Kevin Toland: One big project at a time

Dublin Airport is beginning work on a new runway which, at an estimated cost of €320 million, is the biggest project that DAA has undertaken since it finished Terminal 2, says DAA chief executive

Dublin Airport catered for a record 28 million passengers last year, says DAA chief executive Kevin Toland

Dublin Airport catered for a record 28 million passengers last year, says DAA chief executive Kevin Toland

 

An old viewing balcony runs outside the windows of DAA chief executive Kevin Toland’s office in Dublin Airport’s old terminal building. It’s a vestige of the days when flying was a novelty and airport security was practically non-existent. People could come along and watch planes take off and land.

There are a lot more planes these days, ranks of Ryanair Boeings line up along either side of the pier that stretches away from Toland’s window, but the only people using the balcony are builders working on various jobs in the airport’s two terminals, most of which are designed to accommodate more craft.

Toland runs the State company responsible for Dublin and Cork airports. Last year, the capital’s gateway catered for a record 27.9 million travellers, while Cork grew its numbers 8 per cent to 2.2 million. The gap between the two is big, but they are the Republic’s largest and second largest airports.

Dublin Airport is going to see a lot of builders in the near future. It is beginning work on a new runway which, at an estimated cost of €320 million, is the biggest project that DAA has undertaken since it finished Terminal 2. While the runway has not created quite the same controversy, it has drawn its fair share of fire.

One of the most critical groups for DAA is its neighbours in north Co Dublin. When the airport got planning permission for the runway in 2010, An Bord Pleanála limited the number flights in and out between the hours or 11pm and 6am to 65. The planners were responding to fears raised by locals that more planes would mean more noise.

However, DAA now wants this changed. It already has about 100 flights taking off or landing during the period (the condition only applies once the new runway is built and operating). Those restricted hours also include part of the airport’s busiest time, the early morning, a point when Toland says that the airport is essentially full.

Applying the limit would mean turning away significant numbers of passengers. Locals oppose changing the original planning conditions.

Toland maintains that the airport and those communities regard each other as neighbours and that DAA has been consulting with them for almost a year. “We have lived very well with each other up to now,” he says. “I am very confident that we have a very, very strong case. It will have to go through the rigour of the process.”

A new EU directive on airport noise is likely to play a big part as the drama unfolds. The regulation means that three factors must be considered before planners can restrict operations. The first is land use; DAA says that a new runway has been part of successive Dublin county development plans.

The second is noise abatement. Toland says that the airport is working with the Irish Aviation Authority, on fulfilling this by introducing various measures to cut disturbance, including ensuring that approach and take-off paths are over areas that are not built up.

Third is using quieter aircraft. DAA and its chief executive have pointed out several times that 95 per cent of the aircraft using Dublin are the quietest on the market and that it bans the noisiest planes.

“We are absolutely meeting all those conditions,” he says.

The other bone of contention is the cost. Both Aer Lingus and Ryanair, Dublin Airport’s biggest customers, warned that the €320 million bill was too big. They pointed out that the figure agreed with the Commission for Aviation Regulation (CAR) was €250 million. Ryanair also argued that the airport should not have revealed its hand by putting a price on the project ahead of seeking bids from potential contractors for the work.

“It’s good value for money compared to others,” Toland argues. He points specifically at Heathrow, which may have to pay £6.6 billion for its new runway. The key is that Dublin Airport owns the site where it will build its new runway, while the likes of the London hub must buy the land where it proposes to build, often from businesses and homes that already occupy it.

“We can do it for a lot less,” Toland says. “It’s all on our own land, we do not have to buy the land.” This is because some “very far-sighted” predecessors at the airport decided to buy adjacent property that Dublin was likely to need in the future when it was cheap rather than wait for the day when it was necessary and then face the prospect of having to shell out far larger sums for the same few acres, he says.

Toland does not go into why DAA published its estimate of the runway’s cost. However, according to the CAR, the airport company has to deal openly with airlines and other interested parties, and that includes breaking down the likely cost of big developments. The regulator’s position is that while this does lead to a cost estimate getting published, DAA can still run a competitive bidding process.

That bidding process is now under way and the State company should be naming the winner in a few months. The runway is due to open in 2020. By then, one of the biggest single sources of Dublin Airport’s business, the UK, should have left the EU. At that point, Brexit’s implications for DAA, along with the rest of us, should be clear.

To a certain extent, they are already clear to Toland.

“I think it’s a net negative for this country,” he says bluntly. “Our job is to make sure it’s as positive as possible for our business.” While it’s hard to argue with the first part of his statement, achieving what he sets out in the second is not going to be easy.

Dublin-London is Europe’s busiest air route, about 4.5 million travel between the two cities every year; worldwide it ranks second only to Hong Kong-Taipei. Overall, the UK is responsible for about 35 per cent of the airport’s passengers every year and for 58 per cent of those travelling in and out of Cork.

He acknowledges that aviation faces a lot of uncertainty. There are questions over whether the UK can maintain membership of the EU’s open air travel regime after it leaves the bloc. Similarly, maintaining the common travel area between it and the Republic is going to be difficult, potentially making it more expensive and complex for British tourists to come here.

