Removing Shannon and Cork airports from Aer Rianta's control is not a viable proposition, maintains Liam Meade
The role of Shannon in global and national aviation terms has changed dramatically over the years since its foundation in the late 1940s. Throughout this period of seismic change Shannon has not just survived but grown.
Each succeeding epoch threw up new challenges, but with imaginative promotion and development of the airport, forecasts of impending doom were proven to be well wide of the mark. While all of this change was taking place, Shannon's central asset was the Shannon stopover, a cleverly contrived political imposition on the conduct of aviation commerce.
It now appears certain that this ingenious contrivance has again hit bad weather in the form of market forces and the emergence of the European authorities as the controlling body in trans-Atlantic aviation regulation. The received wisdom is that the stop-over will go in an era of open skies and Shannon will lose the corner-stone of its existence. This prospect, and the fall-off in traffic following September 11th in the US last year, has caused the usual alarm bells to go off all over Clare and Limerick.
Into this shrill and heavily populated firmament comes a new Government and a Minister for Transport, Seamus Brennan, mandated to "make Shannon (and Cork) more autonomous". The favoured option to achieve this would appear to be to remove these two large regional airports from Aer Rianta control and thereby give them new opportunities that would be denied them under the dead hand of the current custodian. The facts at Shannon do not support this view and it is worthwhile reviewing a few of them before taking a leap into the unknown.
During the past five years the rate of growth of terminal traffic at Shannon was faster than the much commented-on rapid passenger growth at Dublin Airport. Over the same period, capital expenditure at Shannon was 22 per cent higher on a passenger basis than at Dublin Airport. Aer Rianta spends 60 times more per passenger promoting Shannon than at Dublin. Of particular significance is the fact that to encourage traffic, the Aer Rianta Shannon passenger charges are 30 per cent lower than what the aviation regulator decreed they should be. It is clear where the balance is made up - from Aer Rianta's profits in other business areas.
There is a highly regarded notion abroad that Aer Rianta favours Dublin over Shannon, that it somehow works its magic to attract more aircraft to the capital than to Shannon. This is a fallacy, Aer Rianta does not attract any aircraft to any airport.
These events occur because of demand and hard-headed decisions made by airlines based on their analysis of this demand. It is only when the airline has seen the potential of a particular route and is ready to test it, that Aer Rianta is asked to provide some marginal incentive by way of discounts or promotional support. The cost of operating to an airport is only a very small fraction of an airline's total route operating costs (about 4 per cent). Any amount of tinkering with this figure is not going to drive the decision to fly the route. It may contribute a little but it is far from central. That is not to say that Aer Rianta should not be pro-active in persuading airlines to analyse fully possible new routes - and it is.
Aer Rianta does not stand accused of running a sloppy operation at Shannon (runway lights not turned on, that kind of thing) but only of not being imaginative enough, or worse, derelict in promoting the airport and finding rafts of new flights. The promotional budget for Shannon (shown above to be disproportionately high) constitutes only 6 per cent of the Aer Rianta total cash operating costs at Shannon. This (made up mostly of cash, not people) would appear to be the target of the reformers and the reforms under serious consideration would involve ripping apart the complete Aer Rianta corporate structure to get at this contentious little fraction.
A profitable (and self-financing) company is to be dismembered to make way for some local dynamo. This will be costly, both at implementation and in the future and a few realities need to be aired before it happens. Among them is the fact that real and sizeable economies of scale in the Aer Rianta operation will be lost and Shannon will become more expensive than ever to operate.
This is a small State of four million people and we have three large/medium-sized airports under Aer Rianta's control. As a nation we permit Europe to tell us how our finances should be ordered and how our major social obligations are to be discharged. Yet we do not trust what is seen as a Dublin-based company to run the three major airports in the State.
There is a need to keep the future of Shannon under constant review, to increase local participation in decision-making and to apply the necessary leadership and resources that will permit an informed promotional strategy to be effectively implemented. The board of Aer Rianta is ready to undertake this work and to make whatever internal structural changes may be necessary to give it every opportunity of succeeding.
It is worth remembering, however, that any amount of imagination, energy and money will not change the reality that Shannon is a large (and expensive) airport located in a sparsely populated area with some of the most primitive surface infrastructure to be found anywhere in the developed world. Shannon is very vulnerable and has been for over 40 years.
Aer Rianta has steered Shannon through this long period of change and challenge. It would be extremely regrettable if its dividend for this effort was to become the fall guy in the series of large-scale, expensive and, in my view, unnecessary structural changes currently being considered by the political decision-makers.
• Liam Meade is a non-executive director of Aer Rianta and a senior marketing executive with a Shannon-based aviation services company