Oireachtas Joint and Select Committees
Tuesday, 28 July 2020
Special Committee on Covid-19 Response
Covid-19: Impact on Aviation
Without further ado I would like to welcome our witnesses, who are joining us from Committee Room 2 to discuss the impact of Covid-19 on aviation. From Dublin Airport Authority, DAA, I welcome Ms Miriam Ryan, head of strategy, and Mr. Ray Gray, chief financial officer. From the Shannon Group, I welcome Ms Mary Considine, CEO. I thank the witnesses for joining us this morning.
I draw the attention of witnesses to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.
Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.
I ask Mr. Gray to deliver his opening remarks and to confine them to five minutes to allow time for questions.
Mr. Ray Gray:
I thank the committee for the invitation to outline DAA's key concerns and difficulties in light of Covid-19 and to set out our views on steps to address them. An early resumption of more normalised international travel is of key importance. However, we are acutely aware that inappropriate easing of restrictions could undo the tremendous progress to date. Critically, Covid-19 and international travel will coexist for a considerable time to come.
International connectivity is critical for Ireland. It drives business growth and development and underpins 75% of the tourism economy. Our airport activities facilitate more than 140,000 jobs and support thousands of Irish businesses. Our airports fully pay for themselves and are not supported by the taxpayer. They have delivered a return of €125 million in dividends to the Exchequer over the past five years. They deliver record route connectivity for the economy, with both Dublin Airport and Cork Airport achieving record traffic volumes in 2019.
Financial sustainability is key to delivering critical and strategically important national airport infrastructure. We have managed our finances accordingly and entered the Covid-19 crisis in a strong financial position, with good liquidity and limited debt. However, this crisis has quickly eroded this strong starting position. In line with Government policy, our role has been to keep our airports open to ensure critical personal protective equipment, PPE, and medical supplies were able to reach Ireland at a time when they were most needed. We are immensely proud of the efforts of our airport staff, who became front-line workers in their own right, facilitating the repatriation of our people and enabling the delivery of much-needed cargo.
However, open airports with minimal traffic have led to losses of around €1 million per day. Passenger numbers in Dublin Airport may fall to 9 million from almost 33 million last year, while Cork Airport passenger numbers may fall below 1 million from almost 2.6 million last year. Industry predictions foresee a slow and protracted recovery for the aviation sector. We have had to take action. In conjunction with staff and unions we have constructively engaged in a large programme of work to rightsize and reshape our organisation. We have cut costs and are reviewing investment programmes pending greater clarity on the pace of recovery.
Dublin Airport faces strong international competition. Aircraft are mobile assets and can and will be reallocated to where they earn the best return. Cork Airport faces particular challenges, including maintaining a level playing-field. The process of identifying a path to reopening the country to international travel has commenced, starting with the publication of the 15-country green list, which we welcome. However, this list will only have a marginal impact on passenger numbers and is unlikely to add more than 100,000 passengers to the number currently flying in any month, which is less than would fly in a single normal day.
We have adopted the recommendations of the European Union Aviation Safety Agency, EASA, and the European Centre for Disease Prevention and Control, ECDC, and have implemented a series of health measures to protect both passengers and staff.
We are working closely with the Government to build a more robust process for tracking inbound visitors using passenger locator forms, with the intention of having a call centre in place in August. There may also be merit in pursuing an evidence-based system for all non-green list countries whereby arriving passengers are required to undertake a Covid-19 test 72 hours or less before travel and submit proof of a negative test prior to travel.
The significant losses we are currently experiencing are not sustainable and put the strategic airport infrastructure of our small and open island economy at risk. It is important that the State intervenes now to offset this risk. This should include continuing short-term supports by extending the temporary Covid-19 wage subsidy scheme, funding grants for pandemic safety measures, waiving rates and setting up an incentive fund for the development of air services.
Second, Cork Airport requires specific support as its revenue base has all but disappeared. A specific mechanism is required to offset essential operating costs and incentivise route development. Cork Airport should also be admitted to the existing regional airport programme and offered the associated capital funding.
Third, we need to look beyond the crisis and draw on the lessons of the past. Despite the need for significant investment, airport charges, our key revenue source, were continually lowered through the aviation regulatory process before Covid-19. The most recent reduction last year amounted to 22%. This left our charges well below those of most peer international airports. This came at a cost to the economy in the form of lower or slower investment and unnecessary financial risk or instability. The recovery phase should see renewed investment in long-term strategic airport infrastructure to support economic growth, especially post Brexit, and to meet our commitments to the European Green Deal policy framework. This will require a new and more supportive regulatory pricing framework.
DAA continues to operate in uncharted territory with little sign of recovery at this point. We are committed to working with all stakeholders to find ways for international travel to coexist with the virus, as it must, in a manner that reduces risk and builds confidence. Our airports can be engines for economic recovery, as they have been in the past. We welcome this opportunity to engage with the committee regarding the role our airports can play in assisting in the recovery effort and the support mechanisms we require to bring this about.
Ms Mary Considine:
I thank the committee for the opportunity to outline the devastating impact Covid-19 has had on Shannon Group and the aviation and tourism sectors more generally. Most importantly, I will refer to the support measures required to assist us as we navigate this crisis.
Shannon Group is a commercial State company. Like DAA, we are not funded by the Exchequer. Our mandate is to promote aviation and optimise the return on our land and property assets. We employ more than 600 people across our businesses: Shannon Airport, Shannon Commercial Properties and Shannon Heritage. Through our International Aviation Services Centre, IASC, we also support the development of a cluster of more than 80 aviation companies based in the Shannon Free Zone. The Shannon Group is a key driver of economic growth in the mid-west and along the Atlantic seaboard. Our activities support a significant number jobs in the region. The connectivity the group provides through Shannon Airport is vital for the business and tourism interests located in our region and enables them to live locally but trade globally.
We in Shannon Group started out this year with great optimism, projecting growth for each of our businesses. We had secured new routes for the airport, were continuing our strong investment strategy through Shannon Commercial Properties, and anticipated growth at our Shannon Heritage visitor sites. We have been through many crises in the past but never on such a scale. Two of our three businesses, Shannon Airport and Shannon Heritage, have been devastated by this pandemic. Like airports all over the world, Shannon Airport witnessed an almost total collapse of airport traffic, connectivity and revenues. All market indications point to a very slow recovery.
Throughout this crisis we have endeavoured to maintain a level of service at our airport to allow repatriation flights and essential cargo movements, including facilitating the delivery of vital personal protective equipment, PPE, to provide emergency cover, and to facilitate maintenance, repair and overhaul, MRO, operators on the airfield. I am proud of the role our employees played throughout the crisis in ensuring the availability of these services.
Between the onset of the pandemic and the end of June, passenger numbers have decreased by 96% year on year. We expect our group revenue to be down by more than 60% this year.
Faced with the fact that our group revenue has fallen by over €1.3 million per week since March, we took decisive action and implemented difficult but necessary short-term measures to preserve the business for the future, allow us to recover from and rebuild after this crisis and, ultimately, protect jobs in the longer term.
Similar to other airports, we have engaged with our employees on a range of measures to reduce payroll costs while we recover from this crisis. Those measures include a temporary reduction in pay and a voluntary severance scheme.
We launched a Covid customer safety charter at the airport and introduced rigorous new public health measures across our businesses in order to protect the health and safety of staff and instil confidence in everyone coming to our airport and heritage sites.
On 1 July we reopened our reopened our terminal to scheduled services, with the recommencement of 16 routes by Ryanair. However, in light of Government advice regarding essential travel only, passenger numbers have been extremely low. We are now operating at well below 20% of normal activity levels for July. Passenger numbers were down by 88% for the first 21 days of the month.
Due to the heavy reliance of Shannon Heritage on business from the international marketplace - this accounts for over 70% of our visitors - we have only been able to open our key sites for the peak season to cater for the domestic market. Unfortunately, despite an extensive marketing campaign, visitor numbers and revenues at our sites are significantly down. The fact is that 30% of our business is never going to make up for the 70% that is not there. Given the collapse in revenue and the increasing losses being incurred by Shannon Heritage, the group is not in a position to continue to subvent the business into the off-season. As a result, we have sought Government support to cover the cost of keeping sites open.
Aviation is expected to be the last sector of the economy to recover. During this time, the economic cost is mounting. Air connectivity is vital for FDI and indigenous businesses in our region. Equally, our location as the transatlantic gateway to the Wild Atlantic Way is crucial for the tourism industry right along the west coast. As a member of the aviation task force, I have highlighted on behalf of Shannon Group the importance of airports to the regions in the context of driving economic recovery and balanced regional development. The measures contained in the task force's report are vital for recovery, including in the context of rebuilding regional and international connectivity. A stimulus package urgently needs be put in place in order to encourage the rebuilding of air traffic. We also need Government support package for essential capital projects at the airport. We welcome the Government's July stimulus package - particularly the extension of the temporary wage support scheme - and we are reviewing the measures it contains in order to identify how they can support our businesses.
