Departure clips airport’s wings

RYANAIR’S swift departure from its Cork flights to Glasgow and East Midlands could not have come at a worse time for Cork Airport.

The beleaguered Cork Airport Authority is saddled with a debt of €113 million for a terminal building of the type that is being built in Europe and the US for 50% of that price.

Worse still, it had been told it would not have to pay off the debt itself only to have this promise broken by its bullying big brother in Dublin, from whom it can’t get a legal separation.

CAA is expecting just a 7% rise in passenger numbers this year, which will not be enough to pay off the yearly repayment on the massive loan.

Added to that, it lost the contract with Centralwings, a low-cost Polish airline, in the spring, following the withdrawal of Czech Airlines and Malév the previous year.

Ryanair announced the withdrawal of two of its five British routes from Cork on Wednesday because it said it should not be expected to be burdened with increased costs which would make the flights loss-making.

“We entered the routes on the basis there would be a zero charge, which barely made Cork competitive with many other offers which we have from across Europe. We clearly told the management of Cork at the time that if the costs increased at any time subsequent to the introduction of the route we would withdraw the route,” said Ryanair deputy chief executive Michael Cawley.

“We did not sign up for a five-year route support scheme. We signed up for zero cost and we told them that if the cost increased at any time by any amount particularly in the current environment when Cork in particular is very uncompetitive with other airports available to Ryanair across Europe, that we would cancel the routes,” he said.

“To think this is being caused by a €2.80 cost increase on 200,000 passengers is an outrageous step by CAA, which in our view has been visited on them by the dead hand of DAA.”

The Cork Airport Authority was brave in its defence, insisting the airline had taken on the routes in a deal which was premised on a five-year sliding scale. That meant it would be 100% free of charges in year one, 80% discounted in year two, and so on over the five years, it claimed.

When news emerged of the withdrawal of Glasgow and East Midlands, CAA said it could not be seen to favour any one airline by extending the terms of the 100% free discount.

However, Ryanair is not just any airline. It is the airline which gives Cork Airport 30% of its passenger throughput. No matter which way one looks at it, Cork Airport needs Ryan- air rather than the reverse.

Cork Airport Authority admits it is in a vacuum at present. Last week Transport Minister Noel Dempsey said he was considering business plans compiled by Cork and Shannon, and was awaiting a comprehensive overall document from DAA within a fortnight before making a final decision on the separation of the trio.

Until then its decisions depend on the will of DAA, which Michael O’Leary maintains is trying to “screw” Cork Airport in order to maintain its own dominance on new routes.

There have been repeated calls for the vacant position left by former chairman of CAA Joe Gantly to be filled by someone who can inject pace into the regeneration of the airport. As yet, there is no inkling of who that will be and what credentials are being sought.

Equity analyst with Bloxham, Joe Gill, laid out a game plan of what Cork needs to do to get out of the quicksand, including:

* Low landing charges and fast turnarounds of aircraft.

* Short and long-haul services, increasing passenger traffic to 6.5m in five years.

* Embrace carriers that genuinely offer low fares and are financially strong.

* Aggressively target British and European destinations to exploit the 450 million-strong market.

Ryanair boss Michael O’Leary said he has asked CAA about using its old terminal to no avail: “We would be in there like a shot. We have asked about four times if we could move back into the old terminal. We would base more aircraft there, open up new routes from Cork because clearly we would have a lower cost base... Cork Airport keep telling us ‘no, its off limits’.

“If it was a question of Cork Airport having the old terminal and no €100 million debt around its neck or the new terminal and the debt around its neck, it would have far better off in the old terminal.”