Brennan to ditch airports' 'dead hand'

Analysis: The difficulty will be ensuring that Cork and Shannon can survive, writes Emmet Oliver.

In a display of political risk taking, the Minister for Transport, Mr Brennan, stepped into Government buildings yesterday to announce the death of Aer Rianta as we know it.

Aer Rianta, which has dominated the aviation sector for decades, will be a different company a year from now, he said.

While Ryanair boss Mr Michael O'Leary toasted the move, consumers will withhold judgment. Some of them will be concerned that one Aer Rianta is simply being replaced by three mini Aer Riantas, while those based near the airports will be concerned about their jobs.

While there was talk last night of disruption at Dublin Airport in coming weeks, Mr Brennan hopes the public will see sense in his plans and withhold their support from unions that disrupt flights.

While his plans have Cabinet backing, if the plot begins to unravel, the Minister could find himself lacking key political support. He partially agreed with this. "It would have been easier for me to fudge it," he said.

While always careful to avoid personal criticism, it is clear the Minister's plans represent a severe setback for Aer Rianta chairman Mr Noel Hanlon, who steadfastly opposes the plans.

Mr Hanlon released a terse statement last night, which said little about the Government announcement. However, he faces an uncomfortable few days before he finds out if he is to play any part in the new structures.

Mr Brennan's thesis, hotly contested by the unions, is a relatively simple one: Shannon and Cork airports are being held back by the "dead hand" of Aer Rianta's Dublin-based management and cannot fulfil their potential.

The examples Mr Brennan uses are pretty straightforward. He cites the Kerry-based holidaymakers who want to travel to the continent and have to drive to Dublin before they can start their journey. He says there is no reason why Dublin should be the only departure point for a range of tourist destinations.

The Minister has committed himself to clearing all debt off the balance sheets of Cork and Shannon. Their debt, believed to be more than €100 million, will sit on the balance sheet of the newly constituted Dublin Airport instead. This arrangement appears uncontentious but what it also means is Dublin Airport will have to take on the €140 million debt needed to fund the upgrading of Cork Airport.

The shifting of debt over to Dublin surprised some observers and even wrong-footed the Minister's opponents. They had been expecting Shannon and Cork to be the clear losers in the announcement but, in a way, Dublin Airport arguably comes off the worst in the shake-up.

A union statement even recognised this last night when it said the Minister's plans would dramatically increase "the debt burden on Dublin at a time when infrastructural development there is so urgently required".

While a debt-laden balance sheet is hardly a welcome prospect, Mr Brennan knows Dublin Airport's future is probably secure based on traffic projections. His difficulty will be ensuring that Shannon and Cork create enough business to survive.

The Minister agreed with this and said Shannon, in particular, had to think beyond its traditional reliance on trans-Atlantic business. If big US carriers are not to be Shannon's mainstay, the alternative is to target no-frills carriers like Ryanair, which ironically left Shannon earlier this year.

One might think business opinion in and around Shannon would be implacably opposed to the plans, but Shannon Development welcomed them.

"The announcement provides a firm foundation for building a new future for Shannon and the Atlantic Corridor region," its statement said.

While the immediate challenge facing Mr Brennan's plans is opposition from unions, the ultimate test will be the ability of Shannon and Cork to create new business at a particularly difficult time in the aviation sector.