Ms Rose Hynes:

I am honoured to have been asked by the Minister for Transport, Tourism and Sport, Deputy Leo Varadkar, to be chairman of Shannon Airport Authority plc. I thank the Chairman and members of the joint committee for the invitation to present to it. I will provide it with an overview of my professional background and outline the key challenges I see for the company in the next few years, as well as my role as chairman in addressing them.

I grew up in New Quay in north Clare, a village near Ballyvaughan in the heart of the Burren. I went to secondary school in Lisdoonvarna, County Clare, after which I studied law in University College Dublin. I qualified as a solicitor in 1979 and specialised in corporate tax law for one year. During this time I became an associate of the Irish Institute of Taxation and obtained a diploma in applied finance. I later became an associate of the Chartered Institute of Arbitrators. Following a period as stagiaire with the European Commission in the Directorate General for Financial Institutions and Taxation in Brussels, I returned to general practice with Moylan and Company, solicitors, in Galway. During this time I also tutored part-time in taxation law for the Law Society of Ireland.

I always had a strong interest in business, corporate and commercial matters. With a view to pursuing such interests, I joined Guinness Peat Aviation Group plc, GPA, in Shannon in 1988 and remained with the company for 14 years. In 1988 GPA was the world's largest aviation company with Mr. Tony Ryan at the helm. It dealt with the purchase, leasing, financing and sale of aircraft. I worked for the first few years in the treasury department and was responsible for the financing of aircraft. The company then had corporate credit facilities of US$6.5 billion with circa 135 banks and was buying aircraft at the rate of two a week from manufacturers. It was a hectic and fascinating time.

In 1992 the GPA initial public offering, IPO, failed and the company went into crisis. At this point GPA had liabilities of approximately US$12 billion, including bank debt. I became part of a small management team which was tasked with the complete restructuring of the company. This was an extremely onerous and difficult task which took many years to complete, involving extensive stakeholder management, downsizing, refinancing, the sale of non-core assets, development of new business, mergers and acquisitions to achieve scale, taking in Texas Pacific Group as a shareholder and, ultimately, the sale of the company. GPA repaid all of its creditors in full.

The GPA diaspora has played a significant role in establishing Ireland as a world leader in aviation leasing and financing. During my time in GPA I held various senior management roles, including chief legal officer, followed by head of the commercial department. In 1997 I was appointed a non-executive director of Aer Lingus and in 2002 and 2003 offered several other non-executive director roles. In the past ten years I have gained extensive board and corporate governance experience. In 2009 I was appointed chairman of Bord Gáis and my other current principal board directorships include Total Produce plc since 2006 and also One51 plc since 2012.

In May 2012 the Government made the decision in principle to separate Shannon Airport from the Dublin Airport Authority, DAA, and merge it with a restructured Shannon Development. Two task forces were established to advise on how best this could be done. In June 2012 I was appointed chairman of the Shannon aviation business development task force. Its mandate was to seek out new opportunities for an independent Shannon Airport and evaluate the feasibility of creating an international aviation centre of excellence in Shannon. The chairs of the two task forces reported during the five month period to a steering group which was co-chaired by the Secretaries General of the Department of Transport, Tourism and Sport and the Department of Jobs, Enterprise and Innovation and attended by the Secretary General of the Department of Finance, as well as senior officials of the Department of Public Expenditure and Reform and the Department of the Environment, Community and Local Government.

My task force issued its report which included several detailed recommendations in November 2012. The overarching conclusion and recommendation was the separation of Shannon Airport from the DAA by December 2012, followed in a second phase by its combination with a restructured Shannon Development, to occur by July 2013. On 31 December 2012 Shannon Airport was separated from the DAA under the provisions of the State Airports Act 2004. New legislation is required to deal with its merger with Shannon Development.

In the course of my task force's work we met over 100 stakeholders, including local councils, public representatives, international airlines, aircraft manufacturers, indigenous and multinational businesses and educational institutions. My colleagues and I on the task force were repeatedly struck by the level of stakeholder support for a reinvigorated Shannon Airport, not just as an airport but also as a broader centre of aviation excellence.

It is important to emphasise that what my colleagues and I repeatedly heard was not romantic nostalgia for Irish coffee and thatched cottages but a measured appraisal of the global opportunities in aviation and a recognition of how Shannon Airport was well situated to grasp and benefit from these opportunities. The task force's report sets out an ambitious vision for Shannon Airport, grounded in its strengths and validated by our discussions with industry stakeholders. The Shannon business plan was externally validated by KPMG on behalf of the steering group and the Department of Transport, Tourism and Sport.

I am genuinely excited at the opportunities I see for Shannon Airport, but of course I recognise the challenges. Perhaps it would be useful if I set out some of the key challenges I anticipate and which have been identified in recent months. The first is the appointment of a CEO. It will be the task of the new entity to develop both the airport and its property assets, sustainably grow annual passenger numbers and create an international aviation services centre. This involves bringing together the airport and Shannon Development into a new entity that combines and builds on the best of both. For this to succeed, we must ensure the new organisation has the necessary leadership at CEO level to develop Shannon Airport on this broad basis. The recruitment process for a CEO is under way and the timely and successful conclusion of this search is one of my immediate priorities.

