With a new slimmed-down Shannon Airport Authority due to take office on September 16, Dermot Walsh surveys the five-year tenure of the inaugural authority
THE Shannon Airport Authority got off to a controversial start and has seldom been very far from controversy since the break-up of the old Aer Rianta and its replacement by separate boards at the three State airports in 2004.
Five years after that proclamation of “autonomy” by the late Seamus Brennan when he was Minister for Transport, Shannon has yet to see Government promises delivered. Shannon has an airport authority but no independence and, as the July report of the Government Task Force documented, is still under the thumb of the Dublin parent body. Neither has the pledge that Shannon would set out as a separate entity “debt-free” been honoured.
And in what airport workers regard as the greatest affront, the Aer Rianta International subsidiary, which originated at Shannon and which was publicly promised to Shannon by Minister Brennan, has been kept in Dublin ownership, with profits of almost €100 million propping up Dublin.
At the final board meeting of the old Aer Rianta, a package that would bring EasyJet into Shannon was on the table. That low-cost airline was to open up a route to London Gatwick starting from one flight a day and building to two and the deal was put together at what inside sources describe as “a modest cost”. But that deal fell through when Shannon did a deal with Ryanair that started the fireworks before 2004 was out.
It was no secret that the interests that had lobbied for an independent Shannon favoured the development of a “low-cost” airport. But when the Ryanair deal was done, it prompted immediate doubts and the first upheaval with a protest resignation from the board of the Dublin Airport Authority, which had been installed as the stand-in for the headquarter body.
Dermot O’Loughlin, who had been elected to the DAA Board by Dublin SIPTU members, resigned as a worker director in December 2004, protesting that the Ryanair deal would cost Shannon jobs and millions of euro in lost income. He went public on the details of the Ryanair deal and disclosed that both the Dublin and Shannon authorities had approved a package under which Ryanair would pay just 1/15 of the normal airport charges at Shannon and would get marketing support in return, which would actually pay Ryanair for each passenger the airline put through Shannon. He revealed that the charges to be levied on Ryanair at Shannon would amount to 50c per passenger and at the same time the airport authorities would reward Ryanair with payments of €2 for each passenger.
The Ryanair deal had been warmly welcomed by the chairman of the Shannon Airport Authority, Pat Shanahan, who predicted that the package would bring 10 million passengers and €50m in revenues to the airport.
But drawing on his working career in aviation, Dermot O’Loughlin warned that the deal would not only mean that Shannon would be the loser for every Ryanair passenger that passed through the terminal, but would provide Ryanair with a Shannon strangle-hold that would shut out competing airlines.
Mr O’Loughlin also forecast in January 2005 that it would be only a matter of time before airlines operating through Shannon would demand parity of treatment in regard to airport charges. It would take until August 2007 for Aer Lingus to grasp the nettle. The then chief executive of the national airline, Dermot Mannion, pulled the Shannon-London service and while a variety of reasons were aired publicly for the decision, in private briefing of public representatives and airport interests, he made it clear that Aer Lingus wanted “Ryanair charges” if the national airline was to keep faith with Shannon.
It would cost Shannon and the tourism and business interests of the Mid-West the loss of the Heathrow connection for a full year and when Aer Lingus restored the London link this year, it cost the Shannon Airport Authority because the national airline was granted the bargain basement scale of charges, as well as qualifying for the write-off of charges, which means that Shannon brings in less than 75% of airport charges in the three years from 2008.
For going public with the details of the Ryanair deal, Dermot O’Loughlin was hit with a complaint from Shannon authority chairman, Pat Shanahan to the SIPTU president, Jack O’Connor. Mr O’Loughlin responded by challenging the Shannon chairman to a public debate either on national or radio airwaves but the challenge was not taken up.
Mr Shanahan would himself become embroiled in internal controversy when he resigned as executive chairman, when it transpired that he had been kept in the dark when the Dublin parent body was made aware of the Aer Lingus intention to withdraw the Heathrow service from Shannon. Mr Shanahan continued on as board chairman but without the executive powers.
Within a matter of months of taking office, the Shannon Airport Authority was advised that the airport had “an unsustainable cost base”. On that account, the business plan drawn up within a matter of months of the new authority taking over has not been adopted in its original or subsequent shape, by the Dublin parent body nor the departments of transport and finance. That meant that Shannon stayed under the Dublin rule and that rule was extended last Christmas when current Transport Minister, Noel Dempsey, deferred all suggestions of separation until 2011 at the earliest. With Shannon fortunes, in particular, in decline since 2008, the prospect of independence is likely to be even more distant, according to union activists.
What followed was a protracted and painful rationalisation scheme, which would eventually trim around 190 from a workforce of 440 that the new authority inherited. The job shedding was both bitter and costly.
The airport authority enlisted the former Labour Court chairman, John Horgan to take on the unions, which only made unions dig in their heels, with the result that the cost-cutting programme cost two-times the original estimate.
Besides sending long service staff into retirement with lump sums of €200,000 and more, the job trimming severely impacted on the marketing of the airport. Two of the highly experienced staff who had operated in the field for years beforehand decided to avail of the early retirement and their non-replacement left the airport with just a marketing manager, one assistant and one part-time secretary. That depletion of the marketing effort has been reflected in the Interim Report of the Mid-West Task Force, which has called for a marketing strategy and for the bolstered marketing funding called for by the Shannon Airport Tourism and Economic Development Plan of 2006, which was turned down by the Department of Transport.
The interim report submitted to Government in July this year also calls for funding and support along the lines set out in the Shannon Plan of 2006, which provoked dismissive responses from the officials of the Department of Transport that came into the public domain under Freedom of Information disclosure of documents. Of €53m proposed for a five-year promotion programme by the expert group that drew up the plan, only €6m has been made available over the past two years. “The remainder of the funding should be delivered with a renewed focus on Shannon Airport and the Mid-West Region”, the Task Force report states.
The primary initiative put forward in the Shannon Airport five year plan was the move to upgrade the US preclearance at Shannon to full customs pre-inspection, which has come on stream in the last month. But the charges per passenger for pre-inspection at Shannon have been fixed at €10.50 and that charge will be significantly undercut by the Dublin pre-inspection station, which is due to come into operation at the end of 2010. With the Dublin charges certain to be well below those at Shannon, according to the Aviation Regulator, the advantage to Shannon for which the Customs and Border Protection station was promoted, will be wiped out.
The CBP charge at Shannon of €10.50 per passenger was dictated by the requirement on the Shannon Airport Authority to repay to the Dublin Airport Authority the €20m cost of building the extension to the terminal building to accommodate the extension to full preclearance procedures.
The responsibilities of the Dublin Airport Authority in regard to Shannon have also been mentioned in the interim report of the Mid-West Task Force.
“Continued investment from the DAA for infrastructure and that the five-year investment programme for the airport is carried out fully to capture growth potential and develop airport operations” are among the “critical requirements” for airport growth, the report pointed out.
The interim report also referred to the Dublin rule, which continues to frustrate Shannon interests. It was the desire to break free from the suffocating influence of Dublin headquarters that actually split and on occasions splintered trade union interests in the debate on the break-up of Aer Rianta. That the promised independence has yet to materialise and that the situation has remained much the same is borne out in another of the “critical requirements” spelled out in the interim report.
“Pending full separation from Dublin Airport Authority, Shannon Airport needs to operate with increased executive autonomy to maximize its potential and its development impact on the region” the task force document stated.