'Radical overhaul' needed for Irish airports to contribute to recovery
Published 02/09/2010 | 05:00
The Irish aviation sector is in need of a "radical overhaul" if airports here are to contribute to an economic recovery, a leading airline analyst has said.
Joe Gill of Bloxham Stockbrokers claimed that the placing of Aer Arann into examinership last week "lays bare deep structural problems" in the country's aviation sector.
"Passenger taxes, taxpayer subsidies and very large airport charge increases have combined to kneecap commercial aviation in Ireland," he said. "A radical reform is required to enable this critical piece of the Irish economy contribute to a recovery."
Mr Gill pointed out that between 2002 and 2008 Aer Arann received €108m in subsidies to operate so-called public service obligation (PSO) routes to small regional airports in a period when it carried a total of just six million passengers.
"These are remarkable sums of money and help explain why PSOs are unlikely to be sustained after 2011," he added.
Mr Gill said the difficulties at Aer Arann were part of the "demise of Irish commercial aviation which has been aggravated by a severe recession and the (volcanic) ash event last spring".
He added that since the Government allowed airport charges to increase by 40pc during a recession, and introduced the controversial airport departure tax, they have made Irish airports materially less attractive to airlines.
"In a landlocked economy these decisions might be deemed eccentric but harmless. In an island economy hugely dependent on international trade and tourism, these actions are unequivocally damaging," he said.
Mr Gill has postulated that the Government scrap the planned €5bn central line metro in Dublin and use €500m of the funds to refinance the Dublin Airport Authority, and in return force a complete separation of Cork and Shannon airports as well as put in place at least a five-year cap on airport charges.
Mr Gill said "strong decisions" needed to be made to convert Dublin, Cork and Shannon airports into "competitive gateways" for the Irish economy. He added that if PSOs are scrapped next year the viability of Waterford, Sligo and Galway airports would be extremely uncertain.