Ryanair pawn - Cork must be allowed compete

Ryanair’s announcement that it is dropping two of its Cork routes to Britain has come as a blow not just to Cork Airport but also to the Munster region as a whole, because it will inevitably impact on tourism and thus jobs in the tourist sector.

Ryanair handles 30% of the air travel into and out of Cork Airport. The airline is engaging in hard-nosed business practices, which have been fundamental to its success. In order to attract new destinations, Cork Airport introduced a Route Support Scheme, which provided free airport charges the first year.

The scheme is designed to operate over a five-year period with a 20% drop in the level of support each year. Thus after five years the airline would be paying full airport charges on those flights.

Ryanair deputy chief executive Michael Cawley insists his company did not sign up to the five-year subsidy support scheme. It simply agreed to provide the flights to Glasgow and East Midlands on condition there were no airport charges for those flights.

“If the cost increased at any time by any amount,” Mr Cawley insisted, “we would cancel the routes.” He argued that concession was necessary because Cork is uncompetitive in comparison with other European airports trying to attract Ryanair.

Ryanair chief executive Michael O’Leary contends Cork Airport Authority (CAA) was willing to extend the 100% subsidy, but the Dublin Airport Authority (DAA) vetoed the idea. In effect, Mr O’Leary seems to be using Cork Airport as a pawn in his ongoing battle with the DAA.

Cork Airport, which is €113 million in debt, needs Ryanair more than Ryanair needs Cork Airport. It must raise €10m to service that debt annually. In the past year Cork Airport has lost the Polish Centralwings contract and both Czech Airlines and the Hungarian Malev Airlines have withdrawn.

Although the CAA has been expecting a 7% increase in passenger numbers this year, that would not be enough to pay off the huge debt with which the CAA is being saddled, not withstanding earlier promises. Ryanair is therefore in a particularly strong position.

The CAA is seriously disabled, waiting for the final break-up of Aer Rianta. Cork and Shannon have submitted business plans to Transport Minister Noel Dempsey, but he is waiting for a comprehensive overall document from the DAA. In the interim Cork Airport is a mere pawn in the struggle between Ryanair and the DAA.

This is a contemptible situation, because the whole region is likely to suffer as a result of apparent indifference. The airline sector is facing difficulties with the fuel crisis and the downturn in the international economy. It is important that Cork and Shannon airports should be allowed to compete without any hint of undue interference from the DAA.