Shannon’s future

high-res-Shannon-piceolas outlines initial suggestions for the future of Shannon Airport.

Shannon Airport has the opportunity to become an international crossroads for business aviation but needs a strategy that will take the airport to over two million passengers in year one and to three million passengers in year five. Those are some of the conflicting views arising from the debate sparked by Transport Minister Leo Varadkar’s decision to separate the airport from the Dublin Airport Authority (DAA) and bring it together with Shannon Development to form a new entity, with a commercial mandate in public ownership.

Varadkar has said that the new entity must work closely with the IDA and Enterprise Ireland to develop the potential of the aviation sector, and explore other opportunities with those agencies for further prospective investments in the region.

Shannon Development’s functions in relation to enterprise and foreign direct investment will transfer to Enterprise Ireland and IDA respectively, and its tourism functions will transfer to Fáilte Ireland. The Shannon Free Zone, a 243-hectare international business park beside the airport, is seen as central to future investment in the area.

The Minister has claimed that the changes “will mean that indigenous and foreign businesses in the region will have direct access to the comprehensive range of supports from the State enterprise agencies, as well as to a dynamic international airport with extensive property holdings.”

He proposes that a tax-incentivised ‘international financial services-type’ model for the aviation sector be established at Shannon. This would attract new industries such as aircraft refitting and recycling, which he understands, don’t currently exist in Europe.

Private sector investment would be required, Varadkar said, but the Government will need “step-in powers” should things go wrong.
The new entity will be established “free of net debt”. The Minister believes that much of the €8 million losses recorded at Shannon last year arose from interest payments on its accumulated debts of around €100 million.

Shannon Airport’s annual reports show that passenger numbers have decreased by 44 per cent from 2007, when it dealt with 3.6 million passengers, to 2011 when it had 1.6 million passengers (30,000 whom were troop and transit passengers).

Former Director of the Shannon Airport Authority Tadhg Kearney has stated that the debt-free element should not come at the price of giving up Aer Rianta International, the travel retail company based at Shannon. He criticised the DAA’s policy of imposing a single business model on its three airports, saying it had “crippled” Shannon. According to Kearney, the new body tasked with running Shannon must build an “unconventional” strategy that increases passenger numbers over two million passengers in year one and to three million in year five.

Aoife O’Sullivan, a partner with aviation specialist legal firm Gates and Partners, has told an Irish Business Aviation Convention in County Clare that the newly formed Shannon could become a registration centre for private jets. This could even lead to private aircraft manufacturing, she contends.

O’Sullivan said that Shannon has an outstanding platform to launch itself as an aviation centre of excellence, between its heritage as the first location for aircraft leasing, having excellent hangar space, a nearby college and a runway that can accommodate all aircraft. It is also in the right time zone for the majority of international transactions.

A steering group has been established to determine the most effective organisational structure of the new entity. It will also develop an implementation strategy, setting out how it will help to achieve strong regional development, while supporting enterprises in the region.

The group is jointly chaired by Secretary General of the Department of Transport, Tourism and Sport Tom O’Mahony and Secretary General of the Department of Jobs, Enterprise and Innovation John Murphy. It is to report to the Cabinet by November.
DAA will be renamed to reflect the fact that it now operates Dublin and Cork airports.

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