Thursday, December 15, 2011

Ireland: Radical revamp could save Shannon Airport

Shannon and Cork airports should not be sold by the Government, but radical new operational structures could ensure their futures, according to a major new report.

The Government had been considering the sale of the airports as part of a wider proposal to offload state assets.

The report, undertaken for the Department of Transport by global consultancy group Booz & Co, also insists that Shannon Airport has a viable future but needs to be removed from the Dublin Airport Authority's remit so it can achieve its growth potential.

The report has also concluded that because Cork Airport has substantial debts linked to the construction of a €100m-plus terminal there in 2006, it should remain linked to the DAA, the Irish Independent understands. But Cork should also be given greater autonomy, Booz says.

Sources added that the report suggests that selling Cork Airport and transferring its debt to Dublin Airport, or selling the Cork operation with its debt attached, are not viable options.

"It should be noted that both Shannon and Cork airports are incurring significant losses and profits from Dublin Airports are no longer sufficient to cover those losses," Transport Minister Leo Varadkar told the Dail in October.

Cork Airport lost over €10m last year, while Shannon Airport made about a €5m loss. However, much of Cork Airport's problem is its debt costs rather than operational losses.

The report has also indicated that Cork Airport could be sold at some stage in the future when it's on a sounder financial footing.

The report by Booz has also warned that although Shannon has a future, its cost base is currently too high.


Booz recommends that Shannon be removed from the DAA's control and be allowed to develop growth opportunities to boost passenger numbers, routes and niche activities. But the airport shouldn't be sold, the report adds.

Instead, it proposes that the ownership structure be changed. If adopted by the Government, that would possibly see local agencies such as Clare County Council, possibly Limerick County Council and groups such as Shannon Development becoming the new controllers of the facility. The report suggests that Shannon could then be operated on a concession basis, with a contract to run it awarded to a third-party specialist.

"That would balance local objectives with the need to create a long-term viable operation," the report concludes.

It's understood that the Mr Varadkar is still reviewing the report.

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