SHANNON Airport is faced with a significant threat to its viability under current ownership arrangements, according to the Booz and Company report.
Commissioned by Minister for Transport Leo Varadkar
in a bid to identify and analyse the future of the three state airports the report, published in part this Wednesday, recommended that full separation from the Dublin Airport Authority would provide the greatest autonomy and incentives to deliver traffic growth.
Responding, Deputy Kieran O’Donnell told the Limerick Post:
“It clearly states that the current model at Shannon Airport is not working and that a fresh look at new ways to improve it are demanded.
“It is also made clear that Shannon needs to be independent of the DAA if it is to improve passenger numbers.
“The demand for the development of landbanks around the airport has been further strengthened”
The report reveals that Shannon has been hardest hit of the State airports in the four years to 2010, with a fall of 50% in passenger figures, while operational costs remain high.
It suggests that opportunities to develop niche businesses would be further enhanced should the airport be more integrated with the surrounding industrial developments, in particular the Shannon Free Zone, which is currently owned and managed by Shannon Development.
According to the report the loss of Shannon as an asset is “unlikely to create significant risks to the DAA’s Financial viability”.
However, it does state that the airport would require financial support to maintain its current size and operating capacity.
“Integrating the Shannon Free Zone with the airport would address this issue”.
It also recommends the exploration of new sources of revenues, “including exploitation of land banks, cargo business potential and improved expansion of the US pre-clearance facility to include cargo”.
However, the report also states that there is “good reason to believe that Shannon Airport will continue to require subsidies from the DAA and that traffic will not recover to previous levels, at least in the short-run”.
The Booz report recommends two approaches for the future control of Shannon.
The first recommends a DAA restructure, with each airport given the status of independent subsidiary within the overall airport group.
“The independent airport boards would set strategic direction for the airports and appoint individual management teams with responsibility for developing tailored business plans”.
The second recommends separating out ownership and operation of Shannon Airport under a local concession model.
Under this approach the composition of the Local Authority holding entity could include Clare and Limerick County Council, with the former recently approving such an approach.
“The holding company could also include Shannon Development as part of a move to integrate the airport with nearby industrial land, as well as input from relevant commercial interests and public bodies as required”.