This pandemic has caused massive disruption. It has changed how we live and work. Until there is a vaccine, there will be many issues which will have to be managed. We can get through this but we have to be prepared to do things differently. We in Shannon Group have taken many short-term difficult decisions to deal with Covid-19 in order to preserve our businesses for the future. We have done what we can, and now Government action is urgently required. We must work together. There is an urgent need for stakeholders to act together in terms of simultaneously managing the direct consequences of the crisis. We have an opportunity to rebalance Ireland for a more sustainable and resilient future.
I thank our guests for attending and for the work they have been doing during this period. Will they outline the financial difficulties their organisations are facing? How many employees do the DAA and Shannon Group have at the Dublin and Shannon airports and how many of them are on the temporary wage support scheme? Have there been any job losses during the pandemic?
Mr. Ray Gray:
From the point of view of Dublin and Cork airports, the financial impact has been both devastating and unprecedented. From the moment we went into what was, essentially, a lockdown situation, our income ceased to come in. At the same, we have necessarily kept the airports open and operating in order to facilitate the delivery of essential PPE and to ensure both the repatriation of Irish citizens and essential travel.
Keeping an airport fully open costs in the region of €30 million a month, or €1 million a day. That has been devastating, particularly as we have had to dip significantly into the cash reserves we had built up to invest in the business.
I do not want to seek to many details in the context of matters that are the subject of privacy. However, will Mr. Gray indicate the proportion of the cash reserves that has had to be used?
Mr. Ray Gray:
We have incurred losses of over €100 million to date. That is the sort of impact it has had. The aviation sector is a cyclical industry and we always maintain a prudent position in order that we can withstand what happens within it periodically. Nobody ever anticipated something of this scale, however. We have positioned ourselves like an oxygen tank in order that we might be able to get through an uncertain period, but that will only be for a limited time. At the end of last year we had approximately 3,500 employees. In the region of two thirds of those are being supported through the temporary wage subsidy scheme. That has been a very important measure in the mitigation of our costs.
As Ms Considine outlined, both airport authorities have been obliged to take very difficult decisions. We have reduced the working time of our employees. We have had support from the temporary wage subsidy scheme. We reduced our costs where we could do that, particularly variable costs. We probably mitigated them at the peak by approximately 60%, which is a significant proportion. Nonetheless, we incurred significant costs.
I wish to discuss some of the experiences within the airports, particularly Dublin. Other members will focus on Shannon and Cork. I am interested in the number of people who have been coming through Dublin Airport. Obviously, there has been an enormous fall-off in passenger numbers. From what locations have people been coming through the airport in the past couple of months? There are concerns about people coming here from particular countries. What I am hearing, however, is that many Irish citizens are coming home as well. Will Mr. Gray outline the position in that regard?
Mr. Ray Gray:
It gradually increased in late June and early July. At the beginning of July, there was some resumption of flights. Up to then, flights had largely been cancelled. The number of flights we are handling at Dublin Airport is approximately 200 per day. Normally, it would be more like 600.
Will Mr. Gray just talk me through the experience people travelling through the airport in both directions are having? Reference was made to an evidence-based model whereby people would provide proof of testing negative for Covid two or three days prior to travelling. What is the current position and what does Mr. Gray envisage doing in order to increase passenger numbers again?
Mr. Ray Gray:
The current experience is that the airport is very empty. What people will immediately see upon arrival is a great deal of space and all of the necessary PPE, decals, hand sanitisers, masks and everything required to facilitate social distancing and ensure the protection of passengers and staff.
As such, travellers will have a relatively normal journey in a virtually empty airport for most of the time. Instead of having around 4,000 people going through terminal one in a busy hour in the morning, an extremely busy time now would be approaching 1,000. That is probably for one hour in the day.
What liaisons, if any, does the DAA have with the airlines once a passenger gets on the plane about the protection for passengers there? Is that entirely left to the airline to resolve? Is there any communication on that?
We will have Aer Lingus and Ryanair in front of us later so I am sure those questions will come up.
There have been reports in the media this week about PPS numbers being collected and I saw Dublin Airport tweeting that they were not sharing passenger information with third parties. Will Mr. Gray talk us through his read on what is going on?
Mr. Ray Gray:
What I will stick to in terms of the facts is that DAA or Dublin and Cork airports do not collect passenger data in the form of personal information and therefore we are not involved in the collection or sharing of any such information. We obviously follow GDPR principles very closely and use airport information for airport purposes only.
Ms Mary Considine:
Similarly to the DAA, and as I touched on in my opening remarks, we have seen a collapse in airport revenue. We have also seen a collapse in revenue into our heritage sites. Across the group we have three main businesses so our property revenue has continued but we have seen slight reductions there. From an overall group perspective our revenue will be down about 60% this year so it is very significant for us. We have eaten into the cash reserves of the airport and we are subventing significant losses in the Shannon heritage business. We would not be in a position to continue that over the winter period and we have had to take difficult decisions to not open some of our sites this year and temporarily close others at the end of the peak season because of the level of losses we are incurring.
The pandemic has been devastating for our business. We had little or no traffic coming through the airport until the end of June. We saw a slight pick-up in July but we are still 80% below the levels that we would normally be operating at from a passenger perspective. It has wiped out not only aeronautical revenue but also commercial revenues because we are dependent on air passengers coming through our terminal to generate commercial activity and revenue for the airport, so it has been very significant for us.
I will ask one more question if I might. I do not wish to conform to the stereotypes of Dublin versus rural Ireland which are reflected in politicians but I am sure that my colleagues from County Clare will in fact ask plenty of questions of Shannon Group as well.
My question is on the PPE transit work that was done at an early stage. I ask Mr. Gray to talk us through the work that his staff did and the experience of that for them at that time.
Mr. Ray Gray:
This has been an extraordinarily difficult time for our staff. First, in the early part of the pandemic, there was a great worry that in the rush for people to get home there could be a catching of the Covid virus. Our people were very much on the front line. That quickly moved to the situation where in March the airport essentially shut for all practical purposes other than repatriation. Our focus then was handling an unprecedented level of cargo traffic and new routes. Worldwide, cargo traffic has actually remained consistent with the norm but that has been replaced with a different type of cargo. In Ireland's case there has been a huge amount of cargo activity, with new aircraft coming in from routes from China with Aer Lingus, from the Middlle Eastern airlines and from North America.
Our staff have worked tirelessly to ensure that everything that was necessary to accommodate that, from the fire and safety services through to the arrangements for the handling, have really been exceptional.
I thank Deputy Carroll MacNeill.
I will sound the bell when people have a minute left and then ring it when the time is up because I am conscious there are no clocks in the Seanad Chamber. I call Deputy McAuliffe.
I welcome all those who have provided submissions. I worked in Dublin Airport. It is a very busy and often exciting place to work and I imagine the impact has been devastating for many of the people who work there, many of whom live in my constituency. I will live up to the stereotype mentioned by Deputy Carroll MacNeill and focus on Dublin and allow my party colleague, Councillor Cathal Crowe use his five minutes for Shannon Airport.
I would like to focus a little bit on the situation which was outlined. We have no horizon on where this virus is going. The current situation is not sustainable. Has the DAA done any projections for Cork and Dublin airports of how many months it could trade for if the current level of business were to become the new norm?
Mr. Ray Gray:
This has been an area of very particular concern from the outset. We took the view that this was going to be serious and was going to last in a very severe way right through this year and into early next year from the outset. What we have seen is that industry projections have more or less moved closer to what we have been seeing and thinking. Right now we expect passenger numbers will be down by 75%. Unfortunately, I had the experience of going through 9/11 in 2001 and the 2008 crisis and if we are in cyclical industries we need to have cash reserves or bank facilities in place to protect us through that. As such we thankfully have the ability to withstand that, devastating as it will be. The consequent wipe-out of capital and capacity will be a problem for another day and is why I addressed thinking about that in the future in my opening remarks. We have the capacity to survive pretty much anything that is thrown at us this year. That does not mean we have been insulated from very tough decisions. Indeed, we are looking at our cash situation literally daily in order to protect it. However we will survive the crisis through this year.
