Oireachtas Joint and Select Committees
Wednesday, 20 October 2021
Joint Oireachtas Committee on Transport, Tourism and Sport
Chairperson Designate of the DAA: Discussion
No apologies have been received. Today is an engagement with the chairperson-designate of the DAA and a discussion of his strategic priorities for the role, as well as his views on the challenges facing the organisation. On behalf of the committee I welcome the chairperson designate, Mr. Basil Geoghegan, and the chief communications officer of the DAA, Mr. Kevin Cullinane. They are both very welcome.
Witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if a statement is potentially inflammatory in relation to an identifiable person or entity, the witness will be directed to discontinue his or her remarks. It is imperative that witnesses comply with any such direction. There are some limitations to parliamentary privilege for witnesses attending remotely from outside the Leinster House campus. They may not benefit from the same level of immunity to legal proceedings that a witness physically present does. Witnesses participating in this session from a jurisdiction outside the State are advised that they should be also mindful of domestic law and how it may apply to the evidence they give.
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.
For anyone watching this meeting, members and witnesses now have the option of being physically present in the committee or to join the meeting remotely via Microsoft Teams. I remind members of the constitutional requirement that they must be physically present within the confines of the Leinster House complex in order to participate in public meetings. Reluctantly, I will not permit members to participate where they are not adhering to this constitutional requirement. Therefore, any member who attempts to participate from outside the precincts will be asked to leave the meeting. In this regard, I ask any member partaking via Microsoft Teams, prior to making his or her contribution to the meeting, to confirm that he or she is on the grounds of the Leinster House campus. If attending in the committee room, you are asked to exercise personal responsibility to protect yourself and others from the risk of contracting Covid-19. I strongly advise the practice of good hand hygiene and to leave at least one vacant seat between you and others attending. One should also always maintain an appropriate level of social distancing during and after the meeting. Masks should be worn at all times during the meeting except when speaking.
Mr. Basil Geoghegan:
I am honoured that the Minster for Transport, Deputy Eamon Ryan, has nominated me to serve a second term as chairman of DAA group and I am grateful for the invitation to attend the committee meeting today. I will take this opportunity to bring members up to date on DAA.
Since I was first appointed, we have had two very different 18-month periods. The first was one of continued growth, breaking ground on the new runway and planning for the future. The second half saw the impact of Covid-19 and was completely different in an unprecedented and challenging way. We saw a thriving global business shrink back to levels last seen more than 30 years ago and incur substantial financial losses of €284 million in 2020 alone. Many difficult decisions and extensive cost-saving measures had to be implemented. I have been immensely proud of our people and the resilience and support they have shown for each other. They have kept our airports operational throughout the pandemic and facilitated our customers and passengers throughout the varying lockdowns and restrictions of the past 18 months. In the early period of Covid-19, they ensured delivery of personal protective equipment and other critical supplies. Globally, they helped our international travel retail business, Aer Rianta International, and our advisory and airport management consultancy services business, DAA International, both of which have exceptional reputations in their respective sectors.
After a very long period of travel restrictions, DAA is now firmly focused on catching up with other countries. We are working with the airlines and tourism authorities to reconnect Ireland to the world. We also welcome the help of the Government’s aviation package as announced in last week's budget. As we look to rebuild our business, we are keenly aware and hugely supportive of the Government’s climate action ambitions. We already have a strong track record and Dublin and Cork airports both outperformed the public sector energy efficiency target in 2020, achieving an estimated 55% reduction in Dublin and 52% in Cork. Dublin Airport is the first airport in Ireland to achieve carbon-neutral status following an extensive programme of activities to reduce and offset its carbon emissions in recent years. Our priority is to become a European airport leader in sustainability by 2030 and to achieve net zero emissions at our airports by 2050.
We have a commercial mandate funded from a combination of own resources and through borrowings in international financial markets. Between 2016 and 2019, the group delivered a return of €125 million in dividends to the Exchequer. We are keen to ensure that we can continue to pay our own way. To achieve this, Dublin Airport, as the group's largest revenue engine, urgently requires a regulatory decision that properly reflects the reality of our present circumstances and addresses the unsustainably low level of airport charges that currently pertain.
Given the scale and severity of the crisis, it was clear from the earliest stages that the Commission for Aviation Regulation’s 2019 price determination for Dublin Airport, which set the airport's pricing out to 2024 based on record levels of traffic and had stipulated a significant 18.5% reduction in airport charges for 2020, had effectively been rendered void. As a result, Dublin Airport found itself facing into the crisis with a fundamentally flawed pricing structure, resulting in airport charges that were disproportionately low when compared with its European peers.
What started pre-Covid as an unfortunate mispricing, transferring value from the Irish taxpayer to airlines, became a fundamental issue for the future provision of airport infrastructure. It is incomprehensible to me that following the greatest and most prolonged plunge in air travel in history, of a magnitude many multiples of that seen post 11 September, 2001, that our already reduced charges per passenger are still based on air traffic forecasts from 2019 when Dublin Airport welcomed 32.9 million passengers. Despite repeated requests, the now departing regulator has not taken any decisive action whatsoever to address the position. This is a grossly unsustainable position given our financial circumstances. It puts at risk our ability to deliver the high-quality day-to-day service expected at our airports. It puts at risk our ability to deliver critical airport infrastructure to support connectivity and it makes it almost impossible to deliver our sustainability ambitions and meet Government targets for our sector.
Airlines and airports have moved decisively and at speed in response to the pandemic-induced crisis, yet almost 20 months after this crisis began there has been no change to charges that were predicated on five times the passenger volumes delivered to date this year. Under new legislation, the responsibilities of the Commission for Aviation Regulation will imminently be subsumed within a newly constituted Irish Aviation Authority. It is critical that the new regime immediately establishes a fit for purpose price cap for 2022 that reflects current market conditions. Our business simply cannot countenance a third year of enforced below-cost prices and regulatory inaction.
We also need a full and considered regulatory review process for subsequent years because if the past two decades have taught us anything, it is that aviation is enormously exposed to peaks and troughs, cycles and shocks.
Investment in such an environment is critically reliant on regulatory certainty and agility facilitating very long-term decision-making. This is not simply a matter concerning Dublin Airport. It must be linked to Government policy and the needs of Ireland as an economy and place to live. In this context, we welcome the addition of a statutory requirement for the regulator to take account of Government policies on aviation, climate change and sustainable development as part of its determinations for the future. It will be key that this facilitates decisions that enable us to meet the sustainability challenge.
Taking a long-term view and ensuring the delivery of critical strategic infrastructure is at the core of our mandate. In this context, the new north runway, which will come into operation next year, will facilitate connectivity for decades to come. We are fully engaged in the process to amend two problematic planning conditions attached to the runway’s planning permission. It is now important that the statutory process reaches a speedy conclusion and that we do not see unintended curtailment of operations at Dublin Airport as a result of procedural delays, even as we seek to rebuild connectivity post Covid. I am also pleased to report that the team is making great progress on the runway reconstruction works at Cork Airport, which will reopen at the end of the month. I acknowledge the capital support from Government for this project.
Regarding complementary infrastructure by other parties, it is concerning that progress on projects such as MetroLink seems to be stalling. In my view, the delivery of MetroLink is essential for sustainable public transport to and from Dublin Airport and it should be prioritised.
In summary, if Ireland wants a full-service, passenger focused and fully sustainable capital city airport that complies with Government targets, the regulatory regime needs to adapt immediately. The procrastination needs to stop now, so that Dublin Airport can continue to be a sustainable and passenger focused international gateway for Ireland’s foreign direct investment, tourism and trade.
Let me conclude by assuring the committee that I view this opportunity to be re-appointed as chairman and to work with the shareholders, fellow board members, the executive team and staff of DAA at this critical time as both a great challenge and a great honour. I thank the committee for the invitation to appear today. I am happy to address any questions members may have.
Mr. Geoghegan and Mr. Cullinane are very welcome. I congratulate Mr. Cullinane on his appointment as group head of communications and I wish him well. He served the DAA and Cork Airport with distinction during his tenure in Cork. In filling the shoes of Paul O'Kane, who we thank for his service, Mr. Geoghegan has appointed a very good person.
The Chairman will not be surprised if I wear a parochial hat for a while. Notwithstanding the very refreshing opening statement by Mr. Geoghegan, which recognised that Dublin is the largest revenue engine for the DAA, it is important that arising from today's meeting we have a full debate on aviation policy with the Minister, Deputy Eamon Ryan, and the Minister of State, Deputy Hildegarde Naughton. I found Mr. Geoghegan's opening statement brilliant. Let me add that I woke up this morning to what he said on "Morning Ireland", which was challenging, but we will come back to that. I have every confidence in Mr. Geoghegan. I have watched him in his role and he is doing a good job. He has steered the DAA through the crisis and will now steer it, hopefully, on to recovery. As chair of the board, he is very committed, along with the board, to the regrowth of aviation as evidenced by his opening statement and his actions.
From a Cork perspective, and Mr. Geoghegan alluded to it in his opening statement, I thank the DAA for its investment of more than €40 million in Cork, including the runway, electrical substation, hold baggage screening and capital projects. Unlike what was said on "Prime Time" last week, it is not a maintenance job but a €40 million project that will need significant investment in the future. In the context of the appointment of Mr. Cullinane as the group head of communications at the DAA, I ask that the board fills the vacancy in Cork immediately. We need a communications manager in Cork Airport to sell and promote it. I hope this role will not be subsumed into part of the DAA because Mr. Cullinane did a tremendous job in Cork and we need that job filled as soon as possible.
I was a reluctant participant in Cork staying within the DAA, but I am now glad it is there. I say that as someone who pushed for Cork's separation from it. We are better placed within the DAA. We have become the fastest growing, and the second largest, airport in the country with 1 million more passengers than Shannon, but that is not what today is about. The Cork Airport Development Council has played a pivotal role in our airport. I am disappointed that the DAA has nobody from Cork on its board with the exception of one worker-director, Eric Nolan, who is doing a tremendous job. It is imperative that a representative from the region of Cork is on the board of the DAA. Mr. Geoghegan knows the numbers who are on the board. We have been well served in the past by Pádraig Ó Ríordáin, Ann-Marie O'Sullivan and, in recent times, Gerry Walsh. They are people of calibre and stature. It is incredible there is no one from Cork on the board. I know it is not Mr. Geoghegan's fault, but I ask that he supports my call that there would be personnel and people of suitable eminence from Cork on the board.
I will make two final points and come back at the end. Transatlantic routes worked with Norwegian Air. I hope that under European tenders we will see the return of transatlantic routes to Cork Airport. In the context of connectivity, we have had a major debate on public service obligation, PSO, levies in recent times. Under the cross-border aviation PSO in the Stormont Agreement, we should develop a Cork-Belfast route with a PSO attached. I ask for Mr. Geoghegan's support, and that of the board, in pursuit of that. If we are talking about connectivity on our island, then Cork-Belfast straddles both ends of the country and a Cork-Belfast route would be a tremendous asset to our airport. Will Mr. Geoghegan expand a little more on his comments on the issue of pricing and his remarks on the need for the Commission for Aviation Regulation, CAR, to make a regulatory decision?
