TOURISM and travel will be the first industries to feel the effects of Britain’s exit from the EU with Shannon very much in the frontline of the Brexit fallout.
With 1,600 people employed across 40 companies, Shannon’s aviation industry is of huge importance to the Mid West region, not just in terms of job creation but also as a driver of the leisure and foreign direct investment (FDI) sectors.
Unsurprisingly, the first moves are coming from the airlines with Ryanair announcing the purchase of 52 new aircraft and adding new routes while Aer Lingus is expanding its transatlantic operations from Dublin and Easy Jet is looking at a new European base.
This was very much in line with the opinions expressed by Irish Aviation Authority chief executive Eamonn Brennan when he addressed local business leaders at a Shannon Chamber function last week.
Emphasising the importance of recognising the strengths, weaknesses, opportunities and threats likely to be created by Brexit, he said that the aerospace sector is worth €4.1 billion and 26,000 jobs to the economy, with the tourism sector adding an additional €5.3 billion and 180,000 jobs.
“There are 155 Air Service Agreements, 42 of which are through the UK’s EU membership and it will take more than two years to straighten this out. The Great Repeal Bill will create two and half tonnes of paper just to write the legislation. It’s just a mess,” he said.
“However there is hope for Ireland as the UK white paper ranks protecting their ties with us as their fourth most important priority, even ahead of controlling immigration on their top 12 items.
“But Shannon needs to remember that it is not the centre of the world in Ireland. It’s Dublin and you need to realise that.
“You left the DAA to get more independence – use that and sell what you are best at. An alternative to Dublin, great infrastructure, a quality of life outside of packed capital.
“CEOs are troubled trying to relocate in Dublin as schools, houses and infrastructure are bursting'” Mr Brennan explained.
Referencing Shannon’s unique selling points – a demand for long-haul traffic, the Shannon Group’s landbank and tourism products, and its US Customs and Border Protection (CBP) – he cautioned on the wisdom of banking on CBP for the long-term.
Citing Abu Dhabi, Manchester and Gatwick, he said that CBPs would be introduced to many more airports, wiping out Shannon’s advantage in this area.
“The advent of new aircraft types that require less maintenance, repair and overhaul is another aspect to be mindful of. Another dilemma for Shannon is its catchment area, which is a critical determinant in an airline’s destination choice.
“This can be a double-edged sword for Shannon as there is little point in attracting new airlines if the local population is not filing the aircraft. It’s a simple fact that airlines will not continue a route if people do not use it.
“Shannon needs to market wider than the region. Links with Galway and the West, Kerry and more. You have a great airport and you need to fill it up with business.
“You can do that in several ways. There is a demand for long haul ‘point-to-point’ travel and Shannon can offer that and business people quite often don’t like using hubs like London and Schiphol etc.
“Ireland makes the most trips by air to the UK, a jurisdiction that is 60 per cent of capacity at Shannon, Knock and Kerry airports. 63 per cent of these trips to the UK would not take pace without air so anything that affects these close links could tip the broader economy into recession
Plans to build a new hanger at Shannon have been seen as raising an opportunity, given that cargo hangarage in Ireland is in short supply.
Mr Brennan called on local business leaders to lobby for the elimination of rates on hangars, which, he said, is the greatest deterrent to operators getting into or expanding their maintenance and repair facilities.
“Hangars by their nature have to be large to cater for aircraft size so a lot of the space being rated is therefore at an elevated level and unused. Rates of the magnitude currently being levied do not make sense and are a huge deterrent to operators availing of the many untapped opportunities in the sector,” he said.
The IAC chief went on the suggest expected outcomes from Brexit
“We are looking at the likelihood of lower trade, higher prices, less attractive position for tourism and less efficiency in travel.
“Air service agreements will pose a great difficulty to UK-based carriers by not being in the EU. Many of them will seek Irish air operator certificates (AOCs) and therefore need to establish bases here.
“Shannon can gain from those short-term opportunities as aviation will become a significant negotiating tool.”
“Ryanair is looking at basing fewer aircraft in the UK and more in mainland Europe. Shannon can get a piece of that if the routes are supported.Norwegian Air is likely to increase aircraft across the North Atlantic routes with two more routes to be announced.
“Irish airlines can survive and thrive by competing and Shannon needs to develop more point-to-point travel options.
“Despite the perception, the new runway at Dublin is huge opportunity for Shannon as it is not likely until at least 2020 so there are short-term gains there.
Dublin has capacity constraints at peak times so there could be an airline overspill if marketed right.
“There are also opportunities in aviation sub sectors like cargo, maintenance, hangarage and business jets, as well as a new industry in drones with aircraft test areas.
Shannon Group chief executive Matthew Thomas said it was key for the region, and beyond to support the existing routes out of Shannon and thereby create a demand for increased schedules and destinations.
He referred to Norwegian Air’s new destinations to Rhode Island and Stockroom as well as routes to Frankfurt and plans for “SAS to dip their toe in the market”
“€20 million is to be invested into Shannon this year enhancing facilities including the runway, restaurants, executive lounges and the Duty Free shop and we need to explore developments like the Scandinavian market opportunities.
“SAS is a very large carrier who is seeking to get an Irish AOC and this has a huge potential to grow.
“We see this as a time of opportunity for the region and we should be confident in its compelling economics.
“Airlines don’t fly benevolently; if there is no demand for a route, they can make a decision to leave very quickly. Similarly, if we demonstrate there is real demand, they will certainly add more capacity,” he concluded.