The longer-term, more strategic issue is that we are going to have to live with this virus. In March we moved into a phase where we will have no resolution until there is a vaccine or until there are mechanisms that can dissipate the virus. As such this is going to be with us for a long period into the future and that is why what we need to put in place is a sustainable regime for safe travel, travel in a new environment and travel where the health measures are correct and effective. Those are calls to be made by Government and health authorities. Our focus is on ensuring there is confidence for the travelling public.
On that issue of confidence, international travel has become the focus of concern for many people. The unions were with us last Friday and they outlined to us that they believed we had the most restrictive travel regime in the European Union, with the quarantine. Would Mr. Gray agree with that assessment?
Mr. Ray Gray:
Statistically, there is no doubt that there is less travel coming in and out of Ireland than is the case for any of our European counterparts. That is because of the calls that have been made for very understandable reasons, from a policy perspective. Our focus is on the fact that we are going to have to live together with this virus into the future. Therefore we have to learn to operate in a risk-managed environment. I would like to quote, if I could, from the World Health Organization. I think this guidance is still on its website. It essentially states that significant restrictions are very useful and effective in the very beginning of an outbreak but they have to be based on proportionate measures. Hence, it is important to find mechanisms to coexist into the future. That will be about health policies. It will also be about travel policies and about the actual mechanisms of travel for the passenger who is getting on the aircraft.
That being the case, can Mr. Gray answer the concern as to why there has been so much concern about international travel given he says that Ireland has one of the more restrictive regimes in the European Union?
Mr. Ray Gray:
Some of that is driven by an understandable focus. People will hear of travel and see that as an infiltrator of the virus. From listening to the Chief Medical Officer each day I think that, statistically, the main drivers of the virus are around inter-community and other practices, rather than travel itself.
That is not to say travel is not very important and we, more than anybody, are very aware of that. That is why we want to work together to create a safe environment. That means looking at things like the process before people leave to travel to Ireland, things like passenger locator forms, pre-departure screening and other measures that are not in their own right a panacea but can play a part in putting in place safe travel measures.
Some of the ways we can improve confidence in that is by having a stronger presence in airports. Can the witnesses speak about their submissions and the discussions they have had with Government to strengthen checks and presences at airports? I direct the question to both authorities.
Mr. Ray Gray:
From our side, since the outset we have worked very closely with the Department with responsibility for transport and with the Government and we are in constant, if not daily, contact with them on that. We are also participating in the facilitation committee, which is set up under the Irish Aviation Authority.
We are in tune with policies set by Government. Our job is to put the facilities in place for passengers. These are the physical things on the ground, social distancing, decals, screening, masks and all the activities as passengers come into the airport either on their way to leave on a flight or on their return. The other important measures relate to the observation and provision of information through passenger locator forms and other mechanisms. They are provided through the airlines, the Department of Foreign Affairs and Trade or the health authorities and their equivalent authorities overseas. We provide access to that information and all the links to that information and we provide support in any way we can.
The more recent measures spoken about are things like the green list, which we welcome but it is a small travel step in terms of recognising that risks are different in different countries. Second, there has been a great deal of discussion about the passenger locator form. That is not something we have had any involvement in other than passengers must provide those on arrival in Dublin Airport and it affects the processes there. However, we have recently been asked by Government to provide support in putting in place a new passenger locator form process and in a Government initiative to electronically create that passenger process. That is something we are looking to work with Government to put in place in early August.
We had representatives from the taxi industry with us last week and they were concerned about changes to the way taxis operate at Dublin Airport due to Covid-19. Will the witnesses consider engaging with those drivers further to ensure their concerns are alleviated?
Mr. Ray Gray:
We have been very much aware of the concerns of taxi drivers and their representatives. It is a group we have had constant engagement with both before and during this Covid crisis. We have put in place measures to alleviate their concerns over licensing and payments during this critical period and we would be happy to engage with them on any and all concerns. Obviously, we are not operating taxi ranks as normal. We have a single rank operating currently at the airport but it is in everybody's interest that that works effectively for passengers.
I thank the witnesses for their presentations. I want to come back to the revelation at the weekend that the Government is using people's travel history against them when it comes to social welfare and that the pandemic unemployment payment, PUP, has been cut for some people who travel abroad based on assessments taking place in the airports.
Is it the case that those assessments are taking place not only at Dublin but also at Cork, Shannon and elsewhere?
Mr. Ray Gray:
As I said in response earlier, Dublin Airport and Cork Airport are not involved in the collection of any information in relation to people's PPS numbers, the PUP or any other similar information. I cannot help with that but such information may well be obtained at the airport by other authorities and there are reports of comments made in the media this morning on behalf of such authorities.
Does Mr. Gray not know, then, when those checks might have started, on what basis, what type of information is being collected or the type of activity that is happening in the airports that the DAA is responsible for?
Ms Mary Considine:
In relation to Shannon, I can confirm we do not collect personal data from customers and we do not pass data on. We are in full compliance with general data protection regulation, GDPR, legislation in that regard. We are not aware of data being collected in Shannon but, if it were, it would be by one of the State bodies.
To return to the DAA, I appreciate it does not collect data itself but it is aware that it is reported that data is being collected. What is the extent to which it is aware of activities taking place in the airports it is responsible for? It is very strange that the DAA would not be aware of this activity and it raises the question of what other activities it might not be aware of in our airports.
Mr. Ray Gray:
There are a range of businesses, activities and authorities that operate out of the airport, from airlines and handlers on the one hand to State authorities, customs, Garda, immigration and so on. We do not have a right of notification or perusal of their activities in relation to data nor should we. We simply co-operate with the State to facilitate the carrying out of their business and ensure we meet our obligations.
Mr. Ray Gray:
We do not police the collection of data.
There are rules and regulations that are very clearly set out for commercial companies and there are obviously rules and regulations set out for the State. I would love to be able to assist the Deputy more but I am unable to provide him with any further information. Both in Dublin and Cork, DAA is doing everything it is required to do in fulfilment of its mandate both where data on passengers is concerned and in facilitating handlers, the State authorities, our customers and airlines.
Okay. I will move on to the issue of airport checks and controls. In his opening statement Mr. Gray referred to the possibility that people might be required to take a Covid-19 test 72 or fewer hours before travelling and submit proof of a negative result prior to travel. We had the Department with us on Friday and they raised the prospect of a testing facility at the airport. There was a motion on the draft schedule for the Dáil on Friday but it has since been removed and a motion relating to prefabs or temporary structures being put in at the airport was substituted in its position.
A number of countries across Europe have a requirement for testing and being able to provide proof of a negative result. Is it the immediate intention of the DAA to proceed with a testing regime at the airport or what are the DAA's plans in that regard?
Mr. Ray Gray:
The issue of testing passengers, whether coming in or going out of the airports, is a matter to be determined by the authorities based on medical advice. We provide the facilities at the airports for everything that happens there, but the question of whether there should be testing, what form it should take and whether it should be done on arrival or departure are matters to be determined by the State. As I think the Deputy will know, there are medical views that certain types of testing are not particularly effective and indeed may give rise to false positives. As such it is something to be considered carefully. Secondly it requires a lot of resources.
It should be taken that with every intervention we make there is risk associated with false positives and negatives. It is very clear at the minute that the regime of checks and controls that we have at our ports and airports inspires zero confidence in the public. That, in and of itself, is a problem. It contributes to the difficulty of having a conversation about what future travel might look like in the context of living with Covid-19. What type of model should the Government be working towards, from Mr. Gray's perspective? Is it one that involves mandatory or random, antibody or DNA testing or one that involves increased tracking and tracing and isolation or quarantine? I would appreciate it if he could give us the best exemplar we should be looking toward.
Mr. Ray Gray:
I will preface my remarks by saying that testing and tracing in all communities is absolutely vital for as long as we coexist with Covid. There will continue to be outbreaks and therefore the identification, treatment and isolation of those is absolutely key.
Coming back to international travel, I am disappointed that the Deputy believes there is no confidence in the system. Everything that we do at the airports we are responsible for is in place to give confidence------
I mean that specifically in regard to the passenger locator form. There were figures announced about it last week. It is not an alarming thing to say, and I mean that with due respect. It is my opinion that the systems we have in place are not fit for purpose.
Mr. Ray Gray:
The process of actually following up on passenger locator forms is a process that is, I think, currently operated under the auspices of the Department of Justice and Equality. We have been asked and are very happy to support the putting in place of a new call centre and process and we will play our part in that process. The decisions on how that operates, the statutory basis and the scope will be matters for Government but we certainly want to-----
I want to return to the social welfare issue. I completely accept Mr. Gray's point around the data sharing and the DAA's very timely tweets over the weekend and thank it for that. It assured people that the authority is not engaged in this. Based on Mr. Gray's comments today I am curious as to the basis on which the DAA is allowing social welfare inspectors into the airport. Presumably the Department of Employment Affairs and Social Protection had to apply to the DAA with a rationale for allowing its staff into the airport. We do not allow just anybody in a high-visibility vest to stop people. Is this the first time the DAA has allowed social welfare inspectors into the airport? To be clear, is it Mr. Gray's contention that social welfare officers have always had access to our airports?