Mr. Basil Geoghegan:
I thank the Senator for his positive comments. I noted certain points he made regarding the communications manager etc. at Cork. I will pick up on the main thrust of his question. I noted, and I am sure it was a slip of the tongue, that he referred to the Dublin Airport Authority. I remind everyone that we are the DAA and we have a broader mandate. Indeed, pre-Covid, I was lucky enough to get down to Cork, where we had a board meeting and I met many members of the advisory council, which was great.
I completely take on board the Senator's point about representation on the board. I will make a couple of points. Clearly, we are a unitary board and everybody who comes in the door to the board sheds their baggage, so to speak, and acts to the benefit of the company as a whole so we are not representing different communities etc. However, diversity on the board across all sorts of measures, including geographic background, is important. The Senator is correct in stating that we had Gerry Walsh, who retired, and that one of our worker-directors from Cork is not seeking re-election. I understand the Public Appointments Service, PAS, will shortly advertise for a new director of the DAA. It would be particularly helpful for us if the Senator uses his good offices to persuade good people to come forward, which makes it easier for the PAS to put good people in front of the Minister.
Mr. Basil Geoghegan:
As the Senator probably knows, and I said it the last time I was in front of this committee, the board would prefer to have more to do with appointing members but it is not in our mandate. I totally get that.
On transatlantic and north-south routes, it would be good if we could improve north-south and east-west connectivity. It makes it easier when there is a PSO obligation because there are then operators we can at least be sure of in terms of revenue.
Indeed, as the Senator is aware, there are some new operators who are starting in that regard.
The transatlantic offering is probably a bit more difficult because that was really down to Norwegian Air, and in that format, it is no more. However, there are new transatlantic airlines starting again. We do everything we can. One of the things which I think benefits both Dublin and Cork, as members of the group, is to be out there marketing with airlines all over the world and trying to understand their needs. Sometimes, their needs can be fulfilled from both airports, and sometimes, from one or the other. That is what we are pushing to do. I hope I have answered the Senator's questions.
In relation to the regulatory system, I will step back a little and say that ultimately, it is a matter of Government policy. Frankly, it is a matter of what the Irish people want to get from all of their airports. We are responsible for two of them. That is a decision that we have input into, but it is their decision. The system must ensure that all of the pillars of the State, whether it is DAA, any other airports, the regulator, the IAA, are supporting achieving that policy. We will then take as our mandate to deliver whatever that is. The important thing is that there are not clashes within the policy. For example, we have a mandate to retain an investment grade credit rating. If we are going to retain that investment grade credit rating, it means we can only have a certain amount of debt and we need a certain amount of profitability. At the same time, we have a mandate to pay a dividend to the Exchequer. If we are to balance both of those mandates with investing for the future, we need to effectively cut our cloth in a way that we can afford. Part of that is driven by our main source of revenue, which is airport charges. I know for a fact that our airport charges are incredibly low compared to other European airports. We had a very good plan under the capital investment programme, on which we received broad support from the airlines. I realise that if an airline has an opportunity to introduce cheaper passenger charges, of course, it will be in favour of that, because as an airline, the focus is on profitability, and near-term profitability in particular, whereas we are thinking about how we can build something that will be there for the next 20 years or 30 years. I have no problem with airlines pushing for charges to be lower; we just have to strike the right balance.
Once we know what the goal is, we can all push towards it. However, we need to be clear about that goal. That is why we welcome the addition of sustainability as one of the building blocks in the regulatory system. The overall aviation policy and what we want from all our airports must be the starting point, then the numbers can deliver that. Clearly, we are not in a situation like Heathrow Airport. Airport charges at Heathrow were already £20 and were increased yesterday. To put that into context, our charges are €7.75. We do not have the economies of scale of Heathrow. Equally, it is not the case, as at Heathrow, that money is flowing out to private shareholders. In our case, the shareholder is the Government, so the money goes back to the people of Ireland. It is a closed system in terms of finances. We need to do whatever we think is the right thing. It is not that money is being leaked to one constituency or another, other than if we simply say that we are going to reduce our charges and transfer value to the airlines. To me, that is something that we need to look at on a heads-up basis. Then we will be fine. Apologies; that is probably a slightly long elaboration. It is our fundamental principle behind how we approach this. It is not about complaining about charges; it is about what we want and how we finance it.
Mr. Basil Geoghegan:
The ability to increase charges would allow us to be more profitable, which would improve our debt to profitability ratios, which would maintain our credit rating. It would also allow us to decide to build for the future, out to 2040 or 2050, in whatever is needed, and to do it in a way that is sustainable. We do not necessarily want to do it in the cheapest possible way. We need to do it in a way that also meets our climate action goals. Pre-Covid, airlines wanted to have a better transfer centre at Dublin Airport because it is a very good way of bringing traffic in and out and bringing it transatlantic. In the context of where climate change is going, a far more carbon-efficient way of flying from secondary cities in Europe is to fly in a narrow body aircraft to Dublin and in a narrow body aircraft across the Atlantic, as opposed to flying from, let us say, Barcelona to Frankfurt and getting into a Boeing 747. That is important.
We want to be able to build those facilities. Many of the members may have questioned at points why they have to end up at the south terminal and get on a bus to go back to the terminal. Perhaps they would prefer to see hard stands. So would we, but we must invest. There were plans to build more stands with appropriate piers at the north end of the airport, which is where more of the Ryanair flights take off from, so that the airline could continue to build. The increase in charges would facilitate that investment. I acknowledge that the people who were on the board of Dublin Airport, as it was in the 1960s, made the decision to take the land that we now have for the north runway. That was before I was born. That is the length of decisions that we have to take.
I thank Mr. Geoghegan. I am conscious of the fact that this is a slightly different process, in that we are almost interviewing Mr. Geoghegan, but he is being reappointed, so it is not the same. We are not trying to test him out to see if he is a good fit for the job and appropriate, because clearly, he would not have been reappointed if he was not. Firstly, I thank him for the job he has been doing in a particularly difficult time. For the benefit of those watching, is it correct that Mr. Geoghegan is occupying a non-executive role?
Obviously, Mr. Geoghegan is very interested and involved, but he is not out there all day, everyday. That is not the role of the chairman. From a committee and housekeeping perspective, when did Mr. Geoghegan's term finish? How long has he been in limbo, as it were, as chairman designate?
Is it correct that that did not impact on Mr. Geoghegan's ability to do anything as such? He could make all the same decisions and have all the same executive - or non-executive - authority, regardless of whether he was chairman or chairman designate?
I am just conscious that because of Covid, there have been delays in the appointment of some chairpersons. However, that has had no impact on Mr. Geoghegan's role as chairman designate. He has the same status in terms of being able to make decisions, conduct meetings, sign documentation or whatever.
So, it was not the case that the two appointments did not coincide. Mr. Geoghegan was appointed as chair designate and the board was able to give him the power in terms of functionality to access the records as if he were chairman?
That is the point I was developing. I am conscious of the fact that the delay in Mr. Geoghegan coming to this meeting has not impaired his role as chairman designate. He has been equally effective as chairman and chairman designate.
I follow the Dublin Airport twitter feed, which is quite an entertaining one. I note that there are discussions with Ballygawley Roundabout and other users about various things. The Dublin Airport twitter feed states that t is not an airport for Dublin; it is a national airport that is based in Dublin. I am not sure that I would ever see that on the Shannon Airport feed or the Cork Airport feed. I happen to be one of the few Dublin-based members of this committee. It is important that people watching this are aware that Dublin Airport is a national asset. It is based in Dublin, and obviously, the largest population catchment is close to Dublin, but it is an airport that performs and delivers for the country as a whole. I recall being a member of the Dublin Regional Authority back in 2006. Members had to go off to a meeting in Fingal to talk about the approval of the development of the third runway, as it was known. Here we are, almost 16 years later, and finally that runway is being delivered. I am sure it was discussed in the 1960s in terms of keeping the land, and fair play to those who were doing that. The airport is very much a national asset. I remember going there as a child and looking at pier A, which was effectively dormant for nine or ten months of the year and was wheeled out for a few package holidays in the summer.
Certainly, therefore, it is an enormous asset to the country and I wish the DAA well with it. I have a couple of concerns and a few questions, which I will put to Mr. Geoghegan together and then he can answer.
What were the passenger numbers for last yearvis-à-visthe peak? I do not think that information was in his opening statement. Mr. Pádraig Ó Céidigh appeared before the committee a couple of weeks ago and I made the point that Shannon Airport did approximately 400,000 passengers hopefully this year. That was the equivalent of four days of passenger traffic in Dublin Airport pre-Covid pandemic. I believe Dublin Airport was doing approximately 100,000 passengers per day at that point. It would not, therefore, be a huge disaster if Shannon Airport was doing better. It will not be the end of Dublin Airport or anything like it.
I would be concerned about what Aer Lingus is doing in Manchester. I appreciate that Aer Lingus is part of the larger International Airlines Group, IAG, at this stage and is entitled to go and locate aircraft wherever it thinks there is business. It is rather that we used to fly them all into Dublin, get pre-clearance and then fly them to America. Now it seems to be the other way around. We will be flying to Manchester and not availing of pre-clearance to go to certain routes perhaps in the US. I know there are other routes to Canada and Barbados, which would not get the pre-clearance. Perhaps we could get Mr. Geoghegan's thoughts on that.
I have not flown since January of last year, obviously, because of the pandemic. Mr. Geoghegan made the point about the south terminal. I recall when one would be on an Aer Lingus aeroplane that would turn right for the south terminal at 10 o'clock on a Sunday night or something when one was coming back. Obviously, that terminal may not be as busy in the future as it was in the past.
I read somewhere that all of the DAA's income comes from passenger charges but presumably there is quite a bit of income coming from car parking, concessions from shops, restaurant concessions and so on. Could perhaps elaborate a little bit on that without giving away any commercial sensitivity that he does not want to give away. He has given us the passenger charges figure. How does that compare with most other capital cities? He mentioned Heathrow Airport but obviously Heathrow is a huge beast of an airport compared to almost any other European airport. He welcomed the Government package and that is positive. When does Mr. Geoghegan see us getting back to pre-Covid figures. I think it was 31 million or 32 million passengers in 2019. What is the figure for 2021? What does he hope the figure to be in 2022? When does he hope to be back to the figure of close to where it was pre-pandemic? I will leave it at that for now.
Mr. Basil Geoghegan:
That is great; I thank the Senator very much. To answer some of his questions on the numbers, between Cork and Dublin airports, before Covid-19 we were just between 35 million and 36 million passengers. It was 32.9 million passengers at Dublin Airport. That dropped to 7.9 million for last year. To put it in context, a busy day at Dublin Airport pre-Covid would have had 100,000 passengers going through the airport. We were running many days at 2,000, and 3,000 or those kinds of numbers during the longer lockdown periods. There were flights coming in from the US with four people on them and that kind of thing. It was, therefore, kind of a ghost town. That is where it has fallen to. The Senator did not ask the question but we are now back at somewhere just below 50% on some days, such as this weekend. Next weekend, it will be higher but we are kind of back at 50%.
