Matthew Thomas doesn’t expect handouts for Shannon Airport, but the Shannon Group CEO does insist that there should be a level playing field when it comes to State financial support for Irish airports.
Last week key Shannon Group executives blitzed members of Clare County Council on three separate occasions. On Monday, Ray O’Driscoll, MD of Shannon Commercial Properties, gave a presentation to the Economic Development & Enterprise SPC, shortly after CEO Matthew Thomas spent an hour with the full council and on Tuesday Deputy CEO Mary Considine attended the Shannon Municipal District meeting.
The series of meetings were apparently in response to recent reports that Shannon Airport’s share of Ireland’s lucrative airline passenger market has fallen to 5.1% while Dublin’s has increased dramatically to 87%.
According to CSO aviation statistics for Q2 2017, passengers numbers at Shannon decreased by 5.5% compared to the same period last year while Dublin (+7.3), Cork (+1.9), Kerry (+8.2) and Knock (+4.1) all increased their numbers.
Matthew Thomas told councillors that Shannon Airport hasn’t “done too badly in the last couple of years” since becoming independent of the DAA.
Today he looks up at Dublin Airport with 87% share of the Irish market and Cork on 6% while, “below us we have the likes of Kerry, Knock and Waterford, all receiving massive amounts of state support, unlike Shannon which doesn’t get a penny”.
In acknowledging that Shannon’s market share has fallen from 5.4% to 5.1% since independence Mr Thomas claimed that had it not been for the loss of 50,000 passengers to Stansted, and 70,000 on the Berlin route which went to Kerry, then Shannon would be Ireland’s fastest growing airport.
The blame lies with “very immature Government policy”, which Mr Thomas said he wants to change. In his view, Ireland’s aviation policy, “was only written a couple of years ago and it is very immature and difficult to regulate”.
Mr Thomas said Shannon’s share of the passenger market has actually increased by 25% however, he is concerned that Irish aviation policy “is leading towards having one airport in the country,” adding, “it’s the only conclusion you can take”.
On the plus side, Mr Thomas noted the addition of four new routes last year, the first time in ten years that Shannon has added four new airlines in the same year.
Next year Air Canada will operate to Toronto and Ryanair will fly to Reus, near Barcelona, in addition, it is hoped to expand Norwegian Airlines’ service to Providence, Rhode Island.
Mr Thomas had prepared a number of items which will require the support of key stakeholders. It was broadly hinted that Clare County Council should do something about extending the dual carriageway to the airport as the single lane carriageway is “one broken down vehicle away from an emergency where people will not be able to get to the airport”.
It was also suggested that the council should consider a more favourable commercial rates model to support the development of new hangars. Next year Shannon Group plans to build one of the world’s biggest hangars.
He’s also unhappy with paying with the price of keeping pace with regulatory standards and wants help to fund security and regulatory investment, in particular, the acquisition of a new security system costing €6m.
Matthew Thomas told councillors that Shannon Airport has spent €15m to resurface the runway this year but, “we won’t see a penny of Exchequer funds for that.” It was an interesting remark given that shannonairport.ie reports that the resurfacing project is financed “through a loan secured from the Irish Strategic Investment Fund”.
The ISIF was established with €8.1bn from the national pension reserve and includes €335m the Government received from the sale of its 25% share in Aer Lingus. Shannon Airport was reported to have received €10m from the fund for the runway project.
Not a development agency
Matthew Thomas told councillors that Shannon Group is a commercial semi-State but emphasised that it is “no longer a development agency like Shannon Development was in the past.”
With regard to Shannon Development, he claimed “there were ten years of very little investment in the Shannon Development portfolio,” in the period preceding Shannon’s independence.
In fairness, Shannon Development was stripped of a number of responsibilities following a 2005 review. Historically, the company contributed significantly to the modernisation of the Midwest Region.
Indeed Mr Thomas referred several times to the fact that 40% of American foreign direct investment (FDI) in Ireland is located within an hour of Shannon – that extraordinary achievement is due in large part to the success of Shannon Development.
“Record levels of investment are being undertaken” in new buildings, said Mr Thomas adding that companies now expect ‘Gold Star’ office accommodation and will not accept ‘level B or C’ accommodation.
The large office block being built at the intersection of the airport and Free Zone is an example of such accommodation and is due for completion next summer. Mr Thomas said they are still working to close out the deal for a tenant to take on all this office accommodation.
