Delaying separation is a threat to survival

THE independence of Cork Airport is unlikely to be realised any time soon despite strong arguments that it is vital for its survival.

This has been a major political and local issue since the Dublin Airport Authority (DAA) took over the running of Cork and Shannon airports from Aer Rianta in 2004. It had always been the plan however, under The State Airports Act 2004 that the airports would be become independent entities.

The Government made a commitment in 2003 that Cork Airport Authority (CAA) would start independent operations debt-free. Then came the €220m debts associated with the new terminal.

In 2007, however, the Government said it believed Cork Airport must take on €100m of the debt when it gained its independence – in spite of concerns that it may spell dire financial straits for the airport. The DAA said it was refusing to carry the costs.

This reportedly caused bitter rows within the Cork Airport board and also with the DAA.

The Government appointed industrial relations expert Peter Cassells in February 2008 to mediate in the row. Cassells then recommended that Cork Airport take on €113m of the debt which the CAA agreed to.

Then in a further twist the Government said in December 2008 that it would be best to defer a decision on separation until 2011, “given the current very difficult aviation market”.

In making his decision in 2011, the minister for transport will take into account the prevailing aviation market and the business case for separation of the three airports, the department said.

According to a department spokesman the “minister has no proposals to postpone his decision beyond 2011”.

On the debt issue he said: “Much of the Cork Airport debt was incurred in financing the new terminal and other new infrastructure at the airport. In the event of full separation of Cork Airport, the minister’s position has always been that the sharing of this debt between the Cork and Dublin airport authorities would have to take account of what is commercially andfinancially feasible for both authorities.

“Following mediation on the matter in 2008 it was agreed that the Cork Airport Authority would take responsibility for €113m of the debt in return for the transfer to it of net assets of €220m, on the separation of the airport under the State Airports Act 2004.”

Cork Airport marketing manager Kevin Cullinane said as far as the airport is concerned it does not have to worry about the debt issue until separation is finalised.

Airport separation had always been signalled as vital to the survival of the airports. In a 2005 interview the then minister for transport, Martin Cullen, said the separation of the airports is “paramount to making Irish aviation more effective and efficient”.

He said it would be beneficial to the airports if they are allowed “to do deals with new airlines offering new routes, be more flexible and grow their own markets”.

He went on to say that for too long Dublin Airport had dominated the policy-making decisions of Cork and Shannon.

“How can we be serious about delivering effective aviation services when the dominant player in the market also controlled the strategies of its two closest competitors?”, he said.

Rumours are circulating that Cork Airport is happy to remain under DAA control but analysts say that for Cork Airport to truly compete with European airlines it needs to be independent.

The Government, however, seems to be taking its time on the issue especially in light of the 2011 deadline.

For Cork Airport to set its own agenda it needs to have the power to make its own decision separate from Dublin. It’s now six years since this has been proposed and for at least another year it will remain that way – to what detriment that will be to the airport and the Cork area remains to be seen.

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