Mr. Ray Gray:
Not necessarily to the DAA but I am sure anybody who is asking a passenger, an individual or a staff member for information will identify themselves, where they are from and perhaps the purpose for which the information is being required. What I am saying to the Deputy is that many State authorities act at the airport and that is a normal part of activity.
Mr. Ray Gray:
I have no specific knowledge about the collection of personal data or PPS numbers and information like that for the purpose of the pandemic unemployment payment. I do not have any specific information around that which I can offer to the Deputy. I do not dispute that there may well be authorities acting in the normal course of their business at the airport and collecting information, or acting in the course of their mandate at any point in time.
Mr. Ray Gray:
I am quite happy to come back to the committee if there is any specific information from our operational team. However there is nothing I can say I am aware of that really can add or shed an awful lot of light on this subject. It is quite normal to have Garda, customs, or other State authorities acting in the airport. They act there for a whole range of appropriate reasons and anything that comes within their mandate is, I expect, conducted by them at the airport.
I thank Mr. Gray. He speaks in the report, which I also thank him for, of reviewing capital investment programmes. I am aware works have started on the north runway. Is this project under review? In 2020 passenger numbers were expected to be at 9 million. Now, based on predictions from CAPA - Centre for Aviation, it will be a five to ten year wait to reach the circa 30 million passengers we were looking at in 2019. I am under the impression that decisions around the north runway are based on a move to increase capacity.
How much extra capacity over the 2019 capacity is the north runway expected to deliver? Is that the best use of funds at the moment?
Mr. Ray Gray:
The north runway is a very long-term project that has been planned since the year I was born or thereabouts. It has been actively planned to put in place since the year I joined the airport or longer, which is over 20 years ago now. It is there to benefit Ireland and the regions for the long term into the future. It is unfortunate but not unusual that significant step changes in airport infrastructure happen during a downturn. By its nature, a downturn occurs every seven to ten years and, therefore, in the life of a project it is not unusual. This project is the right thing for Ireland and significant progress has been made in the construction of the runway. If I was sitting here ten years ago, we would have been talking about the construction of terminal 2 and whether that was wise. Undoubtedly, we would not have been able to grow and support our economy if we had not those airport facilities in place through terminal 2. We would not have been able to expand services, attract the Middle Eastern carriers and accommodate the additional travel that Aer Lingus and many of our airline customers have. These are long-term projects and it is important that we take difficult and measured short-term decisions and stay the course for important strategic decisions. This is not for Dublin Airport, but for Ireland.
I thank Mr. Gray. I have a brief follow-up. Mr. Gray told Deputy Hourigan repeatedly that he had no personal knowledge of what the Department of Employment Affairs and Social Protection were doing and he said the same thing to Deputy Darren O'Rourke. Mr. Gray is not here in a personal capacity but as a representative of the DAA. Does the DAA have knowledge of what data the Department is gathering and whether they are actively present on the campus of Dublin Airport collecting data?
Surely Mr. Gray expected this question. I expect he did not adapt an approach of see no evil, do no evil and hear no evil . He knew this question would be asked here today. It was in the news all weekend. I do not ask what Mr. Gray knows but what the DAA knows. Can Mr. Gray come back to us within 48 hours with an answer as to what the DAA knows, not what he knows or does not know or what he chooses to find out or not find out?
On that point, I think the explanation given today lacks any credibility. I know how heavily regulated the airport is. If a children's choir wants to welcome people home at Christmas in the arrivals hall, it needs permission. To think social welfare inspectors can rock up on the land side of the airport and question people without the DAA knowing or without seeking permission defies all credibility. I would go so far as to say this committee should desire clarification from the DAA before the end of today on what is going on in the airport. If that could be sent to us, it would be appreciated.
I will move on to another element of concern. I will ask Mr. Gray a direct question on testing capability. Has the DAA held any direct discussions with the HSE, the Department of Health or the Government on the practical provision of a testing regime at the airport? If so, how many meetings took place and when did they take place?
Mr. Ray Gray:
I thank the Deputy for his question. We are actively examining the capability of putting in testing at the airport. However, I should say at the outset that the capability for testing today is very limited in this country. There are a relatively small number of parties that could operate a testing facility at the airport and these are very early days. Second, the number of tests that could be handled, physically, at an airport would be restricted. However, we think it can play an important part in providing public confidence and providing efficiency in particular situations.
That is somewhat encouraging. I disagree that it is early days. Almost every Member in this Chamber questioned the previous Minister, Shane Ross, in the Chamber a number of months ago about testing and testing capability.
We have always known aviation would take a huge hit and be one of the last sectors, if not the last, to recover. We talk about confidence. I do not think we are as far away from reopening aviation as some may think once we get a regime in place that people trust. That involves testing of some kind. We have lost valuable weeks on this that need to be caught up very quickly.
There is a great deal of negotiation going on at the moment with staff in the DAA. Is Mr. Gray in a position to give any comfort to workers that there will be no compulsory redundancies in the DAA, given what is going on with Covid?
Mr. Ray Gray:
This has been an exceptionally tough period of time for our staff, through no fault of their own, both in terms of Covid itself and also the concerns they have about the uncertainty of the business. They walk into empty terminals and they hear the outlook for aviation and travel in the media. They have also suffered a reduction in wages, in effect, through the reduction in hours we had to put in place over the last couple of months. The stark reality is that aviation will not be of the same scale in 2021 as it was in 2019. We therefore have to reduce the size and scale of our operation. Our focus has been, not just in the last number of months but in the last number of years, to engage positively with our staff, to trust them with information about difficult decisions and to talk to them about the commercial, financial and other realities that together we have to face. Something like compulsory redundancies is not a measure that companies, particularly State companies, seek to put in place if it is possible to avoid it. That is why we have engaged, and staff and trade unions have reciprocated, in a very intensive process about future options for staff and new ways of working. We hope to take all the necessary steps by working together in all areas and sections of the business and both airports.
I thank Mr. Gray and I have one final question. Since this started, has this Government or the interregnum Government ever come to Mr. Gray with an offer or proposal to keep the DAA viable through this? Has either Government said it would guarantee the operation by investing a certain number of millions of euro to protect jobs and the viability of the DAA?
Mr. Ray Gray:
The Government, through its transport officials and supporting agencies, has been keen to understand the impacts on the business at Dublin and Cork airports, in particular. We have engaged with them on this and they have made measures available to us in the general course of events, like the temporary wage subsidy scheme and discussions about rates rebates. However, today Cork Airport is an area of particular focus for us.
I welcome the witnesses and thank them for their presentations and submissions. I want to return to the issue of data collection at the airport. At the weekend, the Tánaiste said the Department of Employment Affairs and Social Protection had obtained data from the airports. Mr. Gray must be in a position to tell us who would have been able to provide that information to the Tánaiste. The passenger number register contains very sensitive and highly confidential data about passengers. Who has access to that register and who controls those other bodies or people who might get access?
Mr. Ray Gray:
I thank the Deputy for her question. I think the information the Deputy refers to is the information passengers provide when they are travelling abroad and booking through their airline. That information is governed and managed by the airline involved.
With something like the Electronic System for Travel Authorization, ESTA, we are involved by the appropriate authorities. As an airport authority, we do not collect any sensitive passenger data or the sort of information to which I think the Deputy is referring.
I thank Mr. Gray.
I want to move on to the question of testing. The DAA's submission talks about looking at the possibility that passengers would have to be tested and have a negative test result 72 hours before travel. I understand that for a testing regime to be effective a double test must be involved because a person could be tested one day and have no symptoms but could be still carrying the virus and thus a follow-up test is needed a few days later. What is Mr. Gray's advice about the proposal for a single test and to which health authorities has he spoken to get the best advice?
It is very much in the interests of the DAA, the airlines and indeed the country that we have secure arrangements at our airports and ports and that we can ensure the public's safety as well. As such, has the DAA taken any advice on a testing regime that could be introduced in its airports to allow a greater number of passengers to pass through them?
I was looking for specific information there.
At the moment the Department of Justice and Equality is operating a level of control at the airport. It is saying it is waiting to pass that over to the Department of Health. The Minister for Health is saying it is not his responsibility and has passed the parcel to the Department of Transport, Tourism and Sport. Today the Dáil is passing a motion to allow structures to be built at our airports without planning permission. What is the DAA's understanding of what the Department of Transport, Tourism and Sport is proposing where greater controls at our airports are concerned?
