SHANNON Airport director Martin Moroney has rubbished claims that the airport’s future is in question and said he expects to see a number of very positive developments in the near future.
In a wide ranging interview with The Clare Champion, he defended the airport’s dealings with Ryanair, identified a number of major routes that the airport will be chasing and said a long-term plan is being developed for Shannon, which will deliver a sustainable route network.
Some apocalyptic statements have been made about Shannon’s future in recent months, with a certain Michael O’Leary predicting that “there will be tumbleweed rolling across the ground at Shannon”.
Mr Moroney said such statements may cause fear but they are very wide of the mark. “It’s just wrong,” he commented. “Companies that are travelling through Shannon; it has to cause concern to them but they come from people who generally don’t know what they are talking about.”
While Ryanair withdrawals and huge drops in traffic this year have prompted concern, he said there should be some good news very soon. “I believe in a couple of months, people will be less concerned about Shannon because they will see action taken and if they are willing to listen to us and what we have to say, I believe together we can turn Shannon into a profitable airport and people will be quite satisfied.”
He said Shannon will see a number of positive developments in the medium term. “We will see developments in Shannon in the short term and particularly over the next three year period that I believe will put Shannon on a long term sustainable footing that it never really had before.”
He outlined places he feels Shannon has a great chance of resuming links with. “The routes that we would love to see in Shannon, and we do believe are attainable, are Paris, Amsterdam, Munich, Barcelona, Faro and Alicante.”
While he is in no doubt about Shannon’s future, he said the current difficulties do have to be addressed and the airport must return to profitability.
“A key business aspect of Shannon Airport right now is that we’re loss-making. We have one company running the three airports (Cork, Dublin and Shannon) and as a piece of that, on a standalone basis we are significantly loss making and that can’t continue because the Dublin Airport Authority (DAA) operates as a commercial operation, fully self-financing without funding from Government. That’s an important point because I think people assume that if the Government want it could put money into Shannon. That can’t happen. The way the company is structured, the Government expects dividends from semi-state commercials. That’s the way it is and within that, Shannon must be self financing in its own right.”

Preparing a strategy for Shannon recovery

SINCE 2005, there have been seismic changes at Shannon, with passenger numbers  initially soaring before a very stark decline then set in, which has led to some questioning of the airport’s very future.
As airport director, Martin Moroney knows what’s been happening and he’s at the coalface of preparing a strategy for recovery.
This week, he said that while he understands people are concerned about the seemingly never-ending stream of bad news, fears for Shannon’s future aren’t very well grounded and a vision for a sustainable future is being progressed.
“We are preparing a plan which will be finalised quite soon. In the meantime, we are working very hard to ensure that the challenges facing the airport, which have led to some reduction in services, will be handled and we’re very confident about that. It’s really part planning and part doing at the moment,” he said.
“I’ve no doubt that the DAA and SAA’s combined efforts will succeed. We do, I accept, need to engender more support from the region, particularly from those people who do have concerns about the airport’s future, which I really think are greatly exaggerated, although I realise they are there and need to be addressed,” he said.
While it seems a very long time ago now, it’s just three years since the Shannon stopover went and he says the airport has coped with its loss. “It is something we had expected to happen and we are reasonably satisfied with the way we have come out of the open skies agreement in that we have retained transatlantic services on a daily basis. We have, in the summer period, flights with Continental twice a day to Newark, Delta to JFK and Aer Lingus to JFK and Boston. That’s the current level, while we are making great efforts to introduce and attract more carriers and have more services with existing carriers, we are reasonably satisfied that this year we have throughput of around 400,000 on transatlantic, with some very positive signs of a resurgence in US tourism movements through Shannon. All the flights were full during the summer and are still doing very well in October.”
While Aer Lingus has pulled their US services for the early part of 2011, he’s not downcast about it. “They’ve made a decision not to operate for three months but they are a private company with major challenges. Like ourselves, they’ve major challenges and they’ve changed their approach. They’re looking at Shannon positively and we’d love to see them being part of a short-haul network. As regards transatlantic, they do suffer major losses in the winter months and they have decided that those losses should be curtailed by non-delivery for the three months.
“We are currently in discussions with carriers and while Aer Lingus has pride of place because of their long history, we will not be in any way slow to persuade other carriers to come in if Aer Lingus make decisions that require that or give an opportunity for that.”
Another serious body blow has been Ryanair’s decision to massively scale back the services they provide from Shannon.
While Michael O’Leary complained that enough of a sweetheart deal hadn’t been offered, what he had been seeking made no commercial sense from Shannon’s point of view and would have seen the airport’s revenue base crippled.
Mr Moroney says that while Shannon has enjoyed a good relationship with the low-cost carrier, there was just no way Mr O’Leary could have been given what he was looking for.
