Knock may sue over 'unfair' State aid to Shannon

Knock Airport in Mayo is considering taking a legal challenge in Europe over the Government’s decision to separate Shannon Airport from the Dublin Airport Authority.

Knock’s chief executive Liam Scollan has told The Irish Times he believes the decision to separate Shannon from the DAA on a debt-free basis, while also making other incentives available in the region, amounts to illegal State aid and will result in a “gross distortion” of the market.

Minister for Transport Leo Varadkar and Minister for Jobs, Enterprise and Innovation Richard Bruton will today announce the separation of Shannon by the end of the year and its merger with Shannon Development’s landbank next year.

Ambitious plans have been drafted to establish an international aviation services centre beside the airport and to increase air traffic by one million passengers a year.

Debt relief

The DAA will assume Shannon’s €110 million debt. It is understood the Department of Finance is also considering a number of incentives to encourage businesses to locate aviation activities in Shannon.

Mr Scollan said the State support for Shannon, which is expected to lose about €7 million this year, will threaten the viability of Knock, which is owned by a community trust.

“We consider what the Government is proposing to be unfair, a wasteful use of public resources and possibly illegal,” Mr Scollan said. “Our legal advice is telling us that the decision by the Government should be challenged.

“We will have to look very seriously at taking this either to the European courts, to the competition directorate in Brussels or to the Irish competition authorities.”

Mr Scollan said Knock’s passenger traffic would grow by about 5 per cent this year, to 682,000. Shannon’s traffic has declined to 1.5 million a year from 3.6 million in 2007.

While Knock is privately owned, it has been grant-aided by the exchequer. This is due to cease after 2014. Between 1997 and 2012, Knock received €16 million in capital grants from the State. This year it will receive an operational grant of €589,000, which will help to defray a projected loss of €660,000.

It is understood the task force that advised the Government got legal advice which said the plans for Shannon did not breach EU state aid rules.