If I thought the answer would be brief, I would allow it. I do not think that will be the case, however. I am sorry, I will bring the Deputy in at the end. I am going to have to ask all speakers to stick to five minutes. If a member asks a question at the end of that five minutes, there is not going to be time for an answer. I am sorry but that is just the way it is in the context of the time constraints. I call Deputy Paul Murphy.
As Mr. Gray has heard, I have five minutes. I will be brief and I request brief answers.
I want to focus on the attempts of the DAA make up to 1,000 workers redundant from a workforce of, I think, 3,500. I could not help but notice the very sharp contradiction between that and what Mr. Gray said in answer to Deputy Hourigan's question on airport expansion. He said that this was a temporary downturn and that the authority had to continue with the expansion. When it comes to workers' jobs, however, Mr. Gray's position is that they have to go. Is it not the case that when the airport is back up to full capacity, or even greater capacity after the expansion, the authority will need all of these staff again within the airports?
Mr. Ray Gray:
I thank the Deputy for his question. First, all of our engagement with our staff is very much about trying to ensure the best interests of the company of which we are all employees. It is quite clear that we are going to have a significant reduction in our activities, our revenues and the number of employees we will need for a very different form of aviation. This will unfortunately be the case for quite some time to come. In the immediate term we are faced with the reality that we will need fewer people to run our business and that we will have much lower levels of revenue with which to operate it. That is why we have engaged in a very realistic process with our staff, about both how we work and their options at the airport. We are trying to do that in a manner that is responsible, sympathetic and realistic.
I might interrupt Mr. Gray there. Workers have said to me that they feel terrorised into accepting a redundancy package. I will ask the question again. Is it not the case that the airport will need the same number of workers, or more, in the future? Put bluntly, is it not the case that what is happening here is that the DAA is taking advantage of the pandemic to restructure its workforce and that those workers who return in future will come in on contracts or as agency staff and will have significantly lesser terms and conditions?
Mr. Ray Gray:
It is not the case that we will need the same number of staff in the foreseeable future. That is the actual position. It is certainly not the case that we are taking advantage of our staff. I lived and worked through a significant downturn but that pales into insignificance compared with what we are currently experiencing. I know the impact this has on staff for a decade afterwards. Certainly, for my part, we are trying to learn the lessons from that and ensure we operate sympathetically with our staff but also confront them with the realities of a very different environment, just as we must confront them ourselves. I would be horrified to think staff were being terrorised. We have a very active process of engaging with staff; we message them on a literally daily or weekly basis. We have tried to be open, honest and upfront with them about the situation we are facing with them. We have tried to create as many possible staff options that can be available to them, including career breaks, reduced hours and, where staff wish it, looking at voluntary severance.
Does Mr. Gray see the contradiction though? In answer to Deputy Hourigan he stated that this is a temporary downturn and that we need to continue to invest in the expansion because what we are experiencing will end. However, his attitude to the workers is to say that they have to go. Surely it is the case that in two or three years the DAA will require the same number of staff again. If the authority replaces those staff, will it give a commitment that they will come back on the same terms and conditions, or is it leaving itself the option of bringing them in as contract staff, agency staff or something like that?
Mr. Ray Gray:
With the greatest respect, I am not trying to create any contradiction here. However there is a difference between, on the one hand, the long-term planning of the airport for five, ten and 15 years out, with a contract that is already capital-committed, and, on the other, dealing with the here-and-now situation that instead of the 33 million passengers there were at Dublin Airport in 2019, there might 20 million or thereabouts next year, and perhaps a small increase on that the year after. It is not our practice to either treat our staff in a disrespectful manner or to push them out of the business. What we are trying to do is change the way we work and to do that to meet our passengers' needs in the interests of both the economy and the airport. For those people who wish - this is absolutely a voluntary choice - to change course or to do things differently, we are engaging with them on a voluntary and, I hope, sympathetic basis to help facilitate that. I think one can say that the airport has been a good employer, by and large. However, that is not to say-----
I thank the witnesses for attending. I would like to go to Mr. Gray first. On airport testing, we had the Department of Transport, Tourism and Sport in here on Friday last and they were talking about a departure test, which sounds like a good idea as far as risk mitigation is concerned. Mr. Gray partially answered this question already but I ask if he has any executive function in the context of moving the process along so that we might develop a testing regime for the airports as quickly as possible in order to try to give confidence to people who may want to travel here.
Mr. Ray Gray:
Yes, absolutely. As I said earlier, decisions about testing are matters for the health and State authorities. We are suggesting that testing may have a part to play in that. The primary focus of our recommendations to the committee this morning was around testing for arriving passengers. If there is to be testing of departing passengers, those sorts of conditions will be set by the health authorities. Those tests may have to be complied with in order to travel, as they currently are for persons travelling to the Middle East, for example. Right now, there is not an effective or reliable source to put that in place and that is something we are anxious to see a greater possibility of. However on the airport campus, it simply will not be possible to test thousands of people at a point in time. Testing has an important part to play. It is important that we develop this as a technique. We can help manage risk because the thing that needs to be focused on is that it is about managing risk. It is about a series of measures that can reduce that risk and can give confidence to the travelling public. It is health authorities and governments which will determine whether people can travel, confidence will determine whether people will travel.
I thank Mr. Gray, I am in agreement with him. I want to refer back to a point he made a few moments ago about the future development of Dublin Airport and how important it is for Ireland Inc. He specifically mentioned the regions. On that basis, I am thinking of Shannon and Cork airports as well as an application from my own constituency of Waterford to try to get our own regional airport off the ground, quite literally. How is the DAA helping with that process? Shannon is no longer part of the DAA's remit but the expansion of Dublin does not really point to helping the regions, although it certainly helps Dublin.
That is the point I was making. What Mr. Gray expressed about the authority's impact on the regions was that it is not involved with the regional airports. That is not a criticism but a statement of fact.
Turning to Ms. Considine, there was a submission this morning regarding the potential for Shannon Airport to offer a flight combining freight and passenger traffic to the US because of the long runway there and the opportunity to use, I think, Airbus A320neos. Could Ms. Considine give us her understanding of what that might look like?
Ms Mary Considine:
We have significant infrastructure already in place in Shannon. We are the transatlantic gateway to the Wild Atlantic Way so Shannon is already the airport on the west coast serving the US. We have a number of operators which, prior to the pandemic, would have used Shannon to facilitate both cargo and passenger services. I assume that what the Deputy is referring to is the question of what opportunities we have to grow that. We are in a very difficult place now. We are focused very much on survival, then recovery and rebuilding after the pandemic. We will be looking at all opportunities to expand both our services and our cargo operations in Shannon.
I thank Ms. Considine. Does the Shannon Group have any plans to lobby the Government in the context of State aid and, possibly, a subsidy for airlines, which is a very good idea for trying to stimulate demand? It is probably the easiest and most effective way of trying to drop ticket prices and get people flying. Does Ms. Considine have any thoughts about the group making submissions like that?
Ms Mary Considine:
We are in ongoing dialogue with officials in the Department of Transport, Tourism and Sport on this matter. We see the restoration of air services as absolutely crucial to support business and tourism. In that regard, we made a submission that supports be put in place to restore those key services. Similarly, we have sought capital funding for the airport. Due to the fact that fewer than 3 million passengers fly through Shannon and in line with EU state aid guidelines, we would be entitled to Exchequer funding for safety and regulatory capital. That was a significant cost burden on the airport even prior to the pandemic but now we are not in a position to sustain that level of capital going forward and we have sought support in that regard.
We have also sought support for a number of liquidity measures for the airport. The continuation of the wage subsidy scheme is obviously really important but we also sought an extension of the commercial rates waiver. We note that it has been extended but we would have liked it to be for longer. Those support measures are very important to try to preserve liquidity as we recover from this crisis.
I thank the witnesses for attending. I endorse my colleagues' comments regarding social welfare inspectors at the airports. Where are the inspectors getting their information? Is it from the airline authorities? Could somebody answer that question for me? I have a number of questions, especially for the DAA about Cork Airport but maybe I will leave them for now. There are serious concerns about Cork Airport in the context of the safety of both tourists and everyday passengers who come through it.
What are the witnesses' thoughts on rapid testing at airports and ports? This is an issue I have raised time and again in recent months with various Departments, organisations and the Taoiseach and his predecessor. Do the witnesses think rapid testing is something that could succeed at airports and ports? Have the companies looked into the cost of rapid testing and do they think that passengers would be willing to pay?
