MINISTER for Transport Tourism and Sport, Leo Varadkar, has said he would “like to see Shannon Airport operate as an autonomous entity running its own affairs” but claimed that this could only be done if it is financially sustainable.
Speaking in Bunratty last Friday, the minister said the Government has consultants in contact with interest groups about the future of Shannon and Cork airports but the difficulty with Shannon is “it is losing over eight million a year”.
He said in the past, operating at a loss “was ok because the profits in Dublin were enough to sustain it” and stressed that currently, Dublin isn’t making enough money “largely as a consequence of Terminal 2” so it is necessary to ensure Shannon becomes sustainable in its own rite.
Minister Varadkar said what his department is trying to do is turn Shannon Airport from what is now, a liability for the DAA and the Government, into an asset for the country and the region.
“That’s what we are trying to figure out and there’s lots of different options that are under consideration and that’s really the process we’re working on now. I would like to see Shannon operate as an autonomous entity running its own affairs but that can only be done if it is financially sustainable because there aren’t subsidies available for the airport, there wasn’t during the boom and there certainly isn’t now. We are in a very difficult situation in the run-up to the budget,” he explained.
He added that privatisation is one of the options the Government needed to consider and the other option is a concession arrangement where the airport assets would remain in State ownership but the operator would be private.
“There are other options as well, like making it a State company on its own bat but I’m not convinced of any of them yet and that’s really the process that we are embarking on at the moment. We are not in a position of writing off any debts.
“A lot of State companies have substantial debts, in a lot of cases they are self inflicted. If we were to write off the debts of one State asset then we would have to do it for others and that’s not something we are prepared to do,” he continued.
The minister added, “It would be great if Shannon made a profit because, at the moment, it is a loss-making airport and the only sustainable future for an airport like Shannon is one that is busy and has lots of people flying in and out of it and is making money. “Really what we have had over the last number of years is an airport that has been neglected by policy makers and the last government and it can’t go on the way it is,” he stressed.
The minister said his objective is to make the airport strategically important. “This means first of all that it makes money and secondly that it recovers the number of passengers going through the airport, which is down more than half since its peak.
“So the way things are going it will not be important any more because there will be so few people going through it. I want it to be a strategic asset for the region and that means it becoming financially viable and getting a lot more people using the airport. That’s the objective, the actual ownership structure is only the means of achieving that,” he explained.
Minister Varadkar said he was required under the legislation to make a decision on whether to separate the airports by the end of the year and said he believed it was now time to make a decision “whether it comes to a concession or privatisation or another ownership structure that doesn’t have to be made by the end of the year”, he concluded.
Mayor fearful over airport privatisation
THE county’s first citizen has said that under no circumstances can Shannon Airport be privatised.
Mayor of Clare Pat Hayes said the privatisation of Aer Lingus, which withdrew its Shannon-Heathrow services in 2007, shows the importance of the State hanging onto assets of regional and national importance.
“The reality is that a private operator would opt for a lower number of services if that’s what delivers higher profits. The bottom line is all that would matter. Under public ownership there would, at least, be a determination to secure greater services in the region’s strategic interest even if they did not yield a higher return.
“My concern is that, based on his comments so far, the minister is only focussed on making the airport profitable.
“While turning the airport’s finances around is essential, the strategic importance of Shannon to the entire West of Ireland must be the priority.
“Thousands of jobs in industry and tourism depend on it and the airport’s future must be framed in that context,” he said.
The experience around the Heathrow slots shows the importance of the State remaining in control, he claimed.
“All we have to do to see the damage that privatisation can cause, not just generally in aviation but specifically to Shannon, is cast our minds back four years ago to the Shannon-Heathrow debacle.
“Aer Lingus was privatised and despite the Government retaining a 25% shareholding in the airline, it failed to prevent the airline from withdrawing its Heathrow services from Shannon.
“That was a calculated move by the airline to develop a base in Belfast in the misguided belief it would be more successful than Shannon.
“They abandoned Shannon in pursuit of greater profits and it caused huge damage to us here.
“That’s what we would be exposed to under private ownership, whether through full privatisation or a concession lease option,” he added.
The mayor said he believed private owners would immediately downgrade the airport by scaling back on opening hours.
More needs to be done to market the West of Ireland, he said.
“A Fáilte Ireland report two years ago showed that 80% of visitors rated scenery as an important reason for visiting Ireland. Clearly, what visitors to Ireland want is the product we offer on the west coast but yet they are being steered by tourism interests to the east coast.
“That is seriously hurting Shannon and we need to get our collective voices together in the West of Ireland to demand better from them.”
Councillor Patricia McCarthy was serving as Mayor of Clare when Aer Lingus withdrew its Shannon-Heathrow services.
This week, she endorsed Councillor Hayes’ view that Shannon can’t be allowed to pass into private ownership.
However, she also felt improvements can be made and need to be made.
“I would certainly not agree with privatisation but, that said, we can’t stay as we are now either because we are going backwards. We need a formula to secure the long-term future of the airport,” she commented.
Councillor McCarthy said Ireland has had a poor record of privatisation and pointed to the examples of Aer Lingus and Eircom.
She thinks there are a number of options that need to be examined.
“One is that it would remain in State control but would be leased out. The danger with this is that the assets may be abused or that repairs and maintenance would not be carried out. Another option is to put in a management company to run it.
“It’s an option, but there is an inherent danger in that; unless interests from the region are represented.”
She said it was imperative the importance of Shannon to the whole West of Ireland is not forgotten.