A second challenge is the appointment of a board. A relatively short-term challenge for the Shannon Airport Authority and, ultimately, the new Shannon entity is the appointment of an effective board that can provide guidance and support for the CEO and the management team and to ensure there is good corporate governance. The new dynamic in Shannon means that we require a strong, cohesive, committed and internationally experienced board. The board will also have an important role in the transfer and integration of the property portfolio and employees from the restructured Shannon Development. The appointment of the new board is a matter for the Minister and under way. It will be a central part of the chairman's role to lead and manage the board and ensure there is strong communication and transparency between the company and the Department of Transport, Tourism and Sport.

The third challenge is to increase passenger numbers. Shannon Airport's trajectory in recent years has been away from commercial sustainability. That trajectory must be halted and reversed in order for the airport to attain the profitability and growth of which it is capable. The committee will know that Shannon Airport's passenger traffic is made up of terminal passengers, in other words, people who start or end their journeys at the airport, and transit passengers, mostly in military aircraft making refuelling stops. In 2012 Shannon Airport recorded a total of 1.4 million passengers. Of this total, 90% were terminal passengers, 6% lower than in 2011. The remaining 10% were transit passengers. Transit traffic was down over 50% on the figure for 2011, reflecting principally the reduction in United States troop movements to and from the Middle East. Overall, Shannon Airport traffic was down 14% on the figure for the previous year.

The fall in terminal traffic is disappointing, but we see grounds for cautious optimism in 2013. A number of airlines have announced new Shannon services for the coming summer. United Airlines will operate a Shannon-Chicago route, US Airways will serve a Shannon-Philadelphia route, while Aer Lingus will add a Shannon-Faro service to its existing network. While these new services are very welcome and I am confident they will be successful, they are not sufficient. The airport's focus must be on developing commercial passenger numbers to a sustainable level. We must reach a sustainable equilibrium, where our revenues will be in line with our costs. The task force's report sets out the aspiration of reaching 2.5 million passengers within five years.

There is no silver bullet for Shannon Airport. In order to increase passenger numbers, it will have to attract a range of airlines on short and long-haul routes and also airlines making transit stops en route to North America. We are in discussions with a range of airlines and a number of these discussions are particularly advanced. The committee will understand I am unable to be more precise for reasons of commercial confidentiality.

In discussing the challenge of growing passenger numbers at Shannon Airport there are a couple of points I would like to make. First, when we talk about 2 million or even 2.5 million passengers a year, this is considerably less than in the relatively recent past. In 2006 and 2007 over 3.5 million passengers used Shannon Airport. Of course, we live in different economic times and passenger growth needs to be on a sustainable basis. Shannon Airport must, however, grow its passenger traffic. It does not follow that this is necessarily to the detriment of other Irish airports. We are all aware of the importance of balanced regional development.

We are not going to focus solely on outbound traffic. We will also focus on the development of inbound tourism and seek to attract tourists for the benefit of the wider region. We will work with the tourism authorities and tourism industry stakeholders as part of a collective development of Ireland's profile to maximise the number of inbound tourists. We see another part of our growth figures coming from responding better to the needs of Shannon Airport's natural catchment. Business people in the mid-west need connectivity and would welcome a wider choice of routes direct to the main European cities. Having these direct services is one way of enhancing the business attractiveness of the whole region.

The fourth challenge facing us is to continue to reduce costs. As I said, the airport will have to reach a sustainable equilibrium, where our costs will be in line with our revenues. We will be working hard to boost revenues, but we also have to look carefully at our costs. The task force's report notes that the new Shannon entity will have to deliver conspicuous value for money, whether by winning new airline business or attracting new industry. This will require a competitive cost structure. The airport's cost base is currently higher than that of its industry peers, partly because of its reduced traffic levels. Productivity improvements and flexible work practices can help to reduce this disadvantage.

The fifth challenge facing us is the development of an international aviation services centre and the development of a wider property portfolio. I passionately believe in the potential of Shannon Airport as a successful and sustainable airport but also as the location for a major global aviation cluster. This would both anchor the existing industry and attract jobs which would otherwise not be created in Ireland. Our job is to articulate the vision and build the momentum to achieve this. That means we need to sell Shannon Airport and the opportunities it offers. We need to attract businesses and airlines and give people a reason to fly to and from Shannon Airport and we need to develop our wider property portfolio and work with existing businesses. We will also work closely with IDA Ireland and Enterprise Ireland to win new job creating investments, boost opportunities for our existing businesses and develop our property portfolio. Shannon Airport has advantages as an aviation cluster that competing locations abroad do not have. It has ample space and a skilled workforce. Some 1,600 people already work in aerospace companies in and around Shannon. Therefore, this cluster is not being created from nothing. Shannon Airport already has strong links with the aviation leasing community.

I have enumerated five challenges and with the Chairman's permission, I would like to mention a final one. I will then be happy to take questions.

I have spoken about the task force's meetings with stakeholders in Ireland and abroad and the enthusiasm and support expressed for the plans to reinvigorate Shannon Airport. One further challenge facing us is that of winning buy-in from people and businesses who want to believe but who have perhaps witnessed the decline of Shannon Airport during the years. My task and that of the CEO, the board, the management team and the staff of the new Shannon entity will be to create the foundation for this belief. It will be a privilege for me to become chairman of the new Shannon entity and work with the board, the chief executive and the staff in the company. My goal as chairman will be to manage and lead the board in an effective and efficient manner to achieve our stated objectives. I look forward to the challenges ahead.

I thank the Chairman and members of the committee for the invitation to appear before them today. I am happy to respond to questions they may have.