What's this obsession with Irish airports?

BUSINESS OPINION/John McManus: Every year analysts from the international rating agencies such as Standard and Poors' and Moodys come to Ireland. They visit the Department of Finance, the National Treasury Management Agency, the Central Bank and anywhere else they fancy.

The visit is part of the process by which they arrive at Ireland's international credit ratings, currently AAA - pretty much as good as you can get.

One of the agencies usually asks to meet a financial journalist and the NTMA wheels one out. A few years ago I was asked to do my national duty and meet an earnest young man from a rating agency and his equally earnest colleagues.

It was during the summer and the chaotic state of affairs at Dublin Airport was once again making headline news. Out of interest I asked the two rating agency analysts what they thought of the airport and more importantly how much of a negative impact it had on their assessment of the Irish economy.

The surprising answer was none. One of the analysts had flown in from Frankfurt and the only noteworthy aspect of his transit through the airport was the difficulty of getting a taxi once he got outside.

The other analyst had flown in from New York and had got a cab straight away. In other words, Dublin Airport was no more memorable than all the other congested dirty airports that they had passed through in the course of their work.

The national obsession with airports, and Dublin Airport in particular is hard to fathom. Most people - if they are honest - will admit that they probably do not use it more than once or twice a year; the annual holiday and picking up and dropping other people is about the extent of it.

The reality is that the deficits elsewhere in the transport infrastructure have a much bigger impact on their lives.

The completion of the M50, or a motorway to Cork would have a much bigger impact on many more people's lives that any amount of new terminals at Dublin Airport.

In fact, a few more quality bus corridors would probably be a more far-reaching development.

Dublin, Shannon and - to a lesser extent - Cork airports have iconic status far in excess of their real economic importance. The reason - I would suggest - has a lot to do with history.

In the Ireland of the 1950s and 1960s, Dublin Airport was about as cosmopolitan as things got. It was a time when to be employed by Aer Lingus was to be glamour incarnate.

This point is worth bearing in mind when you read Aer Rianta regulatory accounts for 2001 that were published in this paper last Friday. Prepared for the Aviation Regulator who sets landing charges at Aer Rianta's airport they detail for the first time the extent to which Dublin subsidises the other two airports.

More specifically they indicate that massive revenues from ancillary services at Dublin such as car-parking and shopping are the source of much of the revenues.

The figures show that Cork made an operating loss of €1 million while Shannon and Dublin made operating profits of €2.8 million and €36.2 million respectively. When the three airports are apportioned a share of Aer Rianta's interest bill the losses at Cork grow to €2.32 million while Shannon only breaks even.

Dublin is still strongly profitable at €29.5 million.

But an additional €5.7 million in interest costs that are not attributed to any particular airport and a €28.5 million once-off restructuring charge wiped out this profit, resulting in an overall loss for the airport division of €5 million.

In the absence of the restructuring charge there would have been an overall profit of around €20 million, after Dublin subsidised the other two airports to the tune of €8 million. At one level these figures support the argument for maintaining the status quo and not breaking up Aer Rianta as the Minister for Transport, Mr Brennan, has proposed.

It would seem pretty clear that neither Shannon or Cork are capable of sustaining an international airport of the calibre of those currently operated by Aer Rianta without subsidy from Dublin.

Such a situation is justified if you accept that both locations have a right to fully-fledged international airports. This assumption is grounded in the same logic that contends Dublin Airport is a symbol of our national economic virility.

The alternative viewpoint is that the situation is unsustainable and the relationship between the three airports is dysfunctional. Aer Rianta is generating massive revenues through the abuse of its monopoly over parking, shopping and just about everything else at Dublin Airport.

This money - some €23.6 million from parking alone - is used to pay for unnecessary and over expensive facilities at all three airports.

Splitting the three airports would end the current situation whereby Dublin Airport functions as a money-making machine paying for a level of airport services at Cork and Shannon than cannot be justified in economic terms.

It will also require a radical rethink at the other two airports. The general view is that Cork is probably viable, but that a fully fledged international airport at Shannon is not a runner and the airport will have to re-invent itself.

Here again the Aer Rianta figures give some hints about the way it should go. "Own fuel activities" as it is termed at Shannon account for €53.5 million of Shannon's turnover of €120 million.

This was before the current military build up in the Middle East which has seen a huge increase in US military traffic at Shannon.

Its future would appear to lie in offering refuelling and other services to transatlantic traffic.

The effective downgrading of Shannon and Cork will meet resistance at the local level and progress will be difficult until we start to see airports as just another piece of transport infrastructure and not as icons.