Separation anxiety

WHILE proposals on the separation of Shannon from the Dublin Airport Authority (DAA) went before Cabinet on Tuesday, no public announcement offering details of the split has been made as yet.

 

Such an announcement is likely to happen in the coming days and some Oireachtas members have said it will almost certainly come before next Wednesday, which is budget day. It is understood that further discussions with workers are about to take place.

 

Speaking in the Dáil on Tuesday evening, Transport Minister Leo Varadkar said while the Cabinet had discussed separation, “One or two matters must be clarified and the issue must be discussed with some people”, before things go further.

Under pressure from Clare’s Fianna Fáil TD Timmy Dooley, the minister defended the decision to leave the ultra-lucrative Aer Rianta International (ARI) with the DAA, rather than Shannon, where it was set up and developed.

In the Dáil, Deputy Dooley asked, “Will the minister [Varadkar] comment on the Cabinet decision today to separate Shannon Airport from the DAA? How will this benefit our overall capacity to attract tourism to Ireland, considering the minister has failed to give the appropriate level of support to Shannon by virtue of removing ARI, the vital revenue source that has formed part of the Shannon operation for decades, from that airport?”

Responding to him, Minister Varadkar said, “With regard to today’s Cabinet discussion, a memo was discussed but I am not yet in a position to make an announcement on it. One or two matters must be clarified and the issue must be discussed with some people. An announcement will be made in the near future.”

Regarding the future for Shannon after separation, the Minister said, “Its ability to set its own charges again, if it is separated, will assist it in securing new business, which will be a positive for the airport. The 2004 Act, which was introduced by Fianna Fáil, always envisaged ARI would remain part of what was then the Aer Rianta group now DAA. That remains the case. The act also requires that whatever happens, both entities must be viable. Shannon must be viable and the remaining DAA must be viable.

“For Shannon to retain ARI and have its debt written off would bring the viability of both Dublin and Cork Airport into question. It was never going to be a case that Shannon would get both a debt write-off and retain ARI. Indeed, that is envisaged in the 2004 Act.”
He also said the Aer Rianta International (ARI) employees based at Shannon will continue working there.

However, Deputy Dooley said having Shannon’s debt written off is very poor compensation for losing ARI, a company that has recorded hundreds of millions of profits since the State Airports Act of 2004.

“Does the minister accept that Shannon Airport would be well and truly able to carry its current debt pile if ARI was left there? He will be aware from company records that ARI made a profit of almost €30 million last year when exceptional items are removed. It is clear that if Aer Rianta International were to be retained by the airport, the debt burden of approximately €100m at Shannon Airport could be wiped out within three or three and a half years. Does the minister accept the removal of the revenue stream from a company that was created, developed and built in the Shannon Region would represent a significant loss tot he region? Many people would find its removal unacceptable.”

Responding to the Clare TD, the minister made a new claim, that ARI needs to stay with the DAA so that it can raise funds.

“As far as I am concerned, the ARI jobs that are in the region will stay in the region. It has never been the case that the revenue stream goes to the region. An important detail was missing from the figures mentioned by the deputy. As a consequence of its own investments, ARI will have considerable capital expenses in the next couple of years, involving a capital outlay of approximately €60 million. It can only do its business when it has the big balance sheet of the DAA to borrow against. If it were to remain part of the Shannon entity, it would have great difficulty finding the €60m it will need to continue to do its own business.”