Do the witnesses think that the 14-day quarantine is working? Do they think that the filling out of forms is the most positive way to deal with trying to curb the virus at ports of entry? Have the companies looked at other countries and compared their entry and exit strategies for Covid-19? In the United Arab Emirates, UAE, for example, a passenger must produce a medical certificate showing a negative result from a Covid-19 test on entry and exit. If the witnesses have looked at other countries, do they have a proposal as to what should be done in Ireland? Have they discussed any such proposal with the necessary authority, the Government or NPHET? The whole reason behind that is we are trying to open up west County Cork and Ireland generally in a safe manner and rapid testing has to happen, it is a no-brainer. We have to look to the long term. This pandemic could go on for the next number of years. I would like to know if the witnesses have answers to the questions I have asked.
Ms Miriam Ryan:
As a County Cork woman, perhaps I should take some of the Deputy's questions on the Cork side. Over the period 2015 to 2019, we increased traffic at Cork Airport by 30%. It was one of the fastest-growing airports last year. In fact, it was the fastest-growing airport in Ireland last year. Unfortunately, the Covid situation has dealt Cork Airport a really significant blow.
We have, therefore, particularly in our submission, made the call for assistance for Cork Airport. This call relates to some of the capital projects that are required at the airport in order to ensure that it can continue to operate safely and securely. Particular investments are required in hold baggage screening, which is a regulatory requirement. There is a big price tag associated with that. Cork is the only airport that has not had State support in the provision of this infrastructure. Cork also requires support over the next while for investment in runway overlay. There is a very high price tag associated with that as well. There are opportunities under state aid rules to allow for capital investment to be made, via the regional airports programme, at smaller airports. We would certainly like to see that for Cork. There will also be a big programme of work required to regrow the business at Cork Airport. We have specifically sought assistance with some of the investment that would be required to provide incentives and marketing support in respect of the development of new routes and regrowing that business over the next while.
On testing, there has been a lot of talk about it however it is very challenging to do it on arrival at airports. There are many challenges with regard to space for in which to hold passengers. In other words, where to keep them while they are being tested. There are issues regarding the availability of the reagents required for polymerase chain reaction, PCR, testing and also with the availability of suitably-qualified staff to undertake that testing. As such, there are a lot challenges in the context of testing on arrival. That is why we focused in our submission on the opportunities that there might be to carry out testing before the passenger leaves his or her home country. We certainly think those opportunities are worth exploring further. Thus, the first line of defence will be testing on exit so that passengers who arrive here have already been tested and can show to the airline that they have been tested. They will have certificates to show they are being tested and that they can also present that to the staff of the border management unit at the airports and ports on arrival to show they have already been tested. We are seeing that happening now at airports in a number other countries, including Austria. Authorities in Hawaii and Alaska in the United States are putting in place pre-testing requirements and we are now seeing this for some of the airlines that are operating out of Dublin into Abu Dhabi, for example. There is absolute merit in looking at that. It is something we have brought to the attention of the Department of Transport, Tourism and Sport.
I listened elsewhere to the deliberations so far and I do not want to go over the points raised by other members. Is it expected that Dublin and the other airports throughout the country can operate at the scale they are presently doing and still remain viable?
Mr. Ray Gray:
At the scale we are currently at, with virtually no passengers, we will not be able to continue in a viable form. It is very important to see a resumption of safe international air travel and that is very much what our focus is on. It is very important for us, as an island and as an economy - not merely for the DAA - that we continue to have travel, trade and connectivity, subject, obviously, to the wider health requirements.
In the event of there being no let up in the virus and it continuing as it is at present, do the company representatives foresee any further curtailment of services at the airports in Dublin, Cork and Shannon? If so, are such curtailments envisaged at this time and have the companies decided on the shape they might take?
Mr. Ray Gray:
The key point to be made is that international travel and travel to this island is facilitated through aircraft, and aircraft will be deployed where there are commercial routes and a commercial basis. That is the key point. We have to be open for business, otherwise our airline customers are not going to serve, or serve sufficiently, our island economy.
That would have a huge and terrible impact both on the economy and on business in general. This is also clear from what the WHO said insofar as considerations about international travel have to be measured having regard to both the health concerns and the impacts they have on people's lives in a given country.
Mr. Ray Gray:
Our focus is on the recovery of travel and traffic. Much of the initial focus now is around the processes and the safety, health and testing regimes around that. Of course we need to work with airlines. Indeed, the aviation task force and ourselves as airports have been focused on what supports are needed to bolster that into the future. We are going to need Government support in marketing routes. The committee will hear later this morning from the airlines about what supports they are looking for. It is hugely important that as a country we invest in the recovery of traffic. The safeguarding of the business now and the recovery of traffic will ensure we remain strong and viable into the future.
These are my last questions, Chairman. What is the single biggest investment the DAA might be able to make, pending the recovery of traffic, now and in the foreseeable future, keeping in mind the necessity to observe international rules on health and viability?
I wish to raise a few points, the first of which is for Mr. Gray. We have heard the word "outlier" quite a lot over the past week. It is a term I seldom heard used before the aviation sector came before this committee. It means not sitting with others and somewhat disadvantaged. The figures I want to put to Mr. Gray are those for inbound air traffic for the first 19 days of this month. A total of 88,690 people came into Dublin, 6,751 into Cork, and 3,505 into Shannon. I do not think these figures correspond with what the market share of those airports would typically be, which has been much analysed. I think Dublin Airport normally enjoys 86% of market share. Has there been a deal or a directive that has ensured that, even though there are not many flights landing or taking off, the majority of aviation is departing from and arriving into Dublin? I would like Mr. Gray to answer that, please.
Mr. Ray Gray:
No, the arrival and departure of aircraft into Dublin is driven by the demand and by the airline services that are put in place by those airlines. Obviously, there is quite a bit of cargo activity. There has been no deal, directive or requirement in that regard. It is small business as usual, in that sense.
I understand that when everything was being shut down, the previous Government rightly said that it is essential we have some international travel links. That was at the time when nothing was taking off. I think there was one day when only one or two passengers left Dublin. It was right to keep routes open but at that point did the previous Government work out any deal with Dublin Airport Authority to ensure that at a minimum flights from Dublin to London were taking off and landing?
Mr. Ray Gray:
We are anxious to ensure as many flights as possible can operate subject to the overarching health restrictions. We are anxious to ensure that at Dublin and at Cork because it is our mandate to do so. Every day we are sitting down with airlines to discuss their plans and how we can support and assist them. At the same time we are working with the State authorities to follow the national protocols and health procedures.
Unfortunately, we have been receiving disappointing news about the plans of airlines. We are seeing a small take-up of flights so there are low-load factors and airlines are postponing or putting back their plans to bring new capacity online.
I am sorry to cut across Mr. Gray but our time is quite limited. I want to pick up on his assertion that the north runway will be to the benefit of Ireland and the regions, to quote his contribution of a few moments ago. I would again contend that given Dublin's 86% market share, the north runway would do the exact opposite of that. It would lead to more take offs and landings in Dublin. There has been a lot of discourse of late that Shannon has never fared well under separation and that a new configuration which brought it back under the wing of the DAA should be looked at. I ask that Mr. Gray and Ms. Considine briefly give their views on whether that should happen and how it would happen.
Mr. Ray Gray:
If I could address the Deputy's question about the north runway, the reason for its construction is that Dublin Airport was full and because of the need to facilitate the demand for airlines both now and into the future. That is the rationale behind that.
The ownership and operation of the State airports, including the one at Shannon referred to by Deputy Crowe, is a matter for the State and the Government. It is a matter of Government policy and we follow and implement that policy.
Ms Mary Considine:
We likewise implement Government policy but what I would like to note is that since the separation of the airport and, more importantly, the formation of the Shannon Group in 2014 we have seen passenger growth at the airport.
We have seen significant investment in the property portfolio of Shannon Commercial Properties. That is important because the €115 million that we as a group have invested across the airport campus and the Shannon free zone has stimulated economic activity in the region. We have grown the cluster of aviation companies from 40 to well over 80. Fourteen new companies joined the aviation cluster last year.
Last year in Shannon we built the first aircraft hangar to be built in Ireland in more than 20 years, and it was completed in January of this year. It was a significant project. As such we are very committed to our mandate from Government to promote aviation and to optimise the return on our land and property assets. It is very important that we attract new industry into the region and that it is sustainable because air services on their own will not survive without a strong regional economy and, as I have said, the air services coming into Shannon are vitally important for business and tourism.
We as a group have also increased visitor numbers to our heritage sites and in totality that is really important to the well-being of the region.
