Mr. Kevin Thompstone:

I thank the Chairman and members of the joint committee for inviting me and giving me the opportunity to outline how Shannon Chamber, in conjunction with the Irish Hotels Federation and with the support of Ennis, Galway and Limerick chambers, want to present a solution to the Government to aid the restoration of air connectivity to Ireland and recover routes that were viable before Covid-19.

The aviation sector contributes an estimated €8.9 billion to Ireland's GDP, with foreign tourists making a further €8.7 billion GDP contribution. It supports 140,000 jobs and attracts 8.8 million overseas tourists arriving by air. The recent announcement by Aer Lingus that it is closing its crew base at Shannon Airport is a devastating blow to the airport, the Aer Lingus employees and the region generally. It is an indicator of the devastating impact Covid-19 has had on the sector nationally and globally. The collapse in international travel, through effectively halting aviation in Ireland, has the potential to cause further severe and long-term damage to a critical driver of our economy in the absence of a clear and actionable plan to restore air services to regional airports. It is against that background that we have prepared a business case setting out the urgent need for a multi-annual, fully funded, regional air access recovery and growth action plan for the aviation sector. The business case we have prepared outlines the three levels of multi-annual funding airports will require until at least 2024, and potentially as late as 2029, to restore international connectivity to 2019 traffic levels. That time span is based on EUROCONTROL's most optimistic forecast for a return of Europe's air traffic to 2019 levels.

The three funding levels are the following. First is multi-year capital expenditure funding to enable our regional airports to survive during the recovery period. Funding of the order of €32 million annually has already been provided by the Government, and we welcome that. That level of funding will need to be sustained over the period of the crisis. The second category of funding is a doubling of Tourism Ireland's tourism marketing funding from €47 million to €94 million, together with an industry activation fund of €92 million over three years, as called for in previous task force reports to the Government. Finally, and as covered in the aviation task force report from last year, is a fixed euro amount per passenger to subsidise airport charges to enable airlines to restore critical routes to and from North America, the UK and Europe as soon as possible.

To substantiate the business case, particularly for the last item, the fixed euro amount per passenger, we have prepared a detailed traffic recovery support scheme, which we call the TRSS for short, providing costings for the airport charges element of the business case. The model is based on a review of international traffic and route support schemes in operation in countries such as Spain, Denmark and Cyprus and in other parts of the world, and has been prepared using Shannon Airport's 2019 traffic levels to estimate the level of funding required. The current assumptions in the financial model show a total cost range of between €20 million and €39 million for Shannon Airport for the period July 2021 to June 2024. It is calculated based on giving airlines a percentage refund of monthly all-inclusive passenger charges. The idea is that they will get the refund based on the percentage of traffic they deliver to an airport compared with the same month in 2019. To be eligible for a refund, an airline would need to achieve or exceed monthly traffic thresholds. All the detailed assumptions are set out in the model we have shared with you, Chairman. While the calculations are based on Shannon Airport's traffic figures for 2019, the model can also be used to quantify the funding requirement for all airports, based on their 2019 traffic levels, using the CSO data we have added to the model.

We welcome the Government's special package of €80 million for aviation, which included an EU state aid approved allocation of €20 million for route incentives and charge rebates at Dublin, Shannon and Cork airports covering the winter period that has just finished. We also welcome the €200 million in horizontal supports which have been provided to the sector through wage subsidies, rates waivers and so on. However, our business case shows that the levels of supports provided to airports and airlines will need to increase substantially and be multi-annual rather than focused on the recently completed winter season. The TRSS costs over a multi-annual period, whether for Shannon alone or for all State-owned airports combined, is a fraction of the economic impact of the aviation sector. For example, the maximum three-year cost of airport charges support for Shannon Airport is less than the annual local economy and Exchequer spend in respect of just three hotels in the region where I am sitting today, Dromoland Castle Hotel, Shannon Springs Hotel and the Great National South Court Hotel, Limerick.

The International Air Transport Association, IATA, has been consistently making the case for international government action to stimulate market recovery in the face of the devastating impact of the Covid-19 pandemic on the aviation, tourism and hospitality sectors. The TRSS we are presenting to the Government is our solution to stimulating such a recovery in Ireland, so we are very much in solution mode. Again, I emphasise that as Shannon Chamber, together with the Irish Hotels Federation and with the support of Galway, Ennis and Limerick chambers, we believe Ireland must adopt this approach, given what is happening internationally, with €173 billion given by governments globally to airlines and airports since the onset of Covid-19, and that is just up to December 2020. We will be facing into a very competitive aviation marketplace once travel restrictions lift, with airlines favouring airports with lower airport charges and route support facilitating fare reductions to attract and reignite passenger numbers growth. Ireland's regional airports simply must be enabled to compete. That is why we need and must have a clear, actionable and fully funded plan to restore connectivity to this island.