Breen demands clarity from the Transport Minister on the future of Shannon Airport.

December 18th, 2008 - Pat Breen

Speaking during the Adjournment Debate in Dail Eireann on Wednesday, 11th December 2008 last Deputy Breen said " I thank the Ceann Comhairle for facilitating me with this debate.  They say that breaking up is never easy but since the proposed separation of our three airports at Shannon, Cork and Dublin was first mooted in 2003 and, after five years of protracted negotiations with much toeing and froing, according to recent media reports it appears that this break-up is to be grounded by the Minister for Transport and his officials before take-off.  It is important that he clarify proposals for the future of the three airports.

  The State Airports Bill sets out how this proposed separation was to proceed.  Some €21 7,506 of taxpayers’ money was spent by the previous Minister for Transport, Deputy Martin Cullen, to pay consultants to give advice on how this break-up was to proceed.  Yet, armed with all this advice the entire process has been dogged with indecision.

   Each of the three airports had to produce a business plan.  The business planning procedure was complicated and drawn out and, in spite of numerous requests by me to the various Ministers, the Government refused to commission an independent assessment on the robustness of the business plans.  In my view this was essential because when the silverware was to be dished out to Cork and Shannon airports their main competitor, Dublin Airport , was effectively appointed judge and jury.  It was a recipe for disaster. 

We have even witnessed high profile spats and casualties between the Minister, the Department and Cork Airport before a deal was brokered to saddle Cork with a debt of €113 million.

  In the case of Shannon Airport , in order to finalise the business plan it had to implement a significant restructuring programme which it is estimated to have achieved around €10 million in savings with 200 workers agreeing to take voluntary redundancy.

 

However, Shannon Airport has been hit with a series of body blows.  First, in January 2008 the last Aer Lingus flight took off for London Heathrow and, in March, the Open Skies agreement came into effect.  Both events have affected the airport’s traffic figures.  A total of 3.6 million passengers passed through the airport in 2007 but, up to the end of September 2008, overall traffic had fallen by 13% and a 14% decrease is anticipated by the end of the year.  Transatlantic traffic is down 24% and, in spite of all the comments about the mid-west "exaggerating", the Heathrow Airport crisis, traffic to London is down 16%.

  In budget 2009, the airport was hit with another body blow.  The Minister for Finance introduced a €10 air travel tax and, while I acknowledge he levelled the playing field for the airport in the Finance Bill, it has prompted both Ryanair and Aer Lingus to warn of the consequences.  Aer Lingus claims it will cost the airline €30 million next year while Michael O’Leary said, "Traffic at Shannon next year is under huge threat".  Yesterday he announced the ending of the Ryanair service between Shannon Airport and Fuerteventura from 31 January 2009 .  Michael O’Leary has also questioned the viability of Shannon and Cork Airports going forward if the break-up goes ahead while, at the same time, allowing Dublin Airport to retain the bulk of assets from the former group.

  The distribution of the assets from the DAA to Shannon Airport was, and will continue to be, a key stumbling block.  The decision to divest assets from the DAA without first addressing Shannon Airport ‘s key financial and operational requirements going forward was foolhardy and unwise.   It was bordering on reckless trading to proceed with this break-up without making sure that Shannon Airport was put on a sound footing and secured a fair deal.

  Aer Rianta International, the flagship company, was born in Shannon and retaining the ownership of ARI in Shannon was vital for the airport.  The Department also had doubts about the break-up and it was even mooted at one stage that assets from Shannon Development would have to transferred to keep the airport in the black.  Now everything has changed and we are in a new environment of unprecedented economic crisis.  The aviation industry is no different.  Various airlines throughout the world are sitting down to discuss mergers and we are the middle of a debate on the pros and cons of a Ryanair takeover of Aer Lingus.  In this changed economic environment, it is sensible to re-examine at the entire separation of our three airports.  Recently, I met the Minister for Transport at Shannon Airport when he announced agreement had been reached between Ireland and the US to make full pre-clearance facilities available at the airport.  I have supported this project from the beginning and it has huge potential.  However, it will require investment and commitment.

  If the Minister is putting the break-up process on the back boiler, it is very important that the DAA divests strong powers of local autonomy and financial resources to the management and staff of Shannon Airport in order that they can get on with the job that they are doing well in difficult circumstances.  If he is having a rethink, I would like the DAA’s name changed to reflect this decision.  The authority should row in behind both Shannon and Cork Airports to help them weather the storm in these difficult times.  This move would help to foster greater co-operation and goodwill between all three airports.  I would like the Minister to outline his proposals because there is a great deal of uncertainty.  Clarity is needed and if he is having a rethink, I hope he will take on board the issues I have raised in this debate and in recent parliamentary questions.

 

   Minister of State at the Department of Enterprise, Trade and Employment (Deputy Seán Haughey): I am taking the debate on behalf of the Minister for Transport.

  The State Airports Act 2004 provides the framework for the establishment of Shannon and Cork as independent airports.  The Act provides, inter alia , that on dates to be confirmed, the Cork and Shannon Airport Authorities may have the relevant airport assets vested in them and assume full responsibility for the management, development and operation of the airports, respectively.  In the interim, the DAA board has transferred significant day-to-day operational responsibility, under delegated authority, to the boards of the Cork and Shannon Airport Authorities.  To progress restructuring, the boards are required to prepare business plans for eventual separation.

  All three airport business plans have to be co-ordinated by the DAA for eventual approval by the Ministers for Transport and Finance.  Among the requirements to be satisfied in advance of separation is the need to ensure the financial sustainability of all three State airports.  The Minister has received business plans from all three airports and has been in consultation with the three airport authorities concerning the approach to the separation of Cork and Shannon Airports , having regard to the current economic climate and trends in the aviation market generally.  He hopes to announce the outcome of those consultations shortly.