I thank Ms Considine, and my next question is on the fire service at Shannon Airport. I understand overtime is no longer being paid and that the fire service is now at minimum staffing levels. A certain cohort of staff is required to achieve a category seven fire cover status but Shannon and all other Irish airports strive to have category nine status in order that they can cater for Boeing 767s, larger jets, four-engine aircraft and so on which may land. I understand that since overtime has been dropped that is no longer the case. Will Ms Considine explain whether it has dropped back to category seven and what is its category today? On that point, I understand that fire service staff are now cleaning the fire buildings without any training in chemicals etc. Will Ms Considine outline what the current cleaning procedures are for the fire service?
Ms Mary Considine:
The Deputy has covered a number of issues there. First and foremost, we operate an up to category nine airport. Having said that, we do not, at all times of the day, have aircraft which require that level of cover. As such, if we do not have aircraft coming in which require the higher level of cover we operate to category seven and we notify accordingly. We then man up to category nine. As I said at the outset, we had to take very difficult measures when the pandemic hit us in March. We initially restricted our hours of operation. We came back up to 24-hour operation on 1 July with the restoration of terminal services. We have cover in the fire station 24 hours a day, seven days a week at the moment.
We have had to put in temporary measures to reduce pay and that would not be different to businesses all over the country. Those temporary measures are very important in ensuring the longer-term sustainability of the business, because as I have said we need to focus very much on survival and recovery and what needs to be done to ensure we have a business as we come through to the other end of this pandemic.
I thank Ms Considine. If I have time I may ask some short supplementary questions. My last big question is on the July stimulus. I listened to Ms Considine's presentation at the beginning. The July stimulus announcement last week included the extension of the temporary wage subsidy scheme, the suspension of commercial rates until the autumn, capital funding for projects and so on. As there is a whole stimulus package aimed at hospitality and tourism I was hoping that Ms Considine would have some good news on the Shannon Heritage sites front, such as them remaining open beyond the 31 August. What is the current status there? I know she has made requests to the TDs for the region and there is collaborative work in that regard but the landscape has changed in the past five or six days.
Will Ms Considine also explain whether the group will engage with the Shannon Heritage staff, in a similar way as it has with the airport staff, on the matter of redundancies or wage reductions? Are any options on the table or is it solely a case of closing down sites until the spring? There are some people who, due to age profile or length of service to the group may be interested in those options but they have not been put on the table. Will Ms Considine outline how she sees the next few weeks for the Shannon Heritage group?
Ms Mary Considine:
We obviously welcome the July stimulus because it gave certainty about the continuation of the temporary wage subsidy scheme. However, in our dialogue with the officials in the Department of Transport, Tourism and Sport in particular we have already highlighted to them that even with the scheme continuing we would be still incurring significant losses in the heritage business through the winter, hence the requirement for the subvention of that business through the winter. We are in dialogue with Department officials on that and are waiting for an outcome. That business is predominantly reliant on international tourists coming into the country. We do not have international tourists coming into the country in meaningful numbers this year and we are looking at continuing losses in the peak summer season, even taking into account the domestic market. As such there will be no business going into the winter. Banquets, for example, are 94% reliant on international visitors coming to our sites. We would require additional subvention on top of the temporary wage subsidy scheme and we are in dialogue with Department officials on that.
There was no particular capital funding in the July stimulus. Again, that is something we have sought particularly for our aviation sector. We also sought such funding for the redevelopment of the Bunratty folk park and we will continue to be in dialogue about both of those.
We will of course be in discussion with staff once we have clarity on the situation.
I thank the witnesses for their attendance, for the information they have provided and for their time.
I will focus my questions on Ms Considine as my main concern is Shannon Airport, its hinterland and how its survival is crucial for the region. Can Ms Considine give an indication of how many times the management team have spoken to unions in the airport?
I thank Ms Considine. I was going to ask the same question as Deputy Crowe about the announcement of the extension of the temporary wage subsidy scheme and the recent report from the Aviation Recovery Task Force that it will be extended until 2021. Does Ms Considine believe this will benefit the airport enough to provide for the retention of good quality jobs?
Ms Mary Considine:
Again, the temporary wage subsidy scheme is very important in the context of supporting aviation, particularly through the real hardship we are in at the moment. Similar to other airports, we have proposed a number of measures to reduce our payroll costs as we work through the recovery period, including career breaks, reduced working hours, a temporary reduction in pay and a voluntary severance scheme.
We are not per seseeking significant job cuts in the airport. The measures we proposed are more about preserving employment in the long term but taking some difficult and painful measures in the short term. We are very conscious that has an impact on all our employees. To be fair to those employees, they have been working with us. It has been a very difficult period but the difficult and temporary measures we have taken will ensure sustainability of employment in the airport and region in the longer term.
Ms Mary Considine:
The proposal with the 20% pay reduction is for a temporary pay reduction while we recover from this pandemic. All indications are that the recovery will be slow. Airport Council International, ACI, which represents airports all over the world, predicts that recovery to 2019 levels will not happen until 2024. CAPA, the centre for aviation, announced some research lately predicting that airport revenue will not return to pre-Covid levels for five to ten years. We are looking at a reduced level of activity in Shannon Airport for the near and medium term. Consequently, we must implement measures to reduce pay as we work through the recovery period. The support scheme will not alleviate the requirement for the 20% pay reduction.
Ms Mary Considine:
First and foremost, one of our key priorities has been to grow passenger levels at Shannon, both for business and for tourism. We work very closely with airline partners and offer very attractive incentive schemes that are published. In addition, we offer a level of marketing support and work very closely with Tourism Ireland, which provides co-operative marketing to airlines. In total we put a very attractive package to the airlines.
Again, this goes back to airlines being commercial and market demand. It is why, as a group, we have invested in Shannon and the region to ensure we are stimulating demand. For airlines to operate routes that are sustainable in the longer term, they need to be getting yield, which relates to market demand. The more businesses we have, the more people will want to use the services. Again, demand is being created in this way and the long-term sustainability of routes is ensured.
Ms Mary Considine:
We have a very strong management team in place. Prior to the two departures referred to by the Deputy, we appointed a chief operations officer for the group, who has taken on direct responsibility for the operations of our three businesses. We are supported by a strong chief financial officer and legal personnel. We have a strong team and a streamlined management structure in the group. It is appropriate for where we are as we work through the recovery period. We are very confident in the team we have in place.
I thank the witnesses for coming in this morning and for their presentation. The position of Cork Airport was raised already. What was the total number of people working in Cork Airport before Covid-19? What is the long-term plan with respect to the number of people working in the airport when the support scheme is in place?
Mr. Ray Gray:
I thank the Deputy for his question. We have approximately 230 people working at Cork Airport and that number would be somewhat lower in the current environment. It is still approximately 200. As part of our process of rephasing and resizing our business, we are engaged in an extensive process with staff and representatives, like that in Dublin, looking at different ways of working right across the business. We are also examining career options where staff wish to pursue those.
I anticipate that, right across the group, we will, unfortunately but necessarily, sustain less employment in the near term than we had. Cork remains an efficient and effective airport.
Mr. Ray Gray:
Currently, other than absolutely essential staff, we are operating on the basis of a four-day week. That has been a necessary but unfortunate measure and a consequence of Covid-19. We have not brought on board any of the new or summer hires one would normally expect in an airport operation in the summer period. Some contracts have ceased or been ended. We are now engaging with staff on how we can operate the business in a post-Covid environment, looking at the numbers of employees we need for those areas. That will result in some redundancies but they will be voluntary and we expect they will be put in place through mechanisms of engagement with staff and trade unions.
My understanding regarding flights from Cork is that, for example, Aer Lingus has pulled some but that it continues to fly out of Dublin. Is there not encouragement to airlines to try to stay within an airport rather than transfer flights to Dublin, for example? What flights that were operating from Cork have been transferred to Dublin?
Mr. Ray Gray:
Rather than flights being transferred to Dublin, there have, unfortunately, been reductions in air services and a slower than anticipated resumption of those services into Cork due to continuing difficulties relating to travel. We have a team in Cork, through the managing director, Mr. Neil McCarthy, as well as Mr. Kevin Cullinane and Mr. Brian Gallagher on the marketing side, that is constantly engaged with and focused on airlines to try to maximise their return to operation and how they can work in the current environment. The news has not been good. We have been operating on the basis of something under 1,000 passengers per day, with approximately 400 coming in or out, on average, in the past number of days. That compares to something like 10,000 in a normal situation.