Hinting at the possibility of attracting a major player to Shannon, he said there is significant demand for advanced manufacturing units by hi-tech industries favouring Ireland’s low-tax regime and “the very cheap costs of setting up here”.
Shannon Group, he said, has a “rather ambitious”five-year capital plan for commercial properties and Mr Thomas told councillors that he looks forward to updating them on this in the future.
With regard to Shannon Heritage, a welcome tourism boom has seen visitor numbers double since 2012. Keeping pace with this, Mr Thomas wants to improve the offering at Bunratty, Dunguaire, Craggaunowen and King John’s Castle, making it “much more contemporary”.
Last year the heritage attractions generated 253,000 hotel bed-nights, as most of these attractions are in the West of Ireland, Mr Thomas is confident for the future.
Already, he said, “40% of European visitors come to one of our attractions, as well as 34% of all US visitors to Ireland and 32% from the rest of the world.”
The Group has significant investment plans for this sector, particularly Bunratty which he wants to take to “a completely different level” and make it one of the Top 5 attractions in the country.
One major bug-bear is the fact that, unlike the IDA, Enterprise Ireland and Fáilte Ireland, Tourism Ireland does not operate regional targets. According to Matthew Thomas, this causes the agency to be “quite Dublin-centric”.
Another concern is that despite the huge growth in tourism, too many are visiting the West of Ireland on day trips from Dublin. As an example, he said the average visitor to Kinvara, where they operate Dunguaire Castle, spends only six minutes.
“What we need to do, is invest in making our tourist products compelling but we need the agencies to look at bringing in more people and not putting them on buses for day trips to the west,” he said.
A number of councillors paid tribute to Mr Thomas and the work of Shannon Group. Fine Gael councillor Johnny Flynn described Shannon Commercial Properties as phenomenally successful and said it is “absolutely world-class what you’re doing”.
Cllr PJ Ryan said the airport body does “fantastic work”. However as Clare County Council has “pumped serious amounts of money” into supporting the airport, he would like to see the council’s CEO and an elected member appointed to the Shannon Group board.
Matthew Thomas said this is a matter for the Minister of Transport, while Shannon Group is supportive of the idea, it is not in a position to influence the outcome.
Cllr Pat Hayes expressed concerned for the loss of market share and asked whether independence has been good for Shannon? In his view, a major difficulty is that Shannon does not receive State support because it is now independent.
Mr Thomas appeared to have struck all the right notes with councillors who know all too well that Shannon Airport remains the critical engine for growth and development in the Midwest as it has been for the last 60 years.
In the past councillors have always been uncritical in their support of the airport, more recently though, even the most ardent supporter has been having doubts.
Just when it looked as if Matthew Thomas had got all councillors back onside, independent Shannon councillor Gerry Flynn hit him with a late sucker punch.
Flynn served five years on the Shannon Airport Marketing Consultative Committee but was not won over by arguments in favour of autonomy as he feared for a future with the airport “swimming alone in shark-infested waters”.
As a long-time resident of Shannon, Cllr Flynn pulled no punches saying he was very disappointed that there had not been one mention of Shannon Town in Matthew Thomas’ presentation.
“I live in Shannon Town, we have had a very good relationship with the airport for many years. But now it seems that all you are doing is selling off non-performing assets in Smithstown, Ballycasey Craft Centre and at SkyCourt, once the headquarters of Shannon Development.
“In fairness to Shannon Development, they saw the benefit of the footfall from their building to the local economy, but you moved out and are now building new office blocks and even bringing in Starbucks.
“Have you any notion of the damage that you’re doing to our town? You’re taking away from the viability of our shopping centre and there is little or no partnership anymore,” said Cllr Flynn. For his part, Matthew Thomas offered no response.
In the aftermath of Matthew Thomas’ presentation, Dublin Airport took to the airwaves to reject claims that Government policy is leading to Ireland becoming a single airport country.
Describing the airport as “a national asset” with growth benefitting the entire Irish economy, the DAA spokesperson added, “more passengers at Dublin Airport boost tourism, trade and investment throughout the island of Ireland, from Ballymena to Dingle and from Balbriggan to Clifden. Dublin Airport supports 117,300 jobs in the Irish economy and contributes €8.3 billion to Irish GDP annually. These huge economic benefits are felt nationwide.”