrived in Shannon, much was made of his success at Liverpool. He says he could see the potential there as soon as he arrived, as could his employers.

“Manchester Airport had been offered Liverpool for a fairly small sum but turned it down. Peel thought ‘we could do something with this’ and the chairman of Peel Holdings was prepared to invest and he did invest about £60 million in developing it. With that commitment from the company, I thought I can make a go of this. I thought it was substantially underachieving.”

There is very strong loyalty to Shannon in the Mid-West, with people keen to use the local airport, rather than Cork or Dublin if it’s at all possible to do so. Is it rare for the people in an airport’s catchment area to feel an attachment to it and be so supportive?

“I think it’s [the loyalty] really, really strong here. Whether it’s unusual I’m not so sure but it’s very strong and very evident here. People here feel that if the airport is successful, their business has more chance of being successful. They get it.

“In some markets, they take it for granted but here I think you’ve learned a lesson that you can’t take it for granted. In a place like Liverpool, they got used to driving past the airport to Manchester or London. It wasn’t until we did things that the loyalty came. Here the loyalty is inherent.”

Coming to Ireland must have been a big move for the father of two but he says once the job was advertised, he decided to apply for it almost immediately.

“I kind of knew enough about the region from a couple of things in the past and some friends I’ve got here and stuff. I quickly understood that it’s going to go through a big period of change, having come out of the DAA and merging with Shannon Development and Shannon Heritage. That kind of excited me and I thought I’d put in an application for it. I met the chairman and soon bought into where I see the place going and was getting quite excited.”

When Shannon separated from the Dublin Airport Authority (DAA), Transport Minister Leo Varadkar warned that the airport would not have a future if it didn’t make a significant recovery. Its numbers had dropped dramatically over the previous five years and there was clearly a huge job to be done. Pakey says the difficulties didn’t deter him and actually made the job more interesting.

“If you come into an organisation when it’s all rosy, the challenge wouldn’t be quite the same as when it’s at rock bottom.”
Shannon has haemorrhaged money since the economic slump, losing an estimated €150,000 a week last year. However, he says it should break even this year and move into profit in the coming years, unless it comes up against “some curveballs that aren’t foreseen at this stage”.

It has been given a target of reaching 2.5 million passengers by 2021, roughly halfway between the 3.6 million recorded in 2006 and 2007 and last year’s 1.4 million. The Scot feels this is realistic but won’t easily be met. “That’s probably why it’s a good target because it’s achievable and it’d reflect a profitable business.”

While Ryanair were behind most of the growth in Shannon during the latter years of the Celtic Tiger, he says it’s unrealistic to think they or any other airline will have as much business at the Clare airport without a dramatic economic recovery.

“I think the idea that you’d get an airline to come in with six aircraft based here again, perhaps you’d need the economy to get back to 2007 levels for that to happen.”

Over the last few months, Shannon has stopped declining, with passenger numbers finally moving in the right direction. Much of the improvement is because of expanded services to America and Pakey says the challenge now is to get more people to buy into what Shannon has to offer, in the same way as some US airlines have done.

“If you look at the US routes and what we’ve done this summer, it’s tapping into a US market that believes in the Shannon brand. The challenge is expanding that further in the US but also getting other markets to see it like that.

“I came through Ennis this morning and there were dozens of Germans there and they all flew into Dublin. There must be sufficient demand from these markets to fly to Shannon.”

Aviation these days is very competitive and airlines can be ruthless in the pursuit of profit, as Shannon found when it lost most of its routes after the slump.
Pakey says airports need to keep an eye on how they are shaping up, compared to rivals.

“When you look at an operator like Ryanair, a pan-European operator, 50-odd bases, we’re competing with all of those for their next route. It’s not as though they’re saying we need to serve the West of Ireland, they’re saying what’s going to make me the most money out of all my choices.”

At the moment, he says Shannon is able to match many of its peers but feels there must always be an eye on competitiveness. “We are able to do commercial deals at the moment but going forward, you have to consider the cost base and consider can we be even more competitive to secure more business.”

Shannon is different to many other airports, in that it has a range of markets. It offers links to the US and Europe, is an ideal stop for transit business, particularly with its pre-clearance facility and he feels that gives it more opportunities.

“There are different market to develop. All of our eggs don’t have to be in one basket and that’s a good place to be.”
Developing the transit side further is going to be a priority. “There are one or two airlines, not from this part of the world, who are looking at the transit possibilities through here on the way to the States. There are other markets where aircraft will be routed from; East Africa or the Middle East or wherever and  they come through other European points and go to the US.

“Shannon has preclearance and a great stopover product and all we have to do is shout about it. There are reasons we can go to those operators and say ‘hey, Shannon makes sense’. That’s going to be one of our main focuses.”

There have been talks with a number of airlines since the Government signalled its intention to split Shannon and the DAA and more discussions will be held in the coming weeks, he says.

“The guys in the team [working on developing routes] who are still with us have done very well in terms of keeping the relationships going with airlines and obviously they’ve done very well in getting more US services, in particular, through the airport. Those relationships continue and we’re going to be seeing a whole bunch of them [airlines] in October.”

The job of chief executive of Shannon is quite diverse. Pakey likes having the opportunity to do different things.
“There’s no such thing as a typical day and that’s the great thing about the role. Most days would involve communication with the employees and we’ve great employees there who are very loyal to the cause. It’d generally involve some external meetings, whether it’s Clare facing, Limerick facing or wider.

“Hopefully, there’d be a couple of calls with airlines or meetings with airlines. My board are very intent on making this a success. There’d be the odd call with them, particularly the chairman [Rose Hynes].”

After the separation from the DAA, Shannon’s decline continued for a few more months but this summer season has been excellent, with a long overdue return to growth recorded. Pakey says he has been impressed by how well the airport is perceived but says keeping up the early momentum is vital now.

“The thing that’s impressed me the most is how well the brand of Shannon is perceived in parts of the world. We’ve got to really tap into that but it ain’t an overnight fix. We’ve had a very good summer. Hopefully that continues into next year and we can grow markets.

“It will be momentum that will take us there and it will be gradual but the biggest fear is that we would lose momentum. We’ve got to keep the momentum going and that means working with everybody who’s got the same interest as we have in getting traffic to grow.”