Europe is back at higher levels but, again, Europe opened earlier so there is a little bit of a competitive challenge we have there because other people were able to get out of the gate earlier. That really goes partly towards the Senator's question around Aer Lingus moving aircraft to Manchester. I still believe that the proposition at Dublin and Cork airports is as strong as it ever was and that we will get back to those levels and beyond in due course. Even if I look at the number of airlines at Cork Airport, for example, we are going to be back next year at a higher number of airlines than we were before. Destinations may not be quite the same but we are driving back there. It is a combination between the different airports of what one can offer and whether it is a lot of people travelling for business. Are those people actually travelling from Ireland and back or coming from abroad? It is, therefore, where they come from. Again, in Dublin Airport, a lot will be around transit. The US reopening is very important for Dublin Airport because that is much of that proposition. It is interesting to see.
Our airline customers are incredibly mobile with their aircraft. We saw Aer Lingus moving to Manchester because it believed it could fly full planes out of there. If we look at the airports in the North in Belfast, they picked up far more flights and destinations during Covid-19 because people could not fly out of Dublin, Cork or Shannon airports or anywhere here. Many of those have actually now been reversed and we are seeing them coming back. We think, therefore, that we will be as competitive as we ever were.
That then kind of takes us on to the question around charges. I have not got the exact details of where we are, which I am very happy to share with the Senator, against say the Copenhagen or Manchester airports of the world as opposed to London, Frankfurt and Schiphol. We are incredibly competitive on a comparative basis and we have to be. We know that European airlines are thinking about where they are going. They know they have enough time to fly to somewhere in Europe and back during the day. We compete with Copenhagen, for example, for that aeroplane. That is the way competition works between airports. That is, therefore, the way we must position ourselves. I think we are confident on that piece. Even if we were back at the level we were at before, which was €9.50, we would be in a good position with regard to investing. Equally, I think our passenger charges would still be very low. We have not really seen evidence that if one reduces passenger charges at least by that amount, one immediately boosts airline activity.
The Senator is correct in his question around our revenue. Passenger and landing charges are by far our biggest revenue raisers. The important thing, however, is that anything around concessions, car parks, etc., is still regulated. It is still within the regulatory till from the regulators perspective, therefore, it still counts to what we are allowed to earn to meet our needs. We have relatively little unregulated income at the airport. That is one of the reasons why, albeit small, our Aer Rianta International, ARI, and DAA International, DAAI, business are also important. They generate unregulated income and give us an opportunity to grow staff and other opportunities.
The Senator asked when it is going to come back. I spent a huge amount of my time with airlines, airports and operators around the world and the question is when do we get back to these levels? The optimists thought it was 2023. I think 2025 is probably the time to think about. We have taken the steps through taking out cost so that we are confident we can get to a level of being kind of close to break-even or around break-even, depending on the exact number of passengers. We really need to be back in the high twenties in order to have a proper positive profit contribution.
I welcome Mr. Geoghegan and congratulate Mr. Cullinane on his new role. It is very good news.
If the demand for passports in our offices is any indication of a return to health, I think it could happen relatively soon. I am probably being a bit glib there. There is no doubt that the aviation industry has taken a huge hit. Mr. Geoghegan referenced in his statement how vulnerable it is and also the peaks and troughs of the economy. We have never seen that as visibly as we have over the last 18 months.
When is the DAA expecting a decision on the north runway and the two conditions on planning? I know it is a statutory process and Mr. Geoghegan may not have visibility on it. I am just interested to see if he has a view or an expectation.
Whenever recovery happens, and we would be confident that it will happen, and given that Dublin Airport is a very successful airport overall when things are going well and we do not have global pandemics or ash clouds to deal with, the north runway is going to bring in millions more passengers every year. That is the reason for it. We still do not have a light rail system to the airport and we desperately need it. We needed it without the north runway and we will desperately need it with the north runway. What is the DAA's strategy of engagement with the Government and Transport Infrastructure Ireland, TII, with regard to MetroLink?
I know the DAA supports it and needs it, but the DAA is one of the big beasts along with DCU and the hospital group. A town the size of Swords does not act in a uniform manner on it, but should be seen as one, given the population size. What is the strategy for engagement on MetroLink?
How can an airport be carbon neutral? How has the airport become carbon neutral when there is still not a carbon-friendly way of getting to or from the airport if one wants to travel? I imagine the number of people who cycle to the airport for travel is negligible, as is the number who walk. The smell of aviation fumes gets into one's nostrils as soon as one enters the general area. There does not seem to be any retrofitting done of the major buildings that is visible to the eye. I am asking this not to be glib, but aviation is in the crosshairs of climate action. The industry will have to be seen to be making huge changes. What are those changes? What do they look like? Mr. Geoghegan mentioned Dublin Airport is now the first carbon neutral airport but what has been done to achieve that? What are the offsets? I mean this in the most serious way, because I would like to be able to pass on with confidence that the airport in my constituency is leading the charge on reducing carbon emissions and being genuinely carbon neutral. I would like information on that.
Mr. Basil Geoghegan:
We will look at it as an unregulated income opportunity. With regard to the conditions on the north runway, the Aircraft Noise Competent Authority, ANCA, which is the noise regulator and the more modern European way of regulating what happens around an airport, will publish its decisions soon. I do not know exactly when, but it will be soon. We expect that will focus us, not on the number of flights, but on the noise of the flights. That means Dublin Airport will be an exciting place for carriers who are using new technology. New technology is quieter, such as the A320neo and 737 MAX, used by Ryanair and Aer Lingus. They are also lower carbon aircraft and that will drive that. We expect there will be an appeal. It could be us appealing it if the decision is wrong or others appealing it and it will go to An Bord Pleanála. We have a concern about whether An Bord Pleanála is ready for that appeal. We think the appeal is coming and we would like it to be ready and not have to staff up and take longer to make a decision. That being said, we will work with whatever is the decision.
It is not so much about millions more passengers. It will facilitate our growth for quite a long period of time and make the airport safer because there was real congestion at the airport early in the morning pre-Covid. Under the great and watchful eye of the Irish Aviation Authority, aeroplanes do what is called shooting the gap with one taking off and one cross-runway. It is more dangerous than two people being on runways which are kilometres apart. We welcome the runway. It would also allow us to do maintenance on other runways in an easier fashion. When it comes to access to the airport, the positive piece is we are the biggest bus depot in Ireland. We have got over our disappointment in MetroLink being delayed. We continue to make our views known to any part of Government that this is very important infrastructure.
This leads me to the Deputy's question on carbon neutrality. We did not make up the rules. The rules are made up in a way that focuses on the airport as opposed to the activities third parties are carrying out at the airport. Of course, when one takes into account aeroplanes landing and taking off and people coming back and forth, one is at a completely different proposition. While we are happy to have achieved carbon neutrality, and that may have been through using low emission vehicles, solar plants, reducing our energy requirements and the kind of normal things one does in that regard, we want to push on into being a sustainable airport.
People need to fly, especially if they are on an island, but we have to make sure it can be done in the most sustainable fashion. We will not cover it here, but that is sustainable aircraft fuel for now and then it is how we facilitate electric aircraft. What do we do with the grid if we need to use electric aircraft? When we reach the 2040s and beyond, it is a question of how we use hydrogen as a fuel. There is significant investment in that and some experimental things also have to happen. We have a stake in Düsseldorf Airport which is partnered with Lilium, a German electric jet aircraft manufacturer, which currently has a four seater flying. It will have a larger aircraft flying. That is to work with Cologne and Düsseldorf to bring people to the airport from outlying vertiports in a better fashion.
It is exciting and interesting. It will take money to invest in this and not everyone will be happy initially because people will have to bear the costs involved. I hope I have answered the Deputy's questions.
The witness has. There is an extra responsibility on the aviation industry, be it the airport buildings or the airlines, in terms of their communication and messaging regarding climate action because of the position and how people view it. We can walk around with everyday products saying they are carbon neutral, for example, this chocolate bar is carbon neutral or this, that and the other is carbon neutral, but it is very different with an airport. It is great to hear that work is being done in that regard. I know that from being in the constituency, but measuring and being able to communicate that measurement to people to say the airport is making tangible efforts to reduce its carbon is very important. We all have a responsibility. Of course, having such a big bus service from the airport is important for the climate as well.
I thank the witnesses and wish them the best for their continuing and new roles, respectively. Covid measures are in place. We have the digital Covid certificate in place for some months now. Do the witnesses see it as a success and a tool that will be useful going forward? What does the shoulder period between now and next season look like? Could or should anything be implemented to improve on where things are? Mr. Geoghegan mentioned a number of points which are important to attract routes, such as competitiveness in pricing, but what else can be done? What else has Dublin and Cork to offer that could improve on that competitive arena?
Mr. Geoghegan said the DAA needs to invest heavily in capacity enhancing projects to support the long-term growth of the airports. What does he mean by that? Is it just the runway?
We are all hearing clearly about pricing but Mr. Geoghegan also mentioned that the regulatory model is not agile and now might be a time to review it. Is that just the pricing piece or what else does he mean? He said there were 4,100 jobs and that was reduced by 1,000 and 1,000, or 2,000 overall. What does the future look like in that regard? Is that the floor? Would the DAA be looking to take on staff in the near term or how will that hold up? Many of us have been contacted by technicians and tradespeople about some ongoing industrial relations issues. Can I get an update on that? I have heard criticism about the prospect of outsourcing. That is something that should be resisted. Can I get an update on where the DAA is at with those matters?
Mr. Basil Geoghegan:
The Deputy asked about four or five issues there so I will try address them all. On the Covid measures and the Covid certificate, that is all working quite well now. There was pretty good co-operation among all the various State agencies to get that up and running in such a way that when it came in we did not have big delays for people coming in through passport control and so on. That is working reasonably well. The one thing that probably made a difference was that people started coming to the airport a lot earlier because they were aware of all this. That was an issue because we ended up with queues at the wrong times, which the predictive models did not show, but we have tried to get on top of that. We had an issue in August for which we put our hand up.
On attracting more airlines to the airport, one of the things that is very important is the flexibility of the airport in that regard. Different airlines have different requirements about check-in and what facilities they have. Some use third parties, some use their own staff and some are more focused on different types of customers or transferring. We try to make sure we can be as flexible as possible to meet their needs. One example, which we may not be getting back to quickly, was when we had Chinese airlines flying into Dublin. The availability of hot water to passengers was very important to them. We made sure we had that available but at the same time, many of our concessionaires were selling cups of tea and did not want resourceful Irish people bringing their own tea bags and making their own cups of tea. It is about trying to work through some of these things to make sure everybody can be happy. Then there is a virtuous circle because the more flights an airport has and the more opportunities for connectivity, the better it becomes as a destination for concessionaires. We need to make sure we get that up and running again. It is about the speed we can get into it in order to get back to where we were before. We have to look at the other airports around Europe and make sure that, just because they started earlier, they are not eating our lunch before we even get to lunch.
Mr. Basil Geoghegan:
In Cork, it is slightly different because Cork Airport does not have connecting flights. It is all point to point. It is about trying to make sure that when people use Cork Airport and realise there is very good connectivity in Europe they will use it again. It is then a lot easier to sell to another airline, to say, for example, that the Zurich route has been very positive so maybe it should put on a route from Milan, etc. The other thing that is important is where Cork Airport connects to hubs, such as Schipol or Heathrow. There needs to be a number of flights a day to make it work as a hub and spoke network. Cork Airport will operate in different ways in that regard.
