Decision on future of Shannon in weeks

Transport Minister Leo Varadkar and the wider Cabinet will make a decision in the next five weeks on the future of Shannon Airport, while decisions on the futures of Cork and Dublin airports will be long fingered until the end of the year.

A major consultants’ report published by the minister yesterday said there is “an urgent need to consider alternative ownership” of Shannon so the airport can generate new revenue streams.

The day-to-day running of Shannon Airport needs to be taken over by a specialist airport operator if it is to be given the best chance of increasing airport traffic and returning to full viability, the Booz and Company report stated.

Booz and Company have recommended two options for the three Irish airports.

Under this first option, Shannon would separate completely from DAA and would be run by an outsider operator for up to 35 years.

The airport itself would still belong to the Government, however, and the terms of this ‘long-term concession contract’ would be determined by a board which could potentially include representatives from Clare and Limerick county councils as well as Shannon Development.

Cork and Dublin airports would remain under the DAA umbrella but would be run by subsidiary boards which would allow them greater control over marketing and route development.

The second option, offered up by the global management consultants, is to restructure the DAA and have similar independent subsidiary boards at each of the airports.

This option may not. however, provide sufficient independence to Shannon to spearhead a new business plan and reverse its fortunes. But the structure would facilitate all three airports separating in the future and would not affect DAA’s credit rating as Cork Airport is a cash cow for the DAA.

This second model would not be as positive for Shannon Airport. Under the existing DAA model, Shannon is not considered viable and it’s anticipated the airport may not meet projected growth targets due to higher airport charges and a questionable marketing strategy.

The consultants say that the best option for Shannon is to come out from under the DAA umbrella. But if this happens, they would need subsidies in the short term as they would have problems with cash flow.

To further reduce these cash flow problems at Shannon, Booz and Company have advised the airport to generate income from sources outside aviation, including improving business relationships with the surrounding industrial area such as the Shannon Free Zone.

According to the report, the “outlook for Cork is good within the DAA and it will continue to grow within the structure”.

Cork Airport stakeholders have long argued for their separation from the DAA with a greatly reduced debt. However, the DAA think that Cork “could generate free cash flow with which it could repay its debt”.

Shannon-based Fine Gael senator, Tony Mulcahy, said the Booz report strengthens the argument put forward by public bodies, regional development agencies, private organisations and politicians in the Mid-West region in relation to an autonomous Shannon Airport and Free Zone.

Mr Mulcahy said: “I spoke with Minister Varadkar today and reiterated my long-held belief that Shannon Airport will require full autonomy if it is to prosper in the future.”