A GOVERNMENT department has defended paying €2.75m for an airport on the Aran Islands that had been valued at €600,000 in an independent report they commissioned.
The purchase of Aerfort Chonamara was confirmed in December by the Department of Culture, Heritage and the Gaeltacht, which said the airport was “of strategic importance”.
A copy of a valuation report, obtained under FOI however, has revealed that the Department was told it was worth only €600,000 in January of last year.
That report described a series of weaknesses and threats to the airport including a “small and decreasing customer base on the Aran Islands”.
It said the airport was of “limited potential beyond current use” and that wildlife directives could prevent further expansion.
The valuation report said air services in the region were available at Galway, Shannon, and Knock Airport and that engineers had identified other issues including title concerns that would have to be dealt with.
Its valuation says the airport was worth €600,000 assuming vacant possession and that it was “exclusive of all bespoke fixtures and equipment”.
It said that the “business/trade element” of the airport is also excluded.
The report said the valuation was complicated by the “unusual nature of the property” as it was very difficult to find a comparison for it.
It said the airport did have strengths as the only airport linking the Aran Islands to the mainland along with a “dependent customer base”.
The report said there was “strong tourist demand” for the airport and that there were other alternative uses that could be pursued including a remote working hub, an adventure centre, or a media/studio facility.
However, it warned that a “change of planning use” for additional types of development would not be straightforward.
In a detailed statement, the Department of Culture, Heritage and the Gaeltacht defended the purchase saying a second report they had commissioned indicated that building a new airport on the Aran Islands would cost at least €7.9m.
They said: “The aim of the initial valuation was to provide a market value of the existing asset.
“This valuation examined the buildings and runway without giving consideration to the construction costs of [a] new facility similar to the existing asset. This valuation came to €600,000.”
Their second report suggested construction of a new terminal, hangar, fire tender shed, runway, apron along with external works would cost €7.9m.
This did not include other potential costs including VAT, site acquisition, planning fees, airport equipment, lighting, navigation equipment, and other costs.
They said: “Arising from these considerations, as well as detailed contract negotiations with the vendor and approval by the Department of Public Expenditure … the Minister of State [Sean Kyne] approved the purchase of the airport at a cost of €2.75m.”
They said the airport’s acquisition would ensure the Aran Islands would retain its air link and would continue to operate into the future.
The Department said they believed the “one-off acquisition” would eventually result in savings to the Exchequer.