The Deputy asked about capital expenditure. I would invite any member of the committee to come out and look at the new runway, either together or separately. You do not have to be a construction nerd to find it interesting, such are some of the hidden things there and the groundwater tanks that have been created. It is great to see that it has been done. Once the runway is sorted, the next place we are going to have capacity constraints is at gates or stands. In some cases it is a connected gate and in others it is a stand. That was the pinch point in 2019 before Covid hit and that is what we had planned to address next. That is based on pure capacity. I am not talking about sustainability because there are slightly different expenses with sustainability.
On the regulatory model, it is not all about pricing. If the objective is to have a well-developed airport, we need to think about the future now. When terminal 2 was built, lots of people said it was a white elephant and so on. We could not get Aer Lingus to move into it. Now it is full. If the result of the regulatory building blocks is to reduce charges and keep them reduced all through a period like this, something is not working because it is not delivering the policy. That is why it has to be joined-up thinking and then we can work out what we value and what we do not. That is what we would like to see in the system as opposed to anything else, particularly as the shareholder of the airport is not a private enterprise. It is the State so it is all together.
The Deputy asked about jobs. As regards the number of jobs, we will be taking more staff on as the business grows. Members have probably seen that there are now some shortages in staff in every industry. There is quite a lot of poaching going on so we are out looking for staff and will continue to do that. Those staff may work in Dublin, Cork or overseas where there are some exciting opportunities we hope to win.
With regard to the reductions and the new ways of working, let me start by saying the staff were amazing during this crisis. We felt, as a board and as a company, that this was visited upon us. We cut back people to 80% of their working hours, which for most of the staff was 80% of pay. For some it was more because we took any performance-related pay off the table and there were some people who continued to work at 100% because that is what their job required. People pulled together well and our board pulled together well. We got the voluntary early retirement, VER, and voluntary redundancy scheme, VRS, programmes out to give people the opportunity to leave if they wanted to take early retirement. A lot of people felt Covid was a time to reset. Some 93% of staff who stayed said they were prepared to go to new ways of working. There are two cohorts that are not quite there. I would say they are not quite there yet because we have no particular desire to outsource or to have any type of unrest. I would prefer if they also came along. I do not think it is fair to the other 93% to say we will make it different for this 7%.
The new ways of working are not fundamental changes. We are asking people to work across terminals, so if someone works on a particular job in terminal 2, they should be also happy to work on the same job in terminal 1 and we can align rosters to do so. It is about following the work, so if we are very busy in one part of the airport in the morning but less busy in the afternoon we want to move people to where the work is. We want people to use company email for company communications. Some people would not use company email for that. Again, I do not think that is a big ask. We wanted people, particualrly those who are mobile around the airfield, to use iPads to take their work orders and fulfil work orders as opposed to coming back to a depot and doing everything in writing. In the end, I hope that is where we get to because there is no reason anyone should leave the fold.
I am happy to speak now. It is good to be tested every now and then. I was a teacher before becoming a Deputy and I used to enjoy springing a question on a child to see whether he or she was listening in class. I am caught out myself today.
Aviation is a very seasonal sector. We all, including those of us in this committee, wait with bated breath each autumn to see what schedules airlines are offering for the following spring. The airlines, in turn, hope the consumer will react positively by booking seats and that there will be a surge season. Given that the sector is so seasonal and the floor fell out of it in the space of one year, why would its recovery take four to five years? We are now in a good situation in respect of Covid, with things improving day by day. Almost 93% of the population is vaccinated and digital Covid certificates are in operation. People are starting to travel again, albeit slowly. Why will recovery take four or five years when, by its very nature, the industry is so seasonal?
Mr. Basil Geoghegan:
That is a good question. Forecasting the future is always difficult. In making our assessment, we have focused on the actions of airlines. I am not sure I can understand all of those actions but I have looked at them. Some airlines are very much on the front foot because they have very low cost levels. They are pushing to put flights on and can fly at lower load factors. We are certainly seeing that. We see it in Dublin with Ryanair and in Europe with Wizz Air. In the case of other airlines, there has been more of a delay, partly, as I understand, because they have higher cost structures and cannot just put on more aircraft. In some cases, they have been waiting to see whether state supports will be provided. There has been a lot of state support given around Europe throughout the Covid crisis but some airlines are waiting to see how that will work into the future. These are some of the actions by the airlines on which we are basing our forecast.
We have also seen that while there is a propensity from the public to want to travel again, many airlines do not exist in the way they did before. Norwegian does not exist at all and a number of airlines are in the chapter 11 process. I spend a lot of my time working with airlines and, in many cases, their level of debt is far greater than ever before. They also have much less flexibility. It has been said to me by airline executives that the recovery will be demand-led, not supply-led. We will see the proof of the pudding in that regard in the coming years. They are not just going to put on flights and see whether people avail of them; they will wait to see whether the demand is there. That approach, by its very nature, means a return to greater flight numbers will take longer.
Another factor is one I see in my own business. Other than in the past 18 months, I usually travel every week as part of my work. The various technologies like Zoom and Microsoft Teams make it easier not to travel. They will not wipe out travel but their availability means that some journeys will not happen. For many companies that are focused on cost, they will at least cut their travel budgets in the next few years because they feel they can get their business done through alternative means of communication. This was a worry I had for Irish companies, in particular, during the period when we were incredibly cut off from the world. Some of it depends on what others are doing. If a company's competitor starts visiting customers, that company probably will start doing the same. Until the competitor begins those visits, the company likewise does not need to do so. That type of human interaction will take a little time to rebuild.
I thank Mr. Geoghegan for his assessment. It is a valid point about how people travelled in the past versus the global connectivity we have now through Zoom and Microsoft Teams. I am thinking about my own neck of the woods, where the early-morning flight from Shannon Airport to Heathrow used to be full of business people going to London to do business before returning home in the evening. Many of those people are already telling me their colleagues in Britain and globally are aware that probably 90% of that business can now be done online. That worries me for the long term.
Mr. Geoghegan's opposite numbers in the Shannon Group, Ms Mary Considine and Mr. Ó Pádraig Ó Céidigh, who recently appeared before the committee, are making the argument that for real recovery to happen in aviation, charges should be scrapped entirely and there must be a significant form of subvention. In some ways, that is at odds with how Mr. Geoghegan sees the recovery from the perspective of the DAA in terms of engagement with the regulator and charges at the airport. Will he comment on what I perceive to be an incongruity between the two positions?
Mr. Basil Geoghegan:
On the Deputy's point about the early-morning Heathrow flight, another factor to consider is that fares have gone up and are now really high. Michael O'Leary is on record as saying they will continue to rise. This is another reason for the slow return to flying; people cannot afford to travel as much as they would like to.
On the second point, it is, in a way, a case of different strokes for different folks and there are different things that can happen. The DAA would use rebates or low charges in Cork Airport as a way to entice business there, because it is needed. We would not want to do so forever but the aim is to help people to grow their businesses. It can take several seasons to grow a route and make it profitable. I can understand Mr. Ó Céidigh making that point in the context of what he is doing at Shannon. In the case of an airport like Dublin, where there are different types of passengers, it is possible to flex it in a slightly different way. I do not believe we, as an organisation, ever want to do anything other than carry our own water. We are not looking for subvention. We do not think it necessarily drives the right ethos through any organisation, regardless of who owns it. I completely take the point, however, that in the case of an airport like Shannon, where there is not a large number of flights but there is a large amount of infrastructure, it is understandable why Mr. Ó Céidigh is looking at things from the perspective to which the Deputy referred.
I sincerely wish the DAA, encompassing both Dublin and Cork airports, every success. We want to the see aviation recover nationally. We have all taken parochial positions over the years when it came to our local airports because a huge loyalty to them has built up over the years. I have said in the past that there was a kind of predatorial relationship as between the DAA versus the Shannon Airport Authority. That was there coming into the Covid period. It probably was most clearly spelt out in a tweet from the DAA about the Ryder Cup coming to Adare Manor in Limerick in 2026, in which it positioned Dublin as the gateway airport. I take it from Mr. Geoghegan's smile that the tweet was written with tongue in cheek, which is how most of us took it.
That was the past. Since then, we have had the Covid pandemic and a collapse in aviation. There have been many interesting and meaningful debates in this forum about how we would like to see aviation in Ireland move forward over the next two or three years to recovery and beyond that across the next decade. Most of us have declared a position whereby we would like to see a return to a single national airports authority. We are a small island. The motorway on which I travelled this morning puts County Clare just two hours from Dublin. Motorways work both ways in terms of connectivity. There could come a time in the future, based on the charging model to which Mr. Geoghegan is referring and to which Mr. Ó Céidigh referred last week, when there is some kind of charging trade-off or competition. Some would say that is healthy but the question is whether it would serve aviation well overall. The point I really want to make is that the DAA and the Shannon Airport Authority need to look at themselves as partners in Irish aviation and try to work together. We may not see a national aviation policy involving one airport authority, or it may be some time off, but that type of operational co-operation certainly needs to happen.
I ask for the Chairman's forbearance for a further 40 seconds in which I will digress slightly. This committee has championed antigen testing for the past year. Sometimes it felt like we were hitting our heads against a brick wall. Finally, antigen testing has been embraced and we hope it will soon become operational. Much of what has happened over the past 48 hours makes a lot of sense. Covid infections are rising and I very much believe there is still a high risk level attached to the virus. At the same time, we are making huge inroads in tackling it. Many people can live with restrictions going on for another while, but others are absolutely despairing. We should not be seeing teenagers coming under the net of the digital Covid certificates system. In County Clare, there is a famous underage disco in the Queens Hotel nightclub in Ennis.
I was not that trendy growing up. Teenagers in County Clare, as I am sure is the case in Limerick and throughout the country, have been craving social outlets for the past two years. Now they are being told that, although they might have their ticket, their appointment to get their hair done and their new dress or shirt, they cannot go into the disco because they are not vaccinated. The digital Covid certificate, as an enabler for people to live normal lives, is a very good thing. However, 14,15 and 16 year olds should not come under the net of the system.
That is not for anyone here to respond to, it is that we have been the driving force, I would say, in championing this and I wanted to recognise that in committee time.
To follow up on that, Professor Mary Horgan is heading up an expert group. That came about because we as a committee put antigen testing front and centre. We have had various airlines before us. It is something we believe should have been front and centre a long time ago. We first referenced it in a report we did on aviation back in December of last year. We want to see Professor Horgan's report published. We have requested a copy of that report. We will review it. The time for, dare I say it, prevaricating on antigen testing becoming part of the major toolkit is over and it now needs to be brought forward. Deputy Cathal Crowe has made reference to where it may have a central role. Turning to Mr. Geoghegan, was antigen testing something about which the DAA was conscious? Is it something it supports? Various airlines were very keen on it. What is the agency's view on antigen testing?
Chairman, I must absent myself to be in the Dáil Chamber. Before I go, I want to say in conclusion that a 14-year-old does not need to have a digital Covid certificate to go to school, attend hurling training, play a match or go to the cinema and suddenly he or she needs it now to socialise at weekends. I believe in vaccination. I believe in the risks of Covid. I believe in the merits of digital Covid certification. However, we should not be putting a ball and chain around the necks of persons aged 14 years or 15 years. Let them live their lives as young people. It is has been denied to them for the past two years. I thank the witnesses. Forgive me for leaving.
