State-owned airports seek regional funding cuts

Up to €23.9 million was provided to Kerry, Donegal, Ireland West Airport Knock and Waterford between 2015 and 2018

Services to Donegal Airport are funded by the Public Service Obligation scheme.

Services to Donegal Airport are funded by the Public Service Obligation scheme.

 

The three State-owned airports have called on the Government to scale back funding for regional airports amid claims that such financial supports are not delivering value for money.

DAA and Shannon Group, which between them operate Dublin, Cork and Shannon airports, claim the State subvention provided to four regional airports needs to be reduced under a new Regional Airports Programme (RAP) 2020-2024 in order to comply with the objective of the Government’s National Aviation Policy to phase out funding operational expenditure at unviable airports by 2024.

Funding

A total of €23.9 million was provided to Kerry, Donegal, Ireland West Airport Knock and Waterford between 2015 and 2018 under different funding schemes, while a further €30 million was provided to airlines for operating essential services to Kerry and Donegal under a Public Service Obligation (PSO) scheme.

However, the four regional airports have all called for the retention of the current level of supports as vital for ensuring their sustainability and supporting rural connectivity.

In a submission the Shannon Group said there has been no analysis carried out to date on displacement arising from the existing programme.

“Displacement of air services from non-subsidised State airports to subsidised private airports would suggest that the effectiveness of the RAP is questionable.” it remarked.

The Shannon Group said transatlantic traffic at Shannon could be impacted by passengers from its catchment area using PSO routes to connect to US flights via Dublin.

It claimed there was little information available to assess what steps regional airports were taking to reduce their dependence on State supports while funding for capital projects was being made available without consideration of their existing spare capacity.

Capacity

“Given the size of Ireland, the State needs to consider the capacity that currently exists in the aviation landscape rather than funding capacity expansions that may not have sufficient demand or which will displace services from other airports,” it added.

The Shannon Group has called for the new RAP to include all airports which have less than three million passengers annually which would extend eligibility to Cork and Shannon.

“The exclusion of State airports from funding is distorting the competitive aviation landscape within the State,” it observed.

The three State-owned airports handled a combined 36.9 million passengers last year compared to 1.2 million at the four regional airports.

Shannon claims its catchment area overlaps with Knock around the key urban market of Galway city, while the catchment area of Kerry overlaps with both Shannon and Cork.

DAA said its data indicated less than 20 per cent of passengers on PSO routes were tourists and just over 10 per cent were business travellers.

The authority said it believed the PSO subvention of €212 per passenger on a return flight between Dublin and Donegal did not represent value for money, given the majority of passengers were using the service for visiting friends and families.

Separately Cork Airport said it did not believe there was a viable case for a proposed increase in the subvention to Waterford Airport given it had not operated any commercial flight for several years.

Cork Airport said there should be a defined, limited number of strong, sustainable, financially viable and geographically dispersed airports on the island of Ireland.

Opportunity

However, Ireland West Airport Knock said it should be given the opportunity to grow to a viable, self-sustaining position “particularly considering the contribution that it makes to the regional and local economy”.

Kerry Airport said it required funding for a major upgrade of its terminal building to allow it to expand to ensure its future, while Donegal Airport said its relative remoteness and poor road network justified the retention of its PSO route.

Waterford Airport said funding of regional airports was “a modest enough cost” given the wider economic benefits they delivered.

A spokesperson for Transport Minister, Shane Ross, said the new RAP, which was due to be published earlier this year, had been held back as it was “awaiting the approval of the new Government”.

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