Blue-sky thinking needed to secure airport’s future

Ryanair, US routes and independence from Dublin are all key issues for the airport’s survival, writes Seán McCárthaigh.

A CityJet executive told TDs: ‘When we mentioned Shannon Airport to our colleagues in Air France, they did not know where it was. They looked up Shannon on the internet and asked if I was mad because nobody lives there.’ Picture: Press 22

ONCE the darling of the Irish aviation industry through its international reputation as a strategic transatlantic hub since the 1940s, Shannon Airport finds itself at a very different type of crossroads in 2008.

It is no exaggeration to say the past 12 months have been among the most tumultuous it has ever experienced, with fears that Shannon’s importance could diminish amid competition from other airports.

In the current economic circumstances, which often disproportionately affect the aviation industry, the threats to Shannon’s status as the state’s second-largest airport have never been greater.

Although about 3.6 million passengers used Shannon last year, it represented a 0.5% decrease on 2006 figures — most other airports in Ireland recorded significant growth.

The fall-off in passengers was attributable to a combination of the continuing effect of the end of the “Shannon stopover” for transatlantic flights into Ireland, fewer transit passengers and the loss of flights to Dublin.

Nevertheless, the news that dominated the past 12 months was the controversial decision by Aer Lingus to move its landing slots at London Heathrow from Shannon to Belfast.

Although some of the reaction was overblown, it was a serious blow.

The news came shortly after management was looking to the future with renewed vigour having pushed through a plan to provide annual savings of €10m by axing 200 jobs.

But preliminary results from 2008 suggest Shannon’s worst fears are coming true as transatlantic traffic is down a dramatic 19% in the first six months of the year, largely as a consequence of the full effect of the open skies agreement kicking in last April. The agreement allows EU-based airlines to fly from any city in Europe to any city in the US and vice versa.

However, because of its transatlantic connections, Shannon is more exposed than others to the soaring price of aviation fuel, the weak dollar and the downturn in the US economy.

Still Pat Shanahan, the executive chairman of the Shannon Airport Authority, has set the ambitious target of reaching one million transatlantic passengers by 2013, even though the most traffic it ever attracted was 781,000 in 2006. It is offering transatlantic carriers discounts of 50% on charges during the winter in a bid to maintain traffic levels.

While Shannon has benefited as a fuel stopover for aircraft carrying US military personnel, it accepts such business is unpredictable.

But the authority, like their counterparts in Cork, have been hamstrung by the delay in being granted independence from the Dublin Airport Authority. The tension between both sides emerged when Mr Shanahan resigned as chief executive of Shannon over the failure of the DAA to inform him in advance of the loss of the Aer Lingus Shannon-Heathrow service.

Passengers to London have declined 16% as a result. Overall passengers figures are down 9% for the first half of 2008.

On a brighter note, Shannon expects to benefit from the planned establishment of a US Custom and Border Protection facility, which will enable passengers to clear US customs and immigration before boarding. “It will allow airlines to more effectively fly directly to US regional airports and go to domestic terminals in US hub airports,” said Mr Shanahan. “This will reduce costs, increase turnaround time and make it more attractive for airlines to use that facility.”

Shannon should also benefit from improvements on the Atlantic road corridor, particularly the section linking Ennis and Galway and the road tunnel under the River Shannon at Limerick.

The challenge in attracting foreign airlines was highlighted by Cityjet, the airline which maintained Shannon’s connectivity with a service to Charles de Gaulle Airport in Paris.

“When we mentioned Shannon Airport to our colleagues in Air France planning department, they did not know where it was,” its chief executive, Geoffrey O’Byrne White told a meeting of TDs and senators earlier this year. “They looked up Shannon on the internet and asked if I was mad because nobody lives there. They were not aware of it. It is not on the globe as far as the rest of Europe is concerned. We may find that hard to believe but it is a fact.”

There was also something ominous about Michael O’Leary’s disclosure that Shannon is one of only two loss-making airports for Ryanair out of its 28 European bases. Worryingly, given its lack of sentiment to any airport, Shannon has no guarantee that Ryanair will keep its services when its deal expires in 2010.

Indeed, any increase in charges would probably see Ryanair depart the mid-west with undue haste.

Privately, the airport must be concerned at the risk posed by the possibility that Ryanair could withdraw some or all of its services as the airline accounts for 60% of all passengers now using Shannon. As such, locals in the mid-west must hope that Shannon, with its history of innovation from duty free shops to airport management services, will continue to adopt to a new and challenging era.