Mr. Basil Geoghegan:
Yes. We were there. We found it quite difficult but ultimately we were able to get testing at the airport, at least for people who wanted to be tested. We were very clear it would not take away from the State's efforts. Others said it might but it did not. It was commercial. We have been supportive right along of antigen testing as well and we continue to be. We have seen it operate very efficiently in airports around Europe. I took a home antigen test myself yesterday before coming to the committee to make sure I was healthy. I believe in the antigen test's efficacy.
I thank the Chairman. I thank the witnesses for coming in. As a County Cork TD, I congratulate Mr. Cullinane on his new position. He did wonderful work at Cork Airport and I wish him will in his new position within the DAA.
I want to start on a positive note. As someone who has been on an aircraft a few times over the past month, it has been a wonderful experience flying through airports within the remit of the DAA, especially Dublin which at the moment is our only airport that is operational. I very much look forward to utilising Cork Airport once it is back up and running. I thank the DAA for its investment in that airport. Wearing my County Cork hat, I wish to stress some of the points my colleague Senator Buttimer was making earlier on continuing to see the DAA giving Cork Airport the focus it deserves. At a board level within the DAA, it is important there would be a particular focus given to giving some balance, in terms of representation, on the authority's board to the County Cork area. That is imperative for the strategic nature of that airport and its future growth. Overall, I am complimentary of the work the authority has done there, such as the investment being put into our new runway and the new facilities on the ground. It is exciting to see the pace of development and I compliment all the staff and management of the airport for the work they are doing. It has been a remarkably difficult time for everybody working in aviation, whether they are involved with our airlines or our airports, at all levels from management right down to people working on the ground and indeed in the air. I compliment how Government and the aviation sector have worked hand in hand to try to get through this crisis. I firmly believe we are turning a corner. We know that with aviation, things take time but hopefully over the next few years we will get back to the levels prior to Covid. It is looking positive at the moment.
I must switch to a topic of concern. The airports have a critical role in the recovery of the Irish economy. Aviation in Ireland, as we all know, supports more than 140,000 within the economy here. I have a question for Mr. Geoghegan. We have seen recent news, and indeed the authority's own statement yesterday - or that which was reported in the media yesterday - around an increase in airport charges. What direction are we heading in, in terms of what the authority wants? We saw with Heathrow that there was an outrageous proposed increase of up to 50% in airport charges. Are we looking at something like that in the Republic of Ireland? My point of concern is really the health of our own airlines and especially our connectivity. I am concerned about Aer Lingus relocating aircraft to the UK and ensuring our airports here are competitive. My first question is on that. I apologise because I will be interrupting the itnesses as I have quite a few questions to get through.
Mr. Basil Geoghegan:
I thank the Deputy for his comments about Cork Airport. I already responded to Senator Buttimer so I totally get that. We are looking forward to reopening the airport next month.
On airport charges, just to put a sense of scale on it, we had airport charges around the €9.50 mark at Dublin Airport which was something that worked, we believed, for everybody involved and allowed investment.
Mr. Basil Geoghegan:
It was. That has been reduced, to do the like-for-like, to somewhere around €7.75. That is nearly €2 per passenger and when one considers the more than 30 million passengers per annum going through the airport, that amounts to millions of euro which is effectively a value transfer from the taxpayer of Ireland to the airlines, because unless the airlines reduce their fares by the equivalent amount, that is where it goes. I do not blame them, by the way, because they are commercial organisations. However, we would like to see charges calculated on the basis of the current reality as opposed to a very optimistic outlook in 2019.
Mr. Basil Geoghegan:
We even believed in 2019 that it was wrong to reduce the charge to that level. We felt it would inhibit further investment. Given we have a closed system, that is, we do not have external shareholders, it was a case of the taxpayer having many pockets and moving money from one pocket to another. Ultimately, if the DAA as an organisation makes a profit, it pays that money to the Exchequer in the form of a dividend. We would like to see the right level so we can finance future investment.
I must interrupt because I am conscious of the clock. Mr. Geoghegan said this recovery will be demand-led. I commend the hard work of the Minister of State, Deputy Naughton, who has done fabulous work in getting €90 million in supports for the aviation sector. Route supports were very much part of what the Government was hoping to do, in conjunction with permission hopefully being granted by the EU Commission. Would it not be better to keep charges as low as possible, unlike what is happening in airports in the UK, in order to stimulate demand over the course of the next two or three years to get us back to a healthier position where connectivity is protected? I am not trying to undermine the DAA's argument. I know it has extraordinary costs. I can only speak on behalf of myself and my colleagues but we will support the authority in any way we can. Would it not be counter-intuitive to increase the airport charges by a drastic amount in an era when, as Mr. Geoghegan said, we are expecting the airlines to pursue a demand-led recovery?
Mr. Basil Geoghegan:
It is interesting that you say that. We welcome the package that has been put forward by the Government and the Minister of State, Deputy Naughton, which is aid for the airlines to grow that business. There are some other parts to the package too. We already had a system in place at the DAA to incentivise airlines to get their flights and passengers levels back to where they were pre-Covid. We agree that in specific places you will incentivise some to do something by making it more economically effective for them to do it. However, that something which is relatively short term and very targeted is needed more on some routes than on others because some routes naturally have passengers and some airlines are naturally in an almost monopoly position on those routes. That is the way that we would like to go about it. The setting of a charge where the thinking is around building something over the next 25 years has to be at a level which is above cost and allows you to finance it.
My final question is in regard to connectivity. We are seeing huge growth in the eastern economies of the world. It was very noticeable from the levels of traffic at Dublin Airport prior to the arrival of the pandemic that it is a seriously strong base for transatlantic travel but there was an absence of eastern connections, with the exception of the Middle East and the carriers operating to that region. What is Mr. Geoghegan's plan to strengthen that connectivity?
I have the foresight here to try to predict the future, but it is quite evident that at some stage over the next three or four years traffic numbers will yet again exceed 30 million per annum. Dublin Airport was reaching a point where potentially a new terminal would be needed. Are there plans in place for, perhaps, a midfield terminal? What are the strategic growth plans in terms of developing capacity? Prior to Covid, Dublin Airport numbers were reaching a level such that it was at capacity. It is quite plausible that it will be back at that point within three or four years. What are the plans in that regard and in regard to boosting the connections with China, Japan, South Korea and many of the eastern economies that are growing at such a fast pace? It is important that we would bolster those connections in the interests of the State and the Irish economy. I would welcome Mr. Geoghegan's insight on those two issues.
Mr. Basil Geoghegan:
I thank the Deputy for the questions. I will deal with the last one first. Without being too aviation-geeky about it, we need new piers and gates as opposed to a new terminal. The terminal being the entrance to the airport, we do not need a new one. We can use what we have to build what we need for, probably, the next ten years. There was some work done under the previous Government on the necessity of a third terminal. We believe that additional piers and gates will address the issue. It was absolutely within our capital investment plan to do that. It was going to be tough to do based on the passenger charge when we were at 33 million passengers, growing to 40 million, but when we are back at a run-rate of 15 million passengers it is impossible to do. That is one of the reasons we want to get back to this. We need to have the funds so that we can invest. The Deputy is correct. I do not know whether it will be in five years or ten years, but it will be needed and we cannot just take a decision then.
On the eastern access, we had done a reasonably good job in terms of having both Cathay Pacific and Hainan Airlines. The Middle East carriers continue to be a very good point of access for Irish people to the rest of the world because they offer a huge variety of options. Hainan Airlines is owned by HNA Group, which is currently being nationalised by the Chinese Government. I am not sure what will happen in that regard. Hong Kong Airlines has also had its difficulties. The Chinese State has taken the view that there is huge economic benefits to not facilitating Chinese people to go shopping around the world and that it is better to have them shopping at home. I am not sure how keen they will be to do it. We are out there all of the time looking at these areas, including in places that are east but not that far east, such as Tel Aviv.
I am thinking of places like Seoul, Tokyo and, as mentioned by Mr. Geoghegan, Hong Kong which is served by Cathay Pacific and other eastern power blocks, cities and locations. There appears to be a rebalancing internationally of the world economy. For Ireland, it is important that within the DAA, as the agency tasked with responsibility for Dublin Airport, there would be a strong focus on growing these connections. At a political level, we must do all we can to grow that business. That is important. I was anxious to make that point today. I thank Mr. Geoghegan for his interesting feedback and his time.
We are a small island. I am based in Limerick city. Shannon Airport is an international airport. I congratulate Mr. Cullinane on his appointment. I understand he is in situ. Well done.
The committee met previously with Mr. Pádraig Ó Céidigh. As I said, we are a small island. Dublin Airport operates at capacity. We also have an international airport in Shannon Airport. Cork Airport comes under the remit of the DAA as well. What interconnection can take place that benefits Dublin Airport and Shannon Airport, rather than them being competitors? In many European destinations people will commute up to an hour or two to an airport. We do not do that here. My apologies, that is incorrect because it is being done from Dublin. It is more that it has not come to the fore in terms of aviation thinking and overall policy. I would welcome Mr. Geoghegan's views on the relationship between Shannon Airport and the DAA into the future. Shannon Airport is operating at a fraction of its operations pre-Covid. This airport can cater for up to 4.5 million passengers, but it is currently operating at nowhere near that figure. I ask Mr. Geoghegan to put that in context. I know that is an unusual question, but I think it is a very relevant one.
Mr. Basil Geoghegan:
I was not around at the time the decision was taken to move Shannon Airport out of the DAA and so I cannot comment as to whether that was a good or bad decision. When we look at the business so to speak, there are two big drivers, that is, what passengers want and what the airlines want. In a way the connectivity by motorways has meant that for Cork Airport and Shannon Airport Dublin Airport has become more of a competitor. By the way, it is the same for the airports in the North. It is also clear to me that we are set up to compete with Shannon Airport. If that were not the case, we would have an anti-trust regulator who would be questioning what we are doing. The biggest competition for Shannon Airport is Cork Airport. It may be a positive that the motorway between Shannon and Cork has not been finished. I am not sure, but that-----
I have flown in and out of Dublin Airport many times. Getting from the front door of the terminal to the departure gate takes between 30 and 45 minutes. If I fly into Shannon Airport, I can get out of there in a much quicker time. Mr. Geoghegan spoke about investment. In terms of my question, his answer was that Dublin Airport is set up to compete with Shannon Airport. The point I am trying to make is in regard to the experience overall of aviation policy. Mr. Geoghegan gave me the direct answer that as far he is concerned Dublin Airport and Shannon Airport are competitors. With regard to his point regarding the motorways, I am not sure that is part of it. All of the airlines are competing. At this point in time, has there been a return to 50% in terms of passenger numbers flying out of the airport?
My question follows on from previous questions. If passenger numbers are back to 50% and the airlines are back, why will it take to 2025, which is a further four years, to get back to 100%? Dublin Airport can be an unpleasant experience because of the sheer volume of people going through it. In light of such large passenger numbers, would the DAA and Shannon Airport consider having more flights going through Shannon so as to reduce that difficulty? It could be a reciprocal arrangement. Is there scope for that type of discussion?
