The Dublin Airport Authority (DAA) has announced it will separate from Shannon Airport this month, but Aer Rianta International will remain part of the DAA.

The statement that it is to retain Aer Rianta International is hardly surprising, since the DAA would be in severe financial trouble if it didn’t, but the decision to hive off Shannon Airport has raised blood pressure levels amongst many who feel let down by the lack of investment from Dublin in Ireland’s famous landmark airport by successive governments over many years.

In a formal statement entitled ‘Restructuring – Shannon airport’, the DAA said: “Following its decision in principle, announced in May this year, the government has today announced that it has decided to proceed with a restructuring of Dublin Airport Authority plc (DAA) pursuant to which the business, assets and liabilities of Shannon airport will be separated from DAA on 31 December 2012 in accordance with the State Airports Act 2004 (the Act).

“Shannon airport will be transferred to Shannon Airport Authority plc, a separate State-owned company that was established pursuant to the Act. The government has confirmed that Dublin and Cork airports and Aer Rianta International cpt will remain under the ownership of DAA, that all existing group debt will be retained by DAA and that DAA will be renamed to reflect the revised nature of the group’s business arising from the restructuring.”

The Irish Government says that commitments have been received from two Shannon-based companies to create 850 jobs affiliated with the airport, but this is dependent on the separation of Shannon from the DAA.

 

A NEW BEGINNING FOR SHANNON?
Commenting on the development, Transport Minister Leo Varadkar said: “The decision taken today is an historic one and will free the board and management of Shannon airport, together with their employees, to bring a fresh approach to the future development of the airport. A key element of that future will be the development of an International Aviation Services Centre (IASC) in and around the airport, building on a range of aviation-related activities already undertaken in Shannon such as aircraft maintenance and leasing’.

“I am particularly struck by the degree of support for an independent airport across a wide spectrum of interested parties, including business interests, chambers of commerce, and local authorities. Airport users, service providers, and prospective new airport customers including airlines and companies have expressed an overwhelming desire to deal directly with Shannon on a separated basis”.

Meanwhile, the Chairman of the Aviation Business Development Task Force, Rose Hynes has welcomed the announcement to separate Shannon Airport from the DAA by the end of this year. The announcement was made as details of the plan for the new entity were unveiled. This five-year plan is said to be based around sustainable passenger growth to 2.5m passengers within five years and the development of the International Aviation Services Center at Shannon (IASC).

 

 

COMMENT. Doug Newhouse writes: The decision to hive off Shannon is nothing new, having been made last May by DAA and Government. That there is still continued speculation on whether Aer Rianta International will remain within DAA is astonishing to say the least however. Currently, the DAA would find it very difficult to function without the regular contributions from ARI and particularly considering the pressure that Dublin Airport is under and the Irish economy as a whole.

As reported exclusively here before, between 1988-2010, ARI has contributed nearly €370m ($463m) ‘in cash’ to the Dublin Airport Authority (DAA) and last year it delivered profits up 69% to €32m ($40m). By contrast, the DAA parent company recorded a flat turnover of €557m and a group profit decline of -9% to €30m ($37m), which it blamed on the impact of higher interest and depreciation charges. As a result, the DAA is in no position to lose ARI unless it finds a buyer for the retailer with very deep pockets indeed.

Meanwhile, the passion and disappointment amongst many of those and their families who helped build Shannon into such an important airport and industrial area and the headquarters for ARI is more understandable. The fact that Shannon was the birthplace for the duty free airport business will also not be lost on many.

In this vein, the local Irish press has already published a statement endorsed by former ARI executives Liam Skelly, Michael Hanrahan and David Hope. Within this, they point to the substantial expansion of ARI’s business in Russia and the Middle East in the eighties and nineties and suggest that this was set up by a Shannon team for Shannon Airport’s benefit when Aer Rianta was a separate entity.

It is clear that many feel that Dublin has benefited strongly from ARI’s progress over the years, although it has to be said that ARI could never have existed without the backing of the old Aer Rianta company and its Dublin relatives in the past.