For the first four of the five years of the initial agreement, Ryanair managed to meet their commitments in terms of passenger numbers but they fell short in the final one as the economy tanked. As talks on a new deal began, the Ryanair demands grew.
“Subsequent to the five years of the agreement, they said they would reduce the number of passengers to 600,000 and wanted to use the airport for almost nothing. In other words, they wouldn’t increase what they’d pay, because of the lower volume they actually wanted to reduce what they’d pay. This was entirely unacceptable to us on a commercial basis. Apart from minimising the traffic and the return from Ryanair, we would have been forced legally to give the same arrangement to all other carriers.
“We would then have had no revenue base whatsoever. We said to Ryanair we can’t deal with you on this basis but we want you here and we want you to retain your key routes and we want you to tell us your plans for the future. They did that very quickly, they dropped a lot of UK routes, which we commenced the replacement of them when Aer Lingus Regional started Bristol, Birmingham, Manchester and Glasgow.”
He still believes that getting Ryanair in was the right move. “In Ryanair’s case, we believed at the time, and I would still defend that opinion, that when we wanted to see major traffic development on short-haul at a time when the economy was going well, we wanted to be getting ahead of other airports in the West of Ireland.”
Shannon Airport is set to have around 1.8 million passengers this year, which is about half what it would have had at its peak.
While Mr Moroney is confident that there will be a rebound, he doesn’t feel that boom-time levels are achievable in the near future. “We’re sure we can replace a number of routes but will we see the number of passengers we had in 2007? I don’t believe that 3.7 million is achievable in the next five years. People shouldn’t see that as a negative, what we need to see is perhaps 2.5 going to three million. I believe that’s the sort of level we should be looking at and determined to deliver.”
Since arriving at Shannon, Ryanair has continuously chopped and changed its portfolio of services but Mr Moroney feels that in the future Shannon needs to ensure the routes on offer will stick. “We cannot meet our own business objectives in terms of financial performance and profitability and the needs of the region in terms of business and tourism without having a strong transatlantic and strong European network of services. What that will reach ultimately is the question but we are now looking at the sustainability of these routes, getting the right-sized aircraft and getting the right airlines.
“We have identified the priority routes that we believe Shannon can develop and sustain. We want it to be a sustainable network so that people in the region can be reasonably sure that if we have a flight to Barcelona, we’ll have it in three years’ time. We didn’t have that with Ryanair.”
The US Customs and Border Protection Pre-clearance Facility was launched to some fanfare in 2009 but he says it will be a few years yet until it really comes into its own. “We have ongoing discussions and work with a number of airlines on the basis of at least six initiatives, all of them quite different, some might involve UK cities and airlines, some might involve Europe and the Middle East. It’s a big piece of work that we’re doing, obviously it’s quite sensitive and I can’t disclose details. We won’t see the fruits of that, I would say, until 2012. There’s a lot of work to be done and in the current downturn airlines are, in the main, trying to survive and retrench their business.”
There is also the possibility that a Lynx cargo facility could be developed at the airport, which would also provide a massive fillip. While it has been talked about for a long time, he says it is still a runner and negotiations are ongoing. “Cargo is a strong piece of our business in Shannon. I wouldn’t say it’s ignored but it’s not spoken about much. We have key integrators here in Shannon including FedEx and we’re looking at constructing a state-of-the-art facility in conjunction with an American company, Lynx, who have done this at many airports globally. Any investment at the moment requires a lot of examination, looking at the risks and possibilities. That is ongoing and no decision has been made. It would require funding from both parties and that is being worked on through negotiation.”
Shannon also got some stick after increasing charges to passengers and while Mr Moroney says it wasn’t something they wanted to do, he feels it has been reasonably well borne by carriers. “Our increase was quite small but it is an increase and we didn’t want to have to do it. We increased the fee for use of the airport by €1.58. We thought long and hard about it because it is an increase we knew wouldn’t be welcomed by the public. However, airlines in general, besides Ryanair, understood the need for it. Ryanair opted to reduce their traffic because of that but they didn’t make significant changes. There are still many services from Shannon to major routes like Gatwick and Stansted and to a number of other cities, particularly destinations where they see those routes can support the airport charge.”
Allowing things to drift, without making the airport more sustainable, isn’t an option, he says. “All I would say is that unless we address it, it’s too severe to continue doing business. We have to address it. The key point is we are a commercial company and we have to be profitable.”
He says the airport does have the wherewithal to turn things around and that more support is required from other interests. “We have an airport that is second to none in facilities, that has the longest runway in the country, one of the longest in Europe.
“The company has extended the terminal building, put on pre-clearance with a lot of investment. We have great staff who are very passionate about the airport, they have taken a lot of negativity and taken pay cuts. The staff won’t be found wanting in creating efficiencies and in having a positive approach to looking after passengers. I’d like to see the business and tourism community giving us support to help us turn around our own business and to provide a platform to the whole region.”