Cork had transatlantic flights via Norwegian Air. We are competing with Dublin - there is no point in saying we are not - and the western seaboard is competing with the eastern seaboard. Mr. Geoghegan is giving me answers, but there is clearly a need to re-examine national aviation policy. We cannot have a situation where Dublin Airport is bursting at the seams when another State asset that is not that far away has significant excess capacity. This could include Cork as well. Does Ms. Geoghegan see the DAA's role as just having Dublin Airport compete against all the other airports in Ireland for international business?
With all due respect, Shannon Airport has flights to all of the main transatlantic destinations. Kerry does not. Kerry is a different model, as is Knock. Mr. Geoghegan is refreshing in his honesty, which I appreciate because it tells me where Shannon Airport stands. There is an element of David versus Goliath.
Why will it take a further four years to return to 2019's passenger levels when the number is already at 50% and the bulk of airlines are flying? My next question picks up on Deputy O'Connor's point. Under the regulations, Dublin Airport has a charge of €7.75 per passenger. Heathrow is moving to between £24.50 and £34.40. What rate does Dublin Airport's charge need to be at to have a sustainable model that allows for reinvestment? The DAA views the model as needing to be self-sustaining. Why is the return taking so long, given the current metrics, and what rate should the airport charge be at?
There appears to be a contradiction on which I would like Mr. Geoghegan to elaborate. The DAA, in particular Dublin Airport, wants to be competitive internationally. I would have thought it was also competing with climate change. Instead of taking the direct transatlantic or UK routes, could people be willing to travel to Dublin and then fly out? Maybe they would be willing to come to Shannon and then fly onwards. Would that make us uncompetitive? Surely the DAA's competitors should be the major international airports, for example, Heathrow, Frankfurt, Amsterdam and Paris Charles de Gaulle.
Mr. Basil Geoghegan:
I hope I am wrong about passenger numbers and that they return sooner. I have just noticed that most of the forecasts that were made in the middle of Covid by the International Air Transport Association, IATA, and others have been pushed out a little in terms of when capacity will return. That is partly because the airlines are so indebted that they are finding it difficult to operate. Some - those with lower cost structures - will grow faster.
Let me put it another way. Does Mr. Geoghegan believe the low-cost model of flying will come back? I have examined the cost of flights and the fees are very high. Is the low-cost model, in which people can book flights for €20 or €30, returning?
Mr. Basil Geoghegan:
The low-cost operators are already back and will likely win the next battle, but we must remember that they are low cost and not necessarily low fare. They charge as high a fare as they can, and they can at the moment. We are seeing that because there is not a great deal of capacity being provided by others. Hub airports will probably recover faster than others because it is easier for them to get traffic in and out. We will see a little of that.
I hope that numbers return more quickly. If it is 2024, that will be great, but my crystal ball is not clear.
To give the committee a sense of it from the DAA's perspective, the Chairman's point on competition is absolutely right-----
Mr. Basil Geoghegan:
Our starting point is that Dublin Airport in particular is competing less against the Heathrows and Frankfurts and more against the Copenhagens, Barcelonas and Milans, which are large secondary airports. When we think about charges, we believe that the overall package of the price and service we are offering needs to be at least as good, if not better, than theirs. That is why we were relatively comfortable in the prior regulatory period when charges were approximately €9.50 or €10. I cannot give the committee a prediction of how that would fall through the right regulatory model now, but it was certainly different from €7.75. Overall, that is how we view competition, and when people say they want to fly to Ireland, we hope they will fly to one of our airports and not one of the others.
Mr. Basil Geoghegan:
We see opportunities for any airport on Europe's western seaboard, including ours, because a narrow-bodied aeroplane can be used to fly across the Atlantic, which is a lucrative market. We could show people that, by flying into that airport and onwards, they would have a lower carbon charge than if they flew from Barcelona to Frankfurt. Services like Skyscanner and Google Flights tell people how much carbon they are using. Perhaps there could even be a carbon allowance in future. It is important to think about the future. Mr. Pádraig Ó Céidigh is capable of doing that on his own and without my advice. Having smaller electric jets or electric props, potentially with vertical take-off capability - large lessors like Avolon are investing in such aircraft - will change the neural network, as it were. One of the manufacturers of these new jets told me that he viewed this as the decentralisation of aviation because it did not all have to be at one large airport. Smaller airports could be used.
I thank Mr. Geoghegan and Mr. Cullinane for appearing before us. To return to something Mr. Geoghegan dealt with in response to Deputy O'Rourke earlier, multiple people have contacted us about those HR issues. Without getting into the ins and outs of them, I welcome the fact that negotiations are ongoing and that Mr. Geoghegan has stated that it is not the DAA's wish not to have those issues resolved and, beyond that, not its wish to outsource. I think at one stage earlier he was going to explain the position on outsourcing at this point. Could he give me a little detail in that regard?
Mr. Basil Geoghegan:
I will answer that question clearly. The question was whether negotiations are ongoing. I think information was provided to the relevant unions at the end of July to the effect that a decision on outsourcing would be taken. That was as a result of negotiations having broken down or ended. Not having the detail of what has gone on between now and then, I will just observe, as a human being, that nothing is over until it is over. That is my observation.
Mr. Geoghegan has spoken about 2025 and of being in a better place, for want of a better term. He says the DAA will wash its own face when we get to passenger numbers in the high 20 millions per year. This is possibly gazing into a crystal ball, but when does he foresee that happening, on the basis of indications, modelling or whatever else?
Mr. Basil Geoghegan:
I really do not know. We are going through a strategy at the moment and we will set out a new five-year forecast in January, when we probably will be in a better position to answer the Deputy's question. The reason I am hesitant is that a year ago everyone said vaccines were coming out, aviation would be back and the summer would be back. The summer was pretty much a disappointment for air travel. We then thought the US was all vaccinated but, actually, it is not vaccinated. No one thought about the Delta variant. No one thought Joe Biden would keep things closed until November. That is why there are a lot of these-----
Mr. Basil Geoghegan:
-----unknown unknowns. We do think, however, that there is a propensity to travel, that the airlines want to get back and that we have at least some element of normality, even though it is a very different way of travelling. That is why we are confident the sector will be back; it is just that telling the end date is tougher.
I accept that. There are those issues that are specific to the DAA, but Mr. Geoghegan should feel free to go beyond the authority's slipstream. Where does he foresee the industry's wants and needs will be? Supports have been given. Where does he believe the DAA will not need them? What will the DAA require into the future? Does it have a general ask? If what Mr. Geoghegan believes the DAA requires could be delivered along with those other factors with which it interacts in respect of the industry, what would be the DAA's asks from the Government?
Mr. Basil Geoghegan:
The starting point is the joined up regulatory system and policy. If we had that, it would be fantastic for the country, never mind for the DAA. We would show real agility and efficiency. The recently announced help the Government is giving from a tourism and airline perspective is very positive. A close eye will have to be kept on that as to for how long it needs to go on and to see what are the cause and effect. I hope the market will respond quickly to that. As for airports other than Dublin, whether Cork, Shannon or the others, the Government's investment on a regional basis is very important. That goes to the help we got in respect of Cork Airport on the runway. All those points are important. That is probably ongoing. I do not think it is necessarily Covid-related. It is just a sensible economic investment to make.
Mr. Basil Geoghegan:
That is exactly right. Then there are things which are outside our immediate purview but which are really important, such as MetroLink. I know the committee discussed with the chairman of Shannon Airport the fact that none of our airports is connected by rail. It is not acceptable as a country that that is the case. Rail connection would be a big step forward and, clearly, we would like to see it at Dublin, but anything happening at other airports would be a good thing as well. We at the DAA are committed to running an organisation which can effectively carry its own water with a fair regulatory regime. We know we can compete well because we go and compete against other airports in providing services outside Ireland. We run terminal 5 in Riyadh. We are competing to run another terminal in that part of the world. We are up against the biggest people in the world in doing that. It is great when we get Government support, and I know Ministers and others have helped us in that regard. We know we can compete globally; we just want to deliver that really good service back here in Dublin and Cork too. Still, we are very happy that is what is within the purview of our mandate.
Mr. Basil Geoghegan:
Yes. In that case they are really contracts to operate terminals. Sometimes they are to help in their design etc. They can involve anything related to aviation services at an airport that we can operate. In addition, we have run, for example, the platinum services model we have at Dublin Airport, which is effectively a private transfer for commercial passengers. We have done that sometimes outside Ireland. We did a pop-up service in Riyadh when the Formula E was on there. Ireland has been a good test bed of-----
No, and I accept that there is business information that Mr. Geoghegan will not necessarily tell me here and now, but he could trust me and the rest of the public. No, that is absolutely fine.
I have just a final question. Mr. Geoghegan himself made some reference to this and it is something Pádraig Ó Céidigh has spoken about. I refer to a proper conversation, narrative and forum from the point of view of ensuring regional development and, beyond that, ensuring we have the best system in the State and, even beyond that, in the country from the point of view of delivering what we need to deliver in respect of aviation. What does Mr. Geoghegan foresee in that regard into the future, and what role will the DAA play? I realise I am seeking detailed plans in the minute and a half I have left.
Mr. Basil Geoghegan:
I am not sure what I foresee but what I aspire for us to do is to acknowledge how important aviation is to Ireland. That is broad, from lessors to, it seems to me, our supplying of airline CEOs around the world. We have a number of really successful airlines. If we acknowledge that and then understand what we need as an island with our connectivity, particularly because, while geographically we have not moved, Brexit has made us more exposed from a European perspective, I think we could then have a very open conversation about what matters and what does not matter. Going back to the Chairman's point about how the Government and the country look at developing Shannon versus Cork versus Dublin, this could be done in an open and honest fashion. Then I would like to see what we sometimes refer to as the treacle removed. We would like to see fast and straightforward decision-making. Sometimes a quick decision is fine, even if it is a negative one, because you know it quickly. That is what we would like to see. It only matters to some of our business some of the time, but Dublin Airport is not under the planning regime considered strategic infrastructure right now. That is not a good thing. It is not good if there is a delay between the Aircraft Noise Competent Authority, ANCA, process and An Bord Pleanála.
I am not asking for a decision in our favour, although clearly I would prefer that. I would just like it to be fast and efficient. That is what we should be able to do. As I have said, it is a closed system. We are all together in this. If I had a plea, that is what I would like to see because I believe that could deliver better transportation in aviation right throughout the island.
I have been listening for the past two hours. It is a very interesting discussion. I thank Mr Cullinane and Mr. Geoghegan for being here today. I am deputising today for my colleague Deputy Michael Lowry. One might ask, why is a guy from Galway coming in here to talk about the airport in Dublin. When we talk about connectivity and aviation policy, it affects everybody on this island. From where I live in Tuam I can get to Dublin Airport within two hours, I can get to Shannon Airport within one hour, and I can get to the Ireland West Airport in Knock in 45 minutes, all within the set speed limits. The only thing is, when I come to Dublin I dread coming near the M50 because if there is traffic congestion one cannot judge what time one will get to Dublin Airport. The witness referred to MetroLink and so on. I accept that, as the major airport in the country, Dublin Airport must be developed properly and that we have to make sure we are developing it in a way that is best for the country, best for industry and best for the economy. There is a lot to an airport, from the connectivity to the hubs, to get international and global travel. I was on a trade mission in China and at that time we were trying to convince people to have direct flights from China to Ireland, and they have come. This takes an Ireland Inc. approach to getting that done.
