Cork Airport Debt

ishmael whale

Let me make it clear I’ve nothing against Cork, even if Cork can hardly say the same about Dublin. Cork is exactly the kind of location that should be getting investment in infrastructure, unlike the daft Western Rail Corridor.

However, I think the airports agenda is interesting and worth following for what it reveals about decision making in relation to regional infrastructure. The original plan was to saddle Dublin with Cork Airport’s debt. Up to this, it didn’t really matter because the fact there was only one entity – Aer Rianta –could hide any subsidy from Dublin operations. Cork doesn’t particularly seem to have been a beneficiary of this historically, and was probably a loser out of the transatlantic stopover policy, but Shannon seems to have developed a bloated payroll in addition to its right to hijack every second transatlantic flight.

I don’t know whether the decision to split the airports into separate authorities was intended to make any cross subsidies explicit, but it has certainly had that effect. The fact that the commitment to leave Cork debt free at Dublin’s expense cannot be maintained also seems to reveal that Dublin is, finally, developing a political weight to match its economic power.

However, it would be unfortunate if Dublin’s political weight leads to bad decisions. On the face of it, giving Cork airport a dig out seems justified on regional development grounds. Shannon’s case is somewhat different – its suffering from bloat that could not be addressed for political reasons, and the stopover policy was so horribly wrong in a national context whatever stomping they get now they've well earned.

At the end of the day, it at least shows that true decentralisation – in the sense of reorganising budgets and decision making on a regional basis – makes subsidies clearer, and comparisons easier.

http://www.irishexaminer.com/pport/web/ireland/Full_Story/did-sgKQk2p4UD9RQsgDQQ5wn3uAIg.asp

09/02/06

Airport faces €80m debt in Government U-turn

By Harry McGee and Eoin English
CORK Airport Authority could be landed with debts of €80 million as the Government prepares to row back on a commitment to leave the new authority debt-free.

The commitment was given by former Transport Minister Seamus Brennan, who said Dublin Airport Authority should bear the cost of building the new terminal at Cork Airport after Aer Rianta was broken up. But when Senator John Minihan raised the issue in the Seanad this week, the Department of Transport indicated that Cork is unlikely to start independent operations debt-free. ……

The minister mentioned the option of a finance lease covering a portion of Cork Airport’s assets to allow its establishment as a fully independent airport. The lease would be taken with the Dublin Airport Authority. Arbitrated talks between Cork and Dublin airports designed to reach some form of debt compromise are continuing. Last night Deputy John Dennehy (FF) said an outcome is expected in four weeks.

“Any details on how that will be handled is pure guesswork and idle speculation at this stage,” he said. “I will continue to argue the case for Cork.”

Colleague Noel O’Flynn said it appears Cork will have to find a way to service a certain level of debt to operate independently.

Chris_533976

Hmmm.

This is basicially whats happened.

Government: "We'll let Dublin pay for Corks new airport"

Government: "Now that its almost built, we'll make Cork pay for it after all"

Government: "By the way, you can pay for it under our terms. You cant have flights to America to make money, they go to Shannon, who have lots of money"


FFS taxes at Cork Airport are crazy anyway. They'll skyrocket now

ishmael whale

Chris_533976 wrote:

"Now that its almost built, we'll make Cork pay for it after all"

Sorry to be a pedant, but what’s proposed is that Cork Airport should carry half the cost, not the full cost. However, I can agree that traditionally Shannon has profited the expense of the rest of the country, including Cork and including times when the country really needed more business. Going forward, there needs to be a concentration of resources on a few regional centres if we're serious about regional development. A debt free Cork Airport would be consistent with such an approach, assuming it can be achieved without hamstringing Dublin.

http://www.rte.ie/business/2006/0209/presswatch.html
Today in the press
February 09, 2006 09:37

Cork airport may have to share debt - Concern was growing last night that the Cork Airport Authority will have to carry approximately half the cost of the new €160m terminal despite a pledge by the Government in 2003 that the authority would not be saddled with the debt, reports the Irish Times. Minister for Transport Martin Cullen has proposed the idea that the debt would be shared equally between Cork and Dublin Airport Authorities, leaving CAA with €80m debt, according to sources. Mr Cullen's predecessor, Seamus Brennan, pledged in July 2003 that all contractual arrangements involving Aer Rianta would be transferred to the Dublin Airport Authority when the three airports were split up and made independent entities.

invincibleirish

it is ridiculous that Cork airport will be saddled with 1/2 the debt of the airport after being promised otherwise, but maybe in return the Cork Airport Authority can put the foot down and demand that 4 Airbridges be put in place instead of one, and maybe even demand a far better airport bus service!!

Aidan1

I don’t know whether the decision to split the airports into separate authorities was intended to make any cross subsidies explicit

It was. The Shannon lobby is still quite strong, this was an implicit attempt to undercut many of the arguments used by making clear the degree of the cross subsidy going to Shannon from both Dublin and Cork. The fact that SNN are in the process of major 'cost reductions' should tell you just how successful that particular lobