Ministers allow failing airport to fly nest in move to secure future
SHANNON Airport will have to succeed on its own merits in the future after being cast adrift by the Government yesterday.
The failing airport is being cut loose from the Dublin Airport Authority, and now faces the huge challenge of having to drum up enough business to keep going.
Although it will be debt free, it faces the prospect of having to bring in more flights, boost its cargo business, and attract major aviation investors to locate nearby if it is to survive.
The Government has come up with the new plan for the airport after passenger numbers dropped by 1.7 million in the last five years, with Ryanair and Aer Lingus cutting flights.
Its plan means the airport will still be state-owned and there will be no immediate job losses, but there is confusion over how it will work.
The Government has rubber-stamped proposals to set up a publicly-owned firm that will run the airport independently of Dublin and Cork airports.
Many traders in the region believe the stand-alone organisation, which will be expected to fund itself, can help reverse declining passenger numbers.
But airline Ryanair said the decision not to sell off Shannon to private investors was a missed opportunity to create real competition between the country's airports.
Under the new plan, Shannon's €100m debt will be wiped out -- by going onto the Dublin Airport Authority's books -- but it is unclear what will happen to €8m a year in state funding the airport receives.
It will merge with the Shannon Development Authority and this means it will inherit 2,000 acres of land that it plans to develop into a "world-class" aviation hub.
It will be free to cut airport charges when it is severed from the Dublin authority's control.
However, it is unclear whether it can afford to do this or if it would make much of a difference given the limited catchment area for passengers.
Ryanair claimed it was capable of doubling its traffic at Shannon to airports in France, Spain, Italy, Germany and the UK, but only if airport charges were cheaper.
Chief Executive Michael O'Leary said its passenger traffic, which once totalled two million, was now 300,000 a year.
Among the other ambitious plans being considered for the new independent airport are:
• Aviation services, including maintenance, upgrading and storage facilities:
• An international cargo hub, for major industries including the pharmaceutical sector
• A storage hub for global charities
• A residential flight school and a Centre for Space Collaboration and Research Co-operation.
It is unclear when the plan will come into force although the Government hopes it will be before the end of the year.
Among the setbacks was Ryanair's decision in 2010 to reduce flights from Shannon to six destinations, blaming a Dublin Airport Authority decision to increase airport fees by 33pc to €6.30 per passenger.
Aer Lingus has suspended its winter transatlantic schedule over a three-month period from January to March for the last two years, leading to a reduction in seven round trips a week.
A recent report by international consultants Booz said the airport's future was at risk under its current ownership, and separation offered the best chance of growth.
A steering group that will plot the future of the airport plan will be announced shortly.
When asked about the future of state funding to the airport, a spokesman for Transport Minister Leo Varadkar said the new entity "will be placed on a secure footing".
"Minister Leo Varadkar and Minister Richard Bruton's intention is to bring detailed proposals on structures and mandates and legislative change before the end of the year," said a spokesman for Mr Bruton.