While I was listening to everything being said here, I noted that there is a parochialism around aviation in Ireland because there is Dublin, Cork and Shannon, and no mention - or only once - of Knock, which is also an international airport. We have these assets within the Republic of our country and we must develop them. We need to develop them with a national policy and not with competing policies. I believe there is enough for everybody.
I will say two things about aviation. Mr. Geoghegan hit on it when he mentioned being best in class and best at international aviation services whereby we can go any place in the world and deliver them. That is fantastic but we must sell that more and more so that Shannon, Cork and Knock airports can do that. We have the expertise and we need to be able to build our business abroad. Aviation is an enabler to allow Ireland, on the periphery of Europe, to become the stopping-off point to get to Europe and beyond from America. We have the assets but I believe there is a frustration. I hear it also from some of the members of the committee here. The frustration is that we may not all be playing on the same team at times. It is difficult to play on the same team when there is no remit for Shannon Airport but there is a remit for Cork and Dublin airports, so Shannon is not part of the team. At the same time, we should not see them as Galway and Mayo playing at football: they are not arch enemies. There must be recognition for the fact that we have to work together. The appointment of Mr. Pádraig Ó Céidigh to the Shannon Group is a major step forward for the airport, for the west of Ireland and for regional development. Listening to Mr. Geoghegan today, there is no doubt there is a lot of commonality in the thought processes of Mr. Geoghegan and Mr. Ó Céidigh. There is more in common than there is in difference among us here.
We are a very small nation. Geographically we are very small but we are an island and we work way beyond what size should dictate. Aviation in Dublin Airport has shown that consistently, and I congratulate Mr. Geoghegan on that. We have some work to do to make sure that when we are talking about aviation and Ireland Inc. that we are not just talking about DAA. It is also Shannon, Knock or Kerry. It is one industry. We are too small a country to divide it up. If we are to continue to compete with other international hubs around the world we need to be doing it as one hub with three or four locations. That is the way we should be doing it. Policy change has to happen in this regard. I do not have many questions because the witnesses have been already asked a lot of questions. Reference was made to the charge being brought from €7.75 to €9.50, which is a 35% increase. If that is the case, is there a tipping point where that would become a negative in promoting the airport?
Mr. Basil Geoghegan:
I thank the Deputy for the observations and compliments. I will make one comment and then I will answer the Deputy's question directly. On the brainpower and the willpower that exists around aviation, I believe it is multifaceted. If there is to be a debate about national aviation policy, it is important that people have the confidence that it will end up in something. I know, and the members will be aware, that there was frustration around the aviation task force at various times during Covid because people gave a lot of time and worked with their closest competitors, but felt they did not get much bang for their buck. That is the Government's prerogative, but I am aware it was an issue.
Mr. Basil Geoghegan:
On the charge, I did not want to say that it should go from €7.75 to €9.50. That is where it was under the last regulatory period. I absolutely agree that one cannot increase these charges too much. In the context of any of these discussions, it is not the case that a number just appears; there are conversations with customers, with passenger groups and so on. There was a real opportunity at the last determination for the right price to come out but it did not because of the building blocks that the regulator uses, and which the regulator would say it is forced to use. This not a question about the regulators doing the wrong thing, it is about the rules of the game needing to be changed somewhat. Absolutely it must be balanced. It is absolutely right that we at the DAA are told that we need to focus on our costs. We are not looking for blank cheques. We simply want to be able to deliver what passengers, the taxpayers and everybody else would like us to deliver. That is what we want to do and we will do it to the best of our ability. If we are not doing it well enough then the Government is entitled to change us and get others to do it instead.
Yes. It comes back to the national aviation policy. Dublin has continued to grow at a rapid rate and take an increasingly high percentage of the overall traffic. As Deputy Canney put it, we are a small island and it is the missing link. With climate change targets coming and having to be met, this provides an opportunity, under the national aviation policy, for a rising tide to lift all boats. This is the point. I have no doubt that if Dublin Airport had the runways that are at the disposal of Shannon Airport, for example, we would not be building the third runway at Dublin Airport. The DAA would be using that under capacity. It just so happens that it is 150 miles down the road.
It is about making the maximum use of the national assets. Mr. Geoghegan's big thing is that, if there is a change in aviation policy, it must be a working document rather than an aspirational one. Is that a fair comment?
Mr. Basil Geoghegan:
There are certain givens that are absolutely clear. The DAA is in State ownership. It should be investment grade and should be put at risk in that context. It should be in a position to pay a dividend to the State. The DAA should provide best quality, secure and efficient airports within its remit both in Cork and Dublin. Therefore, the regulatory model, which works out how much we can charge, needs to be able to deliver to an efficient DAA - and I am not looking for us to be inefficient - the cash flow that would enable us to make those investments and to take a decision in year 1 regarding something that will be still operating in year 30.
Senator Horkan alluded to an important point in his earlier contribution. I recognise that Dublin is the engine for the DAA. We are all wearing the green jersey. As I said at the beginning, I found Mr. Geoghegan's contribution refreshing because there is a challenge for us as the line committee but, more importantly, if you look at the PwC report on the future of aviation - Deputy O'Connor alluded to the whole issue of the east - you will see that the Chinese market has the potential to be bigger than the US market in a few years' time. I apologise for not knowing the answer to this but the aviation leasing sector is very important and I am not sure what is the DAA's role in that. Under our remit, we have to come back to aviation policy.
I was struck by Mr. Geoghegan's response to a question - I cannot remember whose it was - that the €90 million was for the airlines. I am probably paraphrasing him incorrectly but I believe he mentioned that €90 million for the airlines elsewhere as well. I hope the subdivision of that €90 million will not see everything funnelled through Dublin. I take the point regarding the hub concept, which has worked extraordinarily well for Dublin. I have been in Dublin Airport recently and I compliment Dalton Philips, the chief executive, and all of the staff. It was a pleasurable experience and I have to give credit to the DAA staff and thank them for that.
Cork Chamber of Commerce has a newsletter on economic trends. It has asked a series of questions about when people anticipate returning to flying for business and the level of air travel for business they anticipate in 2022 compared with 2019. The figures are interesting. We need to combine forces to ensure we get people back to flying safely. Connectivity is also important. In saying that, I am still struck by Mr. Geoghegan's remarks to the committee regarding the role of the Commission for Aviation Regulation, CAR, being transferred to the Irish Aviation Authority and the whole regulatory process. I cannot get out of my head what he said about a fit-for-purpose price cap. That is something I am worried about. Will airlines play football with all of us in terms of negotiating with the DAA or the airports at Dublin, Cork and Shannon?
May I be controversial? Shannon Airport is charging little or nothing for landing slots, yet a cost is being incurred. That is a debate we need to have again. Deputy Canney speaks about a level playing field, yet Mr. Geoghegan's remarks today have an import. I thank the Minister of State, Deputy Naughton, for the €90 million but we should have her and the Minister, Deputy Ryan, before the committee again to discuss what Mr. Geoghegan has spoken about, the Irish Aviation Authority. The Bill is going through the Seanad and the Dáil. I do not want us to sleepwalk into anything. That is for a different debate. Today is about Mr. Geoghegan's appointment. I have full confidence in him and I support his reappointment. That is a different debate for us but I thank him for his remarks.
I will be parochial and thank Niall MacCarthy and the team in Cork Airport. They have done an extraordinary job. Mr. Geoghegan spoke about less pay and fewer hours. The staff took a great hit but they had huge pride in their airport and in themselves as entities both in Dublin and Cork. I thank them. I also thank Niall MacCarthy and Dalton Philips for their leadership in Dublin and Cork. We could spend every week here talking about aviation because it is so important. I have rambled on. I found Mr. Geoghegan brilliant today. It was a breath of fresh air for me.
I apologise but I have another last point. I believe Mr. Geoghegan issued an invitation to us to visit Dublin Airport. I hope he will expand that invitation to include Cork Airport because we should go out and visit the two airports and meet with the staff and with the board.
Not at all. It was very good. I found it entertaining and useful. I thank Mr. Geoghegan for being here. It really was not the two and a half or three hours of interrogation he might have expected as a chairman-designate coming before an Oireachtas committee. We have not really discussed anything related to that, but we have still had a very useful conversation about Dublin Airport, the DAA and Irish aviation generally. Going back to Mr. Geoghegan's Twitter feed, I saw a picture of Concorde there in 1984. I think I was out there that day on what was the old Pier A. Once a year, the balcony was opened and people were allowed to go out there. It is something I would be very interested in, even if I was not on this committee, although I am delighted to be on it. I picked up on a point to which Senator Buttimer alluded. We suggested to Pádraig Ó Céidigh that we would visit Shannon Airport. I have visited the airport but have never flown in or out of it and I do not know an awful lot about it. Back in 2014, as a member of the old Dublin Regional Authority, I got a tour of Terminal 2. We saw all the bomb-sniffing equipment, the baggage inspection stuff and the X-ray machines. It was really interesting. The committee would benefit from a trip to Dublin Airport, particularly to look at the north runway and all of the work that is going on there. Whether we were to do it collectively or individually, I would certainly be very interested in that. Perhaps someone could contact me about the logistics of that at a later stage.
I will make a point I made to Pádraig Ó Céidigh. Every Minister for Transport has been Dublin-based. The last one who was not was Noel Dempsey who got absolutely lambasted over the cost of Pier D. People said it was miles away and totally unnecessary and redundant. They said the same thing about Terminal 2. The figures from 2019 proved all of those critics wrong. I do not believe there is a capital city airport in Europe or in the world that has as greater ratio of passengers transiting to the population of the country as Dublin Airport. That might be something to explore. Heathrow is huge but six times the population of the UK, or even England, does not transit through it every year. As a country, we are enormously indebted to aviation. I made this point to Pádraig Ó Céidigh. Duty-free shopping was invented at Shannon Airport, as was Irish coffee. It was the last point one reached in Europe. It had a very interesting deal with the Soviet Union and Aeroflot with regard to refuelling at one point.
Shannon has to reinvent itself. Dublin is constantly reinventing itself. Thirty years ago, nobody knew where Dubai and Abu Dhabi were in terms of transit points. Dublin was becoming a mini Dubai in terms of pre-clearance going west. Dublin was used by people coming in from the UK, particularly, avoiding Heathrow, coming into Dublin and going west. I live in Dublin and Dublin Airport is my airport but it is more than that. It is the nation's main airport.
The DAA has a commercial mandate, I assume, whereby it must compete with Shannon. The witnesses would be accused of all kinds of anticompetitive, monopolistic or cartel-like behaviour if it did not. Equally, I would have thought, though the witnesses can disagree, that the competitors include Manchester, Birmingham, Edinburgh, Barcelona and all those airports which are not monster airports but are secondary in terms of passenger numbers. They are the 30 million or 40 million passenger airports, rather than the 120 million or 200 million in Istanbul or wherever. Geography plays a part.
