I was truly delighted when Monaleen man and Chairman of the DAA, Mr.David Dilger accepted my invitation to be the guest speaker at our Chamber lunch last week. We are all acutely aware of the vital role that Shannon Airport plays in the economic well being, stability and growth of the Limerick, Clare and greater Mid-West region. It is with much anxiety and concern in the recent past that we have seen such a dramatic decline in passenger numbers resulting from the slashing of routes operating from the airport. In the dizzy heights of the celtic tiger 3.6 million passengers went through the airport annually. We’ll be lucky if that figure is 1.7 m for 2010. Our market share of the 21 million passengers through DAA airports is a mere (and worryingly falling) eight percent! We were Ireland’s second largest airport, but our market share has dropped by 40% in 4 years relegating us to third position.
Prior to his arrival at the lunch I had asked David to give us his view of Shannon from his position as Chair of the corporate body that governs the operations and fate of our national airport. I asked David not to pull any punches and to tell it as he sees it. His message may not have been what we as a region wanted to hear, but I think we may have needed to hear it. I believe David delivered a frank, honest and sincere speech. He outlined Shannon’s position very clearly. It is a loss making entity. DAA have a commercial remit to deliver a return on investment to their shareholders (the Irish State).Shannon operates at a loss of between €8 to €10 million per year, as David put it, the DAA are ‘losing their ass’ on their Shannon operation in it’s current loss making state.
David went on to address some of the myths that he believes exist in the region in relation to Shannon. I appreciated his direct use of language and approach throughout as he was brutally honest and frank in his analysis and arguments.
MYTH #1: The so called ‘dead hand’ of Dublin is strangling Shannon.
David believes that we as a region need to stop worrying about who is operating the airport and start worrying about the losses it is incurring. He may have a point here – if the airport was operating profitably would any of us care who governed it? Probably not…
In addition David went on to say that if the DAA doesn’t support Shannon why has it invested €160 million into the airport in the past 15 years? And we, as a region, need to ‘get real’ if we think some private equity investor is going to buy and run Shannon. The operating costs and current loss making status means that nobody in their right mind would touch it.
So where is the future of the airport? David made it very clear that the DAA do not want to oversee the operations of a loss making entity, they want Shannon to be profitable. This can only be achieved by reducing the cost base at Shannon, building a sustainable route network, maximising the value of the landbank, and fully exploit opportunities offered by cargo and US pre-clearance facilities. For my part I am led to believe that Shannon has already shed significant costs from its base in the past number of years. In addition I must admit I’m dubious of any great hidden value in the landbank, there is no shortage of land in Shannon! Most definitely there are opportunities in cargo, particularly if we could secure CBP for it, but we must remember that cargo is not as valuable a business to an airport as people and passengers… I firmly believe route development is the backbone of any future growth and revenue generating activity at the airport…this is where our focus must be. The Lynx project would be fantastic, but we can’t put all our eggs in that basket, it will not generate the money needed to return the airport to profitability and it will not create the connectivity that people in the West of Ireland need to conduct business and will not bring tourists to our region!
MYTH #2: The DAA Promotes Dublin over Shannon
David clearly stated that this claim has no basis in fact, and that Shannon and Dublin operate in different markets and are not competitors. He believes Shannon will grow in tandem with Dublin and indeed Cork and it isn’t a case of one growing at the expense of the others. Yes DAA does invest upward of €5 million a year into the running of Shannon, but this is paltry in comparison to the €1.2 billion investment the DAA made into T2 in Dublin, or the €145 million terminal they built at Cork Airport. As Mr. Dilger made very obvious to us, DAA run airports with a profit motive and I have no doubt that focus is on ensuring a return on these substantial investments. But a question still being raised by people in the region is “is the DAA faced with a very obvious conflict of interest in the management of the three state airports as they do compete with each other particularly in relation to connectivity to Europe and the United States?”. This must be addressed. But for my part, return of passenger numbers and more routes must be our main priority at present.
Issues at the airport are complex. I think we all agree that it is disheartening to watch our airport decline. It is an immensely valuable asset, not just to Limerick & Clare but to the entire West Coast of Ireland. When inviting Mr. Dilger to address our lunch I requested that he be open and honest and that he pulled no punches and he most certainly delivered on this. He may not have said what we as a region had hoped or wanted to hear, but I think it was what we needed to hear. Before we continue the debate on the future of our asset we need to have a clear and concise view of where we are now and to base recommendations on the best data available. It was refreshing to hear somebody speak so plainly and not skirt around the issues. With the benefit of David’s perspective, I hope that it will now add to meaningful and relevant debate on the best way forward for Shannon Airport.