“The UK is still our largest source market for tourism,” Toland says. But he also points out that it is a big rival for tourists as well, particularly as Scotland and Wales offer similar types of holidays. “They are going to have a cost advantage if the UK currency depreciates,” he warns.

There will be some positives. Duty free shopping could return for those travelling between the Republic and the UK, something that should boost the airport’s business. That is unlikely to be enough. Toland argues that the only choice is to defend existing markets and to continue to look for new business to replace what could potentially be lost post-Brexit. “We have to stay agile,” he says.

There will be opportunities as well, he stresses, particularly for bringing in more multinational investment. DAA is working on what it believes is one opportunity, using part of its land in north Dublin to develop a business park, where it has 400,000sq m available. There have already been takers.

“ESB International moved almost 600 people out here from town,” he points out. The company, the international consultancy run by the State energy supplier, was attracted to the site because it is next to the airport and a lot of its staff travel frequently. Toland believes that this could be a draw for other domestic and multinational businesses.

“There is a massive depth to our route network,” he says. “We have 400 flights a week in and out of North America, 140 in and out of the Middle East, 1,700 in and out of the UK and 2,300 in Europe.” DAA is targeting a broad range of businesses, technology, finance, those looking for an English-speaking country in the EU and those looking to move from the UK to another jurisdiction in the bloc.

DAA’s main business is continuing to grow but the momentum is slowing. Dublin was Europe’s fastest growing airport in 2016, expanding by 11 per cent. That momentum is slowing, the first two months of this year were up 6 per cent, at around 3.6 million passengers.

The extra passengers that came with new routes launched over the last two years are now part of its annualised figures. There are more to come in 2017 as Gulf carrier Qatar Airways begins flights from Dublin to Doha in June, Norwegian Air International starts services to the US east coast the following month. Delta’s Dublin-Boston route and Aer Lingus’s long-awaited flights to Miami also begin this year.

“Cork is seeing the same strong trend,” Toland says. The airport will get its first ever service to the US when Norwegian launches flights to Providence, Rhode Island, in July. Flights to Zurich and Verona are also coming on stream there.

Dublin is now Europe’s fifth biggest north Atlantic gateway, ranking only behind the region’s big hubs, led by Heathrow. Its success led to warnings from a number of customers, including Aer Lingus and Emirates, that it was facing constraints on several fronts.

The airport is working to tackle this, according to Toland. It is adding new aircraft stands and gates to the piers that in terminals one and two and building lounges to hold passengers who will be bussed to their planes. Willie Walsh, chief executive of Aer Lingus parent, International Airlines Group, last year expressed misgivings about Dublin’s plans to use more buses.

Toland though says that for an airport its size, Dublin is “under-bussed”. “There is nothing wrong with bussing,” he argues, “what we have done is invest in bus lounges.” He explains that DAA is working closely with Aer Lingus on a lot of these projects. “We still have a lot do as we go forward.”

The State company also plans to introduce a new, more efficient, bag-drop system in terminal one . The Department of Justice is planning to put in new passport screening technology this summer that will help cut the queues that build up at immigration control during busy periods.

There has been talk of another project that could dwarf the runway and the current round of upgrades: terminal three. The speculation gained momentum last November when the Minster for Transport, Shane Ross, announced that he would ask experts to look at the feasibility of a private player running a third terminal at Dublin, as part of a broader review of the State’s airports.

This followed news that Ryanair chief, Michael O’Leary, told a Fine Gael party gathering that his airline should be allowed run the third terminal. Following the minister’s announcement, there were suggestions that it could be built on land owned by businessman Ulick McEvaddy.

Toland readily pours cold water on all of this. “Terminal capacity is a long, long way down the line. Terminal three is not a priority,” he says.

DAA is reviewing a master plan that limits the number of people travelling in and out of the airport by road every year to 32 million, and could push to have that figure increased.

Its chief executive points out that the pinch points are where people get on and off aircraft, something that DAA is bidding to tackle, and not in the terminals, which house security, shops, bars and restaurants. So, for the moment, it looks like a case of one big project at a time.

PANEL

Name: Kevin Toland

Position: Chief executive, DAA, the State company responsible for Dublin and Cork airports

Age: 51

Why is he in the news? Dublin Airport has begun work on a new €320 million runway and is upgrading part of its existing facilities to help it cope with growing traffic, it catered for a record 28 million passengers last year.

Career: Took the helm at DAA in January 2013. Before that he was chief executive and president of Irish food company Glanbia’s US and global nutritionals business for seven years. He took that role on the back of several senior posts with Glanbia in Ireland. He also worked with Coca Cola Bottlers in Russia and with drinks giant Grand Metropolitan in Ireland and central Europe.

Family: Married with three children.

Interests: Ski-ing, reading, travel and “bad golf”.

Something you might expect: He is a fellow of the Institute of Chartered Management Accountants and holds a diploma in applied finance from the Irish Management Institute.

Something that might surprise: His first job was in a men’s clothes shop, where he learned some lessons about customer service – “retail is detail”

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