Cork Airport’s €200m debt ‘is a red herring’

Cork Airport’s €200m debt is a “red herring” that has no impact on its day-to-day operations but which would be even greater today had the airport been responsible for it over the past number of years, rather than the DAA.

Much of the decline in passengers passing through the country’s second-largest airport has been attributed to the overhanging debt arising from the building of a new terminal which opened in 2006,

The debt, however, sits on the balance sheet of Cork Airport’s parent company which also services the debt, according to DAA chief executive, Kevin Toland.

His comments have been echoed by Cork Airport managing director Niall MacCarthy: “As much as we’d like a magic wand to wipe off the debt… it would be wonderful in terms of it would be a headache gone but in terms of what we charge to airlines and in terms of the challenges we have in building traffic, it has no impact.

“Our charges are based on recovering our operating costs and we don’t service the debt as part of those charges.”

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Speaking at a Cork Business Association (CBA) breakfast meeting, Mr MacCarthy said Shannon’s separation from the DAA has allowed it to strike deals with airlines on landing charges that no commercial airport can compete with.

Despite this and having lost 102,000 passengers to Shannon last year — of a total 110,000 passenger reduction — as a result of Ryanair switching a number of Eastern European services from Cork, Mr MacCarthy denied that the southern airport would continue to lose for as long as the situation continued, describing the last 18 months as “a one-off period that has hit us bad”.

“The airlines are worried about filling the seats and getting a good yield, and in reality, although they pretend that the airport charge is the significant issue, it’s only a small proportion of the ticket price so it’s about proving out demand,” he said.

Shannon Airport’s independence and accompanying €105m debt write-off has allowed it to undercut Cork; Ryanair previously said Cork needs to cut charges to attract new routes.

While Cork Airport’s charges — applied on a sliding scale which rises to €8.60 after five years — are low in comparison to Dublin (-17%) and its European peers (-8%), it cannot compete with “ultra low cost” Shannon.

Mr MacCarthy said, however, he cannot and will not criticise government policy and added the Save Cork Airport campaign, which has more than 24,000 likes on Facebook, has been hugely unhelpful while the DAA is doing everything it can for the growth of the airport.

Mr MacCarthy said he is hopeful of landing a new German route in the near future and expects the airport to return to growth next year, but repeated calls for a more coherent tourism policy to market Cork and the Munster region.

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