Flying over Shannon

Cork threatens Shannon’s title as the state’s second busiest airport after 15 years of successive growth, writes Seán McCárthaigh.

WHILE Cork has always enjoyed its position as the country’s second largest city, its airport has always had to be content with occupying third place in the shadow of Shannon with its long-standing association with glamorous transatlantic travel and thousands of US tourists.

Yet, over the past decade while both airports experienced large growth in passenger figures, Shannon has rarely been more than 500,000 passengers ahead of its near rival.

In 2004, the gap between the two airports reached its narrowest when Cork’s passenger total was just 140,000 behind Shannon, while last year the difference was about 440,000.

Cork, with its more populous natural hinterland, is threatening to challenge Shannon as the state’s second busiest airport as the latter has already recorded a 9% decline in passenger traffic in the first six months of 2008, making it likely that the two airports will be vying closely for No 2 position to Dublin by the end of the year. Last year, Cork reported its 15th consecutive year of growth with almost 3.2 million passengers using the airport — an impressive record by any standard.

Indeed, it would be a huge surprise on current trends if Cork has not overtaken the airport with which it is likely to enter into cut-throat competition by the end of 2009.

Cork has always had significantly more passengers travelling to British and continental European destinations, whose numbers are holding up better than transatlantic routes in the current downturn.

More than ever Shannon’s problems have become Cork’s opportunity as the latter has enjoyed a 13.5% increase on its London-Heathrow service so far this year — a result that suggests Cork has benefited directly from the controversial decision of Aer Lingus to pull out its services on the same route from Shannon. For that reason, frustration within the Cork region has reached new heights over the serious delays in granting the airport independence from the Dublin Airport Authority (DAA) as promised four years ago. There is distinct bitterness among Cork business interests about the manner in which former Apple computer executive Joe Gantly announced his retirement as chairman of the Cork Airport Authority (CAA), shortly after he used his casting vote at a board meeting last April to controversially accept a debt of €113m on its new terminal in order to gain independence for Cork Airport.

Many locals feel the decision represented a capitulation by the CAA given that both Cork and Shannon — which currently operate under the control of the DAA — were promised debt-free independence by the Government when the formal decision to separate them under the State Airports Act 2004 was first announced.

The position of CAA chairman remains unfilled, despite Mr Gantly formally stepping down from the position last weekend. Delays in naming his successor and in granting independence to Cork and Shannon have led many Munster business people to believe that, at best, the Government is guilty of an unfathomable lack of urgency and at worst, a potential revision of the original decision is afoot.

Chambers Ireland, which represents 60 chambers of commerce, claims the continuous procrastination since 2004 has left all three state airports “in a precarious governance position”.

Fine Gael TD Bernard Allen believes the €113m debt, if left unchallenged, by any new CAA chairman could permanently damage the airport’s growth potential. “The fear is that a party hack who will be a puppet for the minister will be appointed. We don’t need someone who might put political affiliations before the needs of the airport and the Cork region,” he said.

He also expressed concern that the airport authorities in Cork have looked at selling off some of its land bank to defray the level of debt, despite official denials that the matter is under serious consideration. Efforts to get comments from the management at Cork Airport (representing the DAA) and the CAA last week were met by both sides effectively kicking to touch.

The general vow of silence that has taken over the DAA and the boards of Cork and Shannon airports over their independence is evidence of how politically sensitive the issue has become. A spokesperson for Transport Minister Noel Dempsey said the airport authorities at Cork and Shannon had recently submitted revised business plans to the DAA that are expected to be forwarded to the Department of Transport with detailed commentary from the DAA shortly. The plans must be formally ratified by both Mr Dempsey and Finance Minister Brian Lenihan for the separation to proceed.

IN recent months, DAA chief Declan Collier has admitted the business plan process has proven “complex and protracted”. It is also clear that the DAA is unhappy with some elements of the business plans submitted by both Cork and Shannon, although the company has refused to specify exactly where the problem lies.

However, it is understood DAA executives are annoyed the revised plan by Cork is virtually unchanged from the one submitted when the airport assumed it was going to be debt-free.

In recent weeks, Fine Gael senator Jerry Buttimer released confidential figures presented to the CAA that showed retail income has fallen by 12% in the past year, while car park revenue is down 16%. He claimed the disappointing results were further evidence of the financial crisis caused by the continuing uncertainty about the airport’s debt levels. Although Cork Airport representatives didn’t directly challenge the FG figures, they insisted passenger numbers for the first half of 2008 were up 7% — or 100,000 — to 1.6 million.

Airport management also remains confident that Cork is on target to break last year’s record figures, despite the withdrawal of another airline, Centralwings, in the spring, and which followed the withdrawal of Czech Airlines and Malev the previous year. Mr Allen, however, claims passenger numbers through Cork in recent years have been artificially boosted by the area’s large immigrant community, especially thousands of Poles — a phenomenon that is likely to diminish in importance as the economy enters a potential recession.

Many local business interests in Cork are also unusually empathetic to Michael O’Leary’s description of the new terminal at Cork, which costs €180m, as a “Taj Mahal”. Although it is designed to facilitate up to five million passengers per annum, many people like O’Leary feel the grandiose project will be a millstone around Cork’s neck for years to come.

Another potential risk for Cork (that can also be considered an opportunity) is that Ryanair could soon threaten Aer Lingus as the largest player at the airport given O’Leary’s clout when it comes to negotiating landing charges. Passenger charges at €7.75 per person already compare poorly with both Dublin (€6) and Shannon (€5) and Cork is unlikely to be able to offer superior deals if saddled with a €113m debt.

The Ryanair chief has also shown himself to be anything but a shrinking violet when it comes to implementing the threat of moving services to a rival airport if inflexibility is shown on the issue of charges.

Asked recently if he intended to play Shannon and Cork off against each other in a bid to obtain lower fees, O’Leary replied without hesitation: “Absolutely.”

Add in the recent declaration by senior Aer Lingus executives that Cork is unlikely to get any transatlantic route in the near future because of rising aviation fuel prices and the airport’s immediate outlook isn’t as rosy as first appearances might suggest.