Sean Barrett (Independent) | Oireachtas source

I welcome the Minister and this Bill. Competing airports are a feature of modern aviation. Once we deregulated airlines, the deregulation of airports followed. I gather that it was stated in Westminster today that Gatwick and Heathrow will compete against each other in regard to where capacity in the south east of England should be installed. When they were both part of the British Airports Authority, this sort of competition did not take place.

I have been keen in my writings and research to try to release the competitive dynamic between airports that we have already seen between airlines. Therefore, I wish the project of the launch of Shannon as a separate airport and its enshrinement in this legislation well.

The briefing document prepared for us in the Oireachtas refers to the precipitous decline in business "as a result of the general economic downturn and other operational changes". As the Minister said, passenger traffic fell from 3.6 million at the peak to 1.4 million. There was also a sizeable increase in charges. I spoke to some of the airlines that left Shannon during the period in question and learned they believed the charges were excessive. That is a matter Shannon will have to address under its new regime. I might have some proposals later regarding that.

Shannon is located very close to Cork, which had 68% more passengers in 2012. There should be a Cork airport authority. I would give the airport its independence; it is bigger than Shannon. The whole emphasis, particularly in the Ryanair model, is such that airports that might previously have been regarded as very small are quite well able, on their own account, to look for business and attract passengers. Consider in this regard the national monopoly model that the British Airports Authority used to represent; it never achieved that, and I believe that is wrong. Airports should compete and not collude. I ask the Minister to think again about the possibility of giving Cork the same freedom as Shannon, given that it had 68% more passengers in 2012. It had 2.35 million as opposed 1.4 million in Shannon.

The Booz & Company report mentioned by Senator O’Neill found that the operational cost at Shannon Airport, though reduced from historically high levels, remained relatively high. The Senator quoted a statement to the effect that Shannon Airport, unless something unforeseen happens, will continue to require subsidies from Dublin Airport Authority and that traffic will not return to previous levels, at least not in the short run. That is the challenge the Minister puts before everyone in the Shannon area, the new board and its staff. Studies show that when Shannon was regulated by the Commission for Aviation Regulation, it had serious problems.

In 1999, the IMG report stated that the operating cost per workload unit – basically a passenger or the equivalent amount of freight – in Shannon was €20.6 and that in Cork was €8.2. Staff productivity at Shannon, according to the study, involved the handling of 3,591 passengers per employee per year, whereas the figure for Cork was 10,400.

Other productivity indicators are air traffic movement per runway and passenger revenue per square meter of terminal. We had a phase in Irish airports when the building of a new terminal was regarded as the goal, irrespective of whether anybody used it. Cork was particularly unlucky in that it opened a terminal just when business was going into decline.

The Commission for Aviation Regulation has a role in assisting airports in performing according to the efficiency indicators. We did not have a great record in Dublin either. It was a pity the powers of the regulator were virtually destroyed by former the Minister Noel Dempsey when he just ordered it to increase the charges by over 40% to pay for the second terminal. It is important not only to invest but also to ensure that assets in which an investment has been made are efficiently used. We still need to achieve this. The Booz & Company report makes that point.

The aviation finance and leasing sector is huge. The late Tony Ryan made Shannon the centre of it through GPA. I attended recently the Ireland-Mexico international trade conference and noted there is a very large business involving the leasing of aircraft to Mexico. The great tradition set up by Tony Ryan in Shannon can be developed and improved.

The Cape Town convention facilitates the leasing of aircraft. It is highly regarded and was referred to in very favourable terms at the Ireland-Mexico Chamber of Commerce seminar in the Conrad Hotel on Friday two weeks ago. It also deals with mobile assets. As I have previously mentioned to the Minister, I have received representations from the shipping industry in regard to whether, as this has been such a success in one area, the model could be followed in the shipping sector, which is another area in respect of which the Minister, Deputy Varadkar, has responsibility. All of these are positive developments.

I understood that under insolvency law a person declared bankrupt or who is in arrangements with creditors was precluded from becoming a director. Are such persons barred from being on the board of Shannon Airport?

Ireland's success in aviation financing is well worth building on. I note there was some pressure to increase the borrowing limit beyond €100 million, but that what was provided for has been retained. I support that. Broadly speaking, this legislation is going in the right direction. I propose that we look again at what the Commission for Aviation Regulation can do to assist in ensuring that our airports are run efficiently. While the commissioner first had power over all three airports, this was later reduced to one and then none by virtue of the decision to go ahead with extra terminal capacity. There was evidence that Shannon had a productivity problem and that both Shannon and Cork Airports had invested excessively in infrastructure. The development of aviation finance is well worth proceeding with and the Cape Town convention is a model worth developing. I ask that the Minister consider whether it could be extended to cover the shipping sector.

I am pleased to endorse this Bill. What is provided for therein is the direction in which airports are going, in that instead of being part of a national airport they now compete. I wish Shannon and Cork airports the best of luck. I hope that Kerry and Knock airports also thrive in this new competitive environment.