Business Irish

Sunday 21 October 2018

Knock thriving on wing and a prayer

As Ireland West Airport prepares to welcome Pope Francis, boss Joe Gilmore tells Ailish O'Hora his hopes for a Brexit-beating future

Joe Gilmore says the airport is 80pc reliant on the UK and Brexit is ‘potentially catastrophic’. Photo: Keith Heneghan / Phocus
Joe Gilmore says the airport is 80pc reliant on the UK and Brexit is ‘potentially catastrophic’. Photo: Keith Heneghan / Phocus
Ailish O'Hora

Ailish O'Hora

It's all go at Ireland West Airport, or Knock as it is known locally in Co Mayo. There's a frisson of excitement about the place and managing director Joe Gilmore is upbeat about the exposure the airport will get from the arrival of Pope Francis later this month. He will fly into the airport on August 26 for an hour-long visit to the nearby Knock Shrine.

"It's obviously going to be tremendous event," said Gilmore.

"It's like a culmination of what the airport was put here for in the first place - it's the closing of a chapter started by the visionary Monsignor James Horan," he added.

Monsignor Horan was the man behind the controversial construction of the airport back in the 1980s on a "foggy, boggy hill" as one politician described the location of it at the time.

But Gilmore isn't taking much credit for securing the visit of the Pope later in the month.

"From an airport point of view we had little input. It's all down to the Archbishop and Father Richard Gibbons of Knock Shrine that convinced the powers that be in Rome.

"While it's symbolic and great to have him fly into the airport, it was all down to the shrine really," he said.

The Pope's arrival coincides with a transformational time at the airport.

It is undergoing a facelift as part of a €15m investment which is being spent on new passenger facilities, terminal upgrades and infrastructural works across the airport facility and runway.

The runway investment alone is €12m, with 75pc of that funding coming from the Exchequer.

But the infrastructure upgrade is needed, explained Gilmore.

"The base infrastructure of the airport is over 30 years old and we are now in the process of upgrading the runway - we are at the pre-planning stage with that," he said.

"The contract is out to tender and the expectation is that the contract will be awarded in the next few weeks to the successful bidder - you're talking about the usual international players like BAM, Lagan, CRH and Colas - the main infrastructure firms that are involved in the development of our other airports, like Dublin and Cork.

"That's why investment in the regions from the Exchequer is important, because airports like ourselves don't have the funds for major capital investment. We can fund our operational and overhead costs for the most part. The Taoiseach visited here recently and was very upbeat about the future and we have to acknowledge the support from Government," he added.

While Ireland West Airport it is not state-owned, it does receive state aid under the Public Policy Remit Operational Expenditure Subvention Scheme.

A development fee of €10 is charged to all departing passengers from the airport who are aged over 12 years, and this money supports the day-to-day operations.

Pre-tax profits at the company that operates Ireland West Airport Knock in 2016 increased more than fivefold to €642,788, according to the most recently available accounts.

In a record-breaking year for the airport, passenger numbers increased by 7pc or 48,000 to 733,869 as revenues increased by 3pc to €12.6m.

The airport is now experiencing strong growth figures, but there were much leaner times during the recession, says Gilmore.

"I joined the airport in 2009 and the recession was in full flow," he says.

"We didn't have any job losses, but we had to look at a voluntary redundancy programme at the time. And in fairness to staff they took pay cuts and we had to pare back on costs anywhere we could.

"Our core business with the UK remained strong, because in a strange way we benefited from people commuting to work there.

"Then the tourism business benefited from the lower Vat rate and business began to grow from that. It's swings and roundabouts. I can't commend the staff enough for their work through it - it was three or four years of focusing on survival. Our core customers also stuck by us. There's a strong brand here and with low-cost travel and easy access to markets it has grown," he says.

He added that the value it brings to the regions is well recognised now as endorsed by the investment from local authorities.

"We employ close to 200 people here and onsite there's another 50 to 60 people employed through the airlines, car hire, etc. So, from a local perspective, we're quite a big employer," Gilmore says.

He added that there's about another 1,000 jobs supported downstream - from suppliers to the airport, the tourism sector, food sector and hotels.

