Ryanair deal could land 1,000 jobs for Shannon

Ryanair will treble its passenger numbers into Shannon Airport to one million annually under a proposed new deal that it claims would deliver 1,000 jobs.

 

The low fares’ airline has claimed its ambitious plan would generate an overall expenditure of €450 million in the Shannon region, based on ACI projections that 300,000 tourists generate a corresponding spend of €150 million and 2,500 tourist jobs.

The sting in the tail is the carrier wants a free deal on the 635,000 extra passengers it brings into Shannon.

It insists this deal has to be made available to other carriers who are prepared to bring in the same numbers to Shannon on an annual basis.

Speaking to The Clare Champion, Ryanair chief operating officer, Michael Cawley, estimated Shannon could get €9 or €10 per passenger from ancillary revenue, such as car parking and goods sold in shops, making a net profit of €5 per passenger without any extra cost.

Acknowledging people would travel outbound to Malaga and Tenerife, he estimated about half of the overall passengers would be inbound European tourists if this new deal is accepted. The new routes would be from Germany, Spain, Italy and the UK.

Asked about a possible reluctance to give Ryanair another deal after the last one fell through, Mr Cawley said Ryanair is prepared to pay for the shortfall in terms of the number of passengers that come under its one million annual target, provided there is no new airport tax introduced or landing fees and other charges remain the same.

“If the choice is between Shannon and the DAA, what have they done since we left? The number of passengers has fallen by two million passengers or 56%,” he said.

“We delivered 1.9 million passengers in Shannon for four years in a row and would have done for the fifth year if the Government hadn’t introduced the travel tax and the DAA didn’t increase airport charges,” he said.

Ryanair paid €3.5 million in January 2011 to the Dublin Airport Authority to settle a legal action relating to the breach of a five-year contract with Shannon airport on passenger charges.

It is understood that the airport authority had sought about €5 million in damages from Ryanair, but accepted the lower amount in an out-of-court settlement.

The action related to a five-year discount deal on passenger charges between Ryanair and Shannon that was agreed in November 2004. The deal ran from May 2005 until April 2010.

It involved Ryanair being offered a substantial discount on airport charges – it paid between €1 and €2 per person – in return for carrying an agreed number of passengers. Shannon’s standard charge at the time was €4 per departing passenger.

Ryanair agreed to increase the number of passengers it carried each year of the deal up to a target of two million by April 2010.

The airline based a number of aircraft at Shannon and met its targets for the first three years but failed to hit its target in year four and announced in February 2009 that it was scaling back operations at Shannon.

Mr Cawley blamed their failure to meet the terms of the last deal with Shannon on the introduction of the €10 travel tax in April 2009 and the decision of the DAA to raise airport fees from €1 to €7.50 in May 2010 and by another 33% the following October. He claimed the average fare in Shannon was €20 at the time.

“If people were willing to pay another €10, it would have earned Ryanair another €5 billion over the last ten years. People are not prepared to pay another €10.

“The dramatic decline in Ryanair’s Shannon operations is illustrated by the fact the number of aircraft based in the airport have declined from six to one, routes have plummeted from 35 to 11 while passenger figures fell from about two million to 375,000.”

The number of Ryanair jobs has fallen from 300 to 50 while the number of airport jobs has been slashed from 2,000 to 375.

A DAA spokesman said, “As a commercial company, Shannon Airport is committed to incentivising growth, but any agreement with its airline partners has to be sustainable for both the airport and the airline. Giving away services for free is unsustainable for any commercial business.

“Passenger charges at Shannon increased by €1.58 per passenger in late 2010. This was the first adjustment in six years, as prices had been frozen from 2004. During that same six-year period, Ryanair’s passenger charges increased by up to 1,100%.”

A spokesperson for Shannon Airport said they were not in a position to comment as it is a matter entirely for the company and its shareholders.

Another senior aviation source claimed the €10 Government tax was a “red herring” as Ryanair tried to change the terms of its previous Shannon deal when it couldn’t meet its targets before this tax was introduced.

He also questioned the number of airports where Ryanair apparently received services for free and claimed their proposal is not commercially viable in the long term.