Aviation is critical to Ireland's recovery and success. It is a huge employer with aircraft leasing and everything else. I suppose the ask for us as policymakers, politicians and legislators is that we explore the issue of the Commission for Aviation Regulation versus the IAA. We have a briefing about the air navigation Bill in the next hour. The issue is as to the reason for "the treacle", which is not a phrase I have heard used before but is apt to describe the slowing down of things through bureaucracy. Other than that, what asks do the witnesses have of us as politicians?
The DAA is an enormous contributor to Fingal's rates bill and Fingal benefits enormously from its existence. Where do witnesses see the growth? Is it the US, Europe or the Middle East and the east? What airlines is it? Is it Aer Lingus, Ryanair or lots of other airlines? I knew they have to be commercially sensitive but what competitor airports are the witnesses most worried about? I mentioned Manchester. I would be concerned about the Aer Lingus deal. Planes that would have flown out of Dublin to the US are now flying out of Manchester. Are there other concerns about what is coming along and trying to steal our business?
Many airlines have downsized and parked aircrafts in deserts. Some of them will never come back out of deserts. Are the witnesses concerned that some airlines that flew into Dublin have smaller fleets and Dublin might be towards the bottom of the queue? How do we get back up the queue in terms of airlines' reallocation of aircraft?
Mr. Basil Geoghegan:
I thank both Senators for those points. I note Senator Buttimer's complimenting of the team in Cork and of Dalton Philips and the team in the DAA. I agree that a great job has been done and it has flown right through the organisation. Everyone had to pull for this one. The €90 million is not all to the airlines. Parts go to other parts of the aviation industry-----
On that point, which is a good one from Senator Buttimer, what does Mr. Geoghegan believe would be the best use of the €80 million of taxpayer money the Government will provide for route support? Should it come through the airlines or the airports? What would bring more strategic flight routes back?
Mr. Basil Geoghegan:
Ultimately, it has to be in the hands of the airlines but related to numbers of passengers delivered. There has to be a connection between the two. Reducing airport charges does not make the connection but having that connection is important. If any airline is able to put on a route and deliver a certain amount of passengers, it should be rewarded for it, especially if it would not have happened but for the subsidy. That is important.
Mr. Basil Geoghegan:
Airport charges are across the board. If I am an airline running on a positive route, for example, Dublin to London Heathrow, I have a different profit structure than someone struggling to put on a new route from Shannon to Zürich. Subsidy is a public good and has to be directed to the right place. Having a laser focus on that is important. Some of that is also to help the airports. Hub airports may recover a bit faster but it is to help an airport make the investment it needs so it can attract that airline. So a bit is needed on both sides.
On the question of where we will get more growth, the answer is everywhere. It is not just new places but also density to places. If I am going to Vienna for a business meeting, I want to know I can get on a flight to Vienna at 7 a.m. and leave Vienna at 6 p.m. to come back. Double daily flights are important. I hope we will have much more long haul out of Dublin. Therefore, it is about making sure we have enough flights coming in to connect with those because connecting traffic is important. It is everything and we----
Mr. Basil Geoghegan:
The natural place will be west but we were proud of the fact we got connectivity to China. Equally, I know that if I am in Helsinki I have a much better proposition for European airlines who want to go to China. They can fly over the top and it is lower cost, faster and lower carbon. We need to acknowledge we need thick routes with many passengers when we do something to that far away.
On concerns, we are lucky that we have pretty vibrant airlines at Dublin Airport. We are part of the fact they are so vibrant. It is great and I compliment all of them, both the large ones and some of the smaller ones who are also vibrant. The other concern I have, and it is not a worry but it is at the forefront of our minds, is that as we take these steps we cannot be short-sighted. We need to be long-sighted and think about the sustainability of what we are doing. I want to attract airlines who use new equipment. If we have an airline using new equipment and sustainable aviation fuel, that is terrific and we have to make sure they can fuel up on sustainable fuel. That is the same if it is electricity in five or ten years' time. On the point about Noel Dempsey, one will not get applause for it right now but it does not matter, one can rest easy in future years knowing one did the right thing and that is our North Star on this.
I think that answers the direct questions.
Mr. Basil Geoghegan:
We would like immediate action. Many meetings have taken place on this and we have put out a roadmap. We ask for immediate action to get charges for 2022 sorted so they are not based on growth above €32.9 million and all the other things. Then there is the issue of how we address the future regulatory system around charges. Everybody will have strong views and some of their views in private will be different to those in public. As a broad group, we should be able to get to the right decision.
Mr. Basil Geoghegan:
And formally. It is done continuously to go through everything from operational decisions to having a review on a regular basis, I think it is weekly or monthly, of operations, how we can do better, how Members can help us and we can help them. With the capital infrastructure plan, CIP, we spent lots of time with the airlines going through what they wanted from the airport. Aer Lingus would like to see a good transfer hub. Ryanair wanted more stands. It does not want stands with air bridges. We had a debate and, to a certain extant, a laugh with Michael O'Leary as to whether we should have a bridge from one pier to another or put people in buses. That is fine. We will always have some differences. The broad parameters of the CIP were supported by all of the airlines. It then comes down to the right cost. For an airline, it is natural to say the cost needs to be lower. I have no problem with that; that is their job. Our job is to have manners put us so we are not inefficient but also give us the facility to invest for the long term.
I will not say too much, but I support the comments made by the two previous speakers about the hard work that has been done by staff in the DAA and, indeed, by Mr. Dalton Philips, who has been wonderful to work with. I compliment him and the staff of Dublin Airport in addition to the staff and management of Cork Airport.
The concluding point I wish to make relates to the trends when crises have happened in aviation back through the decades. Nothing has hit aviation quite like this pandemic, but looking at the aftermath of 11 September 2000 and the global recession, the trend is always the same. There is a return to a situation of rapid growth and recovery in the sector. I have no doubt that aviation will very much benefit from that. It is unclear how quickly that will occur. It is purely based on the situation with Covid because we do not know where it is going. However, if we work under the assumption that we will emerge from the Covid pandemic in the course of the next 18 months and, hopefully, herd immunity will have been reached internationally, we can only assume that Dublin Airport will be heading for potentially 40 million passengers over the next ten years.
I want to look to the future rather than talk about the past. It is very important for Mr. Geoghegan to seize the opportunity in the climate we are in now politically, where there is such a focus on getting things done rapidly. We have learned a great deal from Covid and that we can get through some of the traditional barriers that may have slowed down the development of key infrastructure. With regard to the future growth of Dublin Airport in terms of the provision of new terminal facilities, the airport utilises piers and I accept that. Perhaps there is no need for a new arrival or departure facility at Dublin Airport. However, in terms of the pier capacity to allow the airport to expand the number of routes it operates and the capacity of those routes, I wish to see growth and development in that area, particularly while there is a Government in place that wants to back development. Providing the additional capacity is quite exciting. There is the new runway, and Mr. Geoghegan has spoken extensively about that. I want him to focus on the provision of new piers at the airport. What is his plan? What does he intend to do? Will he be building new piers or a new mid-field facility or is he looking at renovating existing facilities or demolishing older facilities and replacing them with more modern facilities? I want to focus him on that, if he does not mind. Will he give some insight into what the airport is planning over the course of the next ten years? That is in the context of a desire now just to move on and to start planning for the future, particularly from my point of view as the transport spokesperson for Fianna Fáil. That is my frame of thought.
Mr. Basil Geoghegan:
On the other matter, which is really important, the best way to answer, to be honest, is to get the Deputy to come to Dublin Airport and see it. We have a virtual model and we had a scaled model of what we are doing at the airport. It is easier to see it. It is big; it sits in the middle of a table and can be seen. We have to re-examine that, given where we are now and given a fact that I did not mention previously, which is all those losses we had. We financed that because we were able to take cost out, go to the bond markets and raise cash, but it is debt that we now have on our balance sheet and it will not just disappear. We have to cut our cloth a little. The broad plan was, on the south side of the airport, to develop further around Terminal 2 and have a transfer centre in that part of the airport. On the north side of the airport the plan was to deliver another pier further over from the current most northern pier and there is going to be another pier down where the hangars are currently.
Does that expand the wide-body capacity? This refers back to my point about expanding out to the east. The airport will need the capacity for aircraft such as Boeing 777s, the Airbus A350s and the Boeing 787 Dreamliners. Is that capacity going to be extended in Dublin?
Mr. Basil Geoghegan:
The other thing we were then going to do is in the middle, which is on the far side of the cross runway. It was to have additional stands there so we would be able to meet what we need to do in respect of wide-bodies and also in respect of narrow-bodies. If the Deputy thinks about it, they might not fly to China but a lot of the routes to the US are flown on narrow-bodies. That is the way we think it will go because, again, it gives more point-to-point activity in the US. The A-380 is perhaps the aeroplane of the past, but the others absolutely-----
I did not mention it, but I understand. If one looks at the hub airlines, such as Emirates, Turkish Airlines, Qatar Airways and Etihad Airways, they seem to be operating and will continue operating wide-body aircraft, and I doubt that we will ever see Aer Lingus doing eastern flights given its current trajectory. Is there a plan to expand the capacity in Dublin Airport to service that type of growth, where there could be three or four daily services serving the Middle East? Essentially, it is going back to what we had pre-2019 and growing from there over the course of the next ten years. I am sorry that it is a very technical question, but it is an important one.
Mr. Basil Geoghegan:
It is a good question and the answer is "Yes". We are finishing our strategy work in the next couple of months. Perhaps at that point it would be a good time to explain what our new strategy is and to talk about what we thought the capital investment programme could be and how we may have to tailor it. We are hoping that will all be part of a new regulatory review, so we are going to be consulting with our customers as well.
Mr. Basil Geoghegan:
We do not have one at present. We have a five-year plan which we submitted to the Department during last year. The Department needed to see a plan. It was very difficult to do because of Covid. We are doing that work at present and will have one at the end of this year. We are working with some external parties as well on it. In a way, we just need to get the ball on the green, so to speak, regarding when we need that infrastructure. Whether the infrastructure is in full use in 2035 or 2040 matters less. It just has to be there.
Mr. Basil Geoghegan:
Where we were constrained in current terminal capacity was not so much with regard to how much we could handle in a year or a day but when the peaks were happening. Airlines want to start early in the morning and to finish late at night. Those were the periods when we were constrained.
This is very technical, but it is my last question. Can the airport price its landing charges differently at different times of the day? Can it charge more at 6.30 a.m. than it will charge at lunchtime or is it stuck with €7.75 per passenger all the time?
We will follow up on your point that you want the review of the passenger charges to be concluded quickly so you can know with certainty what will happen in 2022.
As we normally do in these circumstances, we will write to the chairman indicating that the committee has met Mr. Geoghegan who gave an impressive performance. We will refer to that particular point in the letter if that is okay.
Yes, maybe an invitation could be issued to representatives of Dublin and Cork airports. It would be productive to have representatives of all the airports before the committee. Does Mr. Geoghegan have anything further to add?
I thank Mr. Geoghegan and Mr. Cullinane for attending and engaging with the committee. We wish Mr. Geoghegan well in his new role. He will allow us to add Mr. Cullinane to those good wishes. A letter and the transcript of this meeting will issue to the Minister for Transport, Deputy Eamon Ryan, notifying him that the committee has met Mr. Geoghegan and we wish him well.