Last year over 200,000 passengers flew into the airport and stayed in the region for an average of five days.

They spent €150m locally, says Gilmore adding that the data is tracked closely.

He added that the Wild Atlantic Way has been a great boost for the airport, as it serves as a central access point, particularly from the UK where the airport gets all-year business.

"There are nine cities served from the UK and we've seen big increases in the past four or five years. Even this year, we're are seeing strong numbers," he says.

Passenger numbers at the airport have grown by 20pc over the past five years and Gilmore is hopeful it will get close to 800,000 by the end of this year.

The longer-term plan is that by 2024/25, the airport would have secured an investor and would be in a position to stand alone financially.

However, it would continue to seek Exchequer funding for infrastructure upkeep and development.

Airport executives sat down with Government officials in 2014/2015 and developed a 10-year growth plan in association with the Department of Transport and seven local authorities. Following on from that, the authorities took a 17.5pc stake and invested €7m. This was completed last year.

The Horan International Trust owns the remaining stake.

But Gilmore said the airport is looking for outside investors who would come on board as a development partner and be willing to take a longer-term look at a return on investment.

"The type of investor we are talking about is one who would come in and actively promote the region, tourism and economic development. You are looking at a 10- to 15-year period before you would see returns on this type of investment. It's more suited towards a pension fund maybe," he added.

The longer-term objective also includes growing passenger figures and to get the figure well north of one million, maybe 1.5 million, by 2024/2025.

The airport is also looking at new markets.

So could passengers by flying to Paris from Knock in 2019? It's possible.

Gilmore added that airport executives are talking to airlines such as Aer Lingus and Ryanair about Germany and France - with Frankfurt, Dusseldorf and Paris as potential destinations that could be reopened and added to existing strong markets such as Spain, Portugal and Italy.

The airport also has a co-operation agreement with Stewart Airport in New York and has charter services going to Boston and New York for the past few years, with the US another potential growth market.

Of course, there are challenges - and top of the list is Brexit.

"So far, no, there hasn't been a Brexit bite. I think the challenge with Brexit is the uncertainty and obviously our business is about 80pc dependent on the UK - so anything to do with UK trade or traffic could have a serious impact on us.

"As we get closer to the deadline we are taking all the steps we can, contingencies if there's going to be increased security checks, immigration and on that side we're looking at what infrastructure requirements there might be.

"From a west of Ireland and from a SME perspective, Brexit presents the biggest risk over the next few years and if there is what they are terming a hard Brexit and if the UK crashes out in March there is a significant risk of major disruption to the aviation sector in the short term.

"That could be potentially catastrophic for us, but how it manifests itself remains to be seen. If we couldn't provide our services there would be an impact on employment, tourism. We believe the business model is still strong, but if there are legal, or safety situations that would not permit flights then that would be the worst-case scenario.

"But we don't expect a catastrophic outcome and we remain hopeful that the political powers will find a way to allow that not to happen," he adds.

Gilmore appears to be a natural optimist and he is focusing on his vision for the future, maybe taking a lead from the Monsignor himself.

"My idea for Ireland West Airport in 2025 is that we would have passed well over one million customers, we would have an additional 10 to 12 routes into Europe and also direct access, at least direct seasonal access, to the US through Stewart, and potentially other airports."

He adds that there are other potential development prospects at the airport.

Last year a 300-acre land bank around the airport was designated as an Strategic Development Zone (SDZ) and there's a full SDZ planning scheme being developed by Mayo County Council that will go to consultation later in the year for the region.

"That gives certainty around planning for aviation-related and other commercial businesses.

"It will give people an incentive to come in and invest in ancillary services like aviation-related businesses like maintenance and repairs businesses, maybe flight training schools. In relation to that, there's a reason to believe we could have a small hotel being built here. I'd like to think by 2025 there would be another 1,000 to 2,000 jobs located in the vicinity of the airport if we can get the right mix."

It might now seem hard to believe that Ireland West Airport was once scoffed at for its location on a 'boggy hill' and was the butt of many jokes.

"In my past I worked down in Shannon in the industrial park with GE and I admired what they achieved there.

"There's no reasons why airports can't act as gateways or enablers for other businesses and I think there's great opportunity," he says.

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