Mr. Ray Gray:
The decision about capacity on a particular route is taken by an airline. We actively encourage our airlines to resume their operations and maximise them out of Cork. We work to try to prevent it where possible but, unfortunately, there has been a slow resumption in air services. The news on that has been more negative than positive in recent days. However, we continue to focus on how we can get airlines and passengers back to Cork Airport and get some resumption of normality as soon as possible. A range of actions is required to do this, both in terms of capability and rules-----
I refer to Mr. Gray's answers - or probably his non-answers - to the questions put to him by other members in respect of data collection.
It is simply not credible that Mr. Gray would expect us not to ask about this matter. It has been the number one topic on all media channels since the Tánaiste said on Sunday that PPS numbers are somehow being collected at Dublin Airport. I would have assumed Mr. Gray would expect us to ask this question and he has not really answered it. I know what Dublin Airport is like. Unfortunately, I travel through it a lot more than I would like. I prefer to travel through Shannon Airport. Travellers are processed by customs officials, immigration officials, gardaí and, possibly, customer service representatives. Who actually collects the PPS numbers? Mr. Gray has not really answered that question. I presume the Tánaiste does not do it himself, so someone else must collect them. Mr. Gray might come back with an answer to that question, an answer which he failed to provide to my colleagues. Mr. Gray has said he does not know, but it is not credible that he would come here and not expect to be asked about this.
Mr. Ray Gray:
I am sorry if the Deputy feels I have been less than forthcoming with the committee but I can assure him that is absolutely not the case. I have said categorically in response to his inquiry that the information that is being collected is not being collected by the DAA. Several State agencies operate at the airport under their own mandates and arrangements. They do not require specific permission from us to operate, nor do they have to inform us of their activities. That is why I am regrettably unable to be more helpful to the committee.
I thank Mr. Gray. He still has not answered the question. He must have known this would come up.
I would like to ask Ms Considine about Shannon Heritage. She expressed concern about staff and the fact that the sites will not reopen in September. I understand they are to close at the end of August. I was disappointed that Ms Considine made no commitment to extend this opening period. I believe the stimulus has changed things. I visited Bunratty Castle with several of my colleagues last Sunday. Staff there told me that 60% of the visitors were domestic tourists. We all accept that international travel has fallen, but we cannot simply say that there is nothing to be done. There is an opportunity here, especially with the stimulus. We are asking people to take staycations. Shannon Heritage workers are deeply concerned. As Ms Considine knows, many of these people have given years to Shannon Heritage and the sites it operates, namely, Bunratty Castle and King John's Castle in my own city. I ask Ms Considine to answer the question we asked in meetings with her two weeks ago. How much money did she ask the Government for, particularly with regard to Shannon Heritage? Will she consider keeping the sites open after the end of August?
Ms Mary Considine:
I thank the Deputy. To clarify, we have sought subventions for Shannon Heritage to cover the operating losses that will be incurred over the winter and up to next summer. Unfortunately, we are not confident that international travellers will return next summer in the same numbers as before, so losses are likely to continue. We are in dialogue with officials in that regard. As outlined in my submission, despite several intensive marketing initiatives and national coverage for the opening of Bunratty Castle and King John's Castle in Limerick, visitor numbers have not picked up to any great degree. Visitor numbers and revenue are still down by more than 70% at Bunratty Castle. They are down by 86% at King John's Castle. In respect of the latter, it is really disappointing to note that the domestic market has fallen since last year. It is approximately 40% of what it was in 2019. As the committee will be aware, more than 70% of our market is international and it is very difficult to make up for that. In this business, we traditionally make money in summer and lose it in winter. We lost money as the pandemic began and incurred significant losses as it progressed. We expect that to continue this winter.
I wish to ask about Shannon Airport's separation from the DAA in 2013. The figures for Shannon Airport are quite clear. I have them in front of me. The numbers have not increased as quickly as those for Cork Airport. Has there been any discussion of Shannon returning to the DAA?
I am sorry there is not more time. I have to be fair to everybody. I have a couple of questions myself. I would like to continue to discuss Shannon Heritage, which is part of Shannon Group. Ms Considine has repeatedly told us that most of the sites rely on international tourism for business. According to the figures I have seen, 39% of the visitors to Bunratty Castle last year were Irish. The figure for King John's Castle was 26%. The GPO had 34% Irish visitors and 35% of visitors to Malahide Castle were Irish. However, 79% of the visitors to Craggaunowen were Irish. Proportionally, Craggaunowen has twice as many domestic visitors as the other sites but it is the only one that has not been opened. Could Ms Considine explain that?
Ms Mary Considine:
I thank the Chairman. Craggaunowen works from a very low visitor base. Approximately 15,000 visitors visited the site last year. The Deputy is correct to note that because of its location its market is predominantly domestic. It is open from June to mid-September and is very heavily reliant on school tours during the June period. Obviously, we were not open in June of this year. Craggaunowen would lose money in any event, but because of our portfolio of sites we were able to support that business prior to the pandemic. We are now losing money right across the business because of the collapse in our revenues. Consequently, we made the decision to open our key sites in order to ensure that Bunratty Castle, a site in Clare on 26 acres of land, would be available to the domestic market while the schools were on holiday. We made the same decision with respect to King John's Castle in Limerick. Unfortunately, we were not in a position to open all our sites this year. This business is in a financial crisis and there has been a complete collapse in revenue. Shannon Heritage's revenue is down by 86% this year. It is very difficult to keep trading. Our decisions have been made with the long-term interests of the business to the fore. We made the temporary decision to close key sites during the summer to reduce losses.
School tours have inevitably fallen off in circumstances where schools are closed. Due to the fact that the are closed, however, I suggest that parents across the mid-west are looking for places to bring their children for a day or even an hour. The children have been unexpectedly under their feet since March. A site with 30 acres of parkland, a crannóg and a castle would have been an attractive proposition if it was open, but it was closed and it remains closed.
Does Ms Considine think Shannon Heritage is a good fit in the Shannon Group? Has the group used this crisis to hobble Shannon Heritage to the degree that someone else will have to take it over?
Ms Mary Considine:
I do not agree that the crisis has been used in that way. At the start of this year none of us would have envisaged the devastation this pandemic would cause for our businesses. As outlined in my submission, we had projected growth for Shannon Heritage this year. We had expanded the portfolio and taken on a new attraction. The position we are in is very disappointing. The fact remains that our visitor base and revenues have collapsed. We have had to take difficult temporary decisions this year.
In response to the question on Shannon Heritage, I note that the protection of national monuments, which is obviously our obligation, is very difficult for a commercial entity. The Shannon Group has a commercial mandate.
We do not receive Exchequer funding. Consequently, each of our activities has to generate a commercial return and this, in turn, allows for capital investment. In the context of the work we have done in Shannon Heritage since 2014, we have invested €6 million in the business, we have addressed some of the historic underinvestment relating to it and we have moved it from a loss-making business to making a profit at an operational level. That was important because that then allowed us to start to invest money back into improving the product. We were also working closely with Fáilte Ireland to secure capital grant funding for the redevelopment of Bunratty Folk Park under the platform for growth scheme so we have strong ambitions for the group-----
Given that many of the group's sites were closed, it was not able to avail of the temporary wage subsidy scheme at least not in respect of some of the Shannon Heritage sites. I have three questions and I ask Ms Considine to be very brief in her replies. She stated that the group took on a site for its portfolio. What was that site and is it open? Some 39% of visitors to Bunratty Castle last year were Irish. Obviously, numbers are down but has the group at least maintained the Irish component of its visitor figures? What marketing, if any, has been done in respect of Bunratty or any of the other sites? Ms Considine mentioned capital requirements for Bunratty. If these are not commercially sensitive, I ask her to outline them and indicate whether the Government has agreed to step in given that state aid rules have been relaxed?
Ms Mary Considine:
The capital we have sought is for the redevelopment of Bunratty folk farm under platform for growth and we are in ongoing discussion with Fáilte Ireland and have been in discussion with our own officials in that regard. The new site we took on last year relates to the casino in Malahide. We have contractual arrangements with Fingal County Council to operate Malahide Castle, Newbridge House and the casino in Malahide and these sites have reopened in line with the Government Roadmap for Reopening Society and Business.
I thank Ms Considine. I have one final question for both companies. During the period beginning in mid-March when everything began to shut down, have they had to turn away business? A "Yes" or "No" answer is required here. If they have had to turn away business, can our guests explain why? I am obviously talking about the airports.
Okay. I thank our guests very much for their time and for answering all of our questions. I think some answers have to be provided in writing. One of those answers relates to the activities of Department of Employment Affairs and Social Protection on the Dublin Airport campus and what is known about it by the DAA, as opposed to Mr. Gray personally. There are also some other answers to be provided directly to members of the committee, including Deputy Colm Burke. I thank our guests for attending and for answering all of our questions.