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Category: Asset 8News & Views

Airports under scrutiny

December 28, 2011

By Staff Reporter

Ireland is especially airport conscious this time of year, but potentially radical plans are being studied to ensure the viability of the Republic’s main airports, most especially famed but lately challenged Shannon.

Shannon should be run as a separate, more business-orientated entity managed by local bodies with Dublin and Cork remaining under current management.

This is the recommendation of a report commissioned by Transport Minister Leo Varadkar in October. In it, the consultancy firm Booz and Company makes significant recommendations that could radically shape the futures of all three.

According to the Irish Examiner, Booz finds that Cork Airport is profitable on a day-to-day-basis, but has accrued significant debt from the development of its new terminal.

It is also struggling with difficulties arising from the economic downturn. The consultants, according to the report, believe that while it will be able to pay the interest on its loans in the long term, for the immediate future it should remain under the a common ownership structure with Dublin.

However, in the new arrangement, Cork would have greater autonomy. If it was to go it alone, saddled with the debt for the terminal, it would struggle to grow. However, if it was let go debt free, that would cause difficulties for Dublin. According to the sources, Booz does not rule out a full separation in the future.

According to the Examiner report, the consultants also believe that if Shannon Airport continues under the current arrangements, its high cost base and falling passenger numbers would mean it might not have a viable future.

Therefore, the company is proposing significant changes to the existing business model. It recommends that Shannon be removed from the Dublin Airport Authority structure and put into the hands of a public holding company comprised of a number of commercial and public bodies, such as Clare County Council and Shannon Development.

Booz recommends that while the airport should maintain international passenger travel, it should try to develop private plane traffic and cargo activities.

Stated the Examiner report: When he appointed Booz to carry out the report, Mr. Varadkar said it was his objective to free Shannon and Cork “as much as possible” from the control of Dublin without turning them into separate semi-state companies, a policy that was first mooted by a previous transport minister, Seamus Brennan.

Cork Airport is currently sustaining losses of €10 million to €14 million per year, while Shannon Airport’s loss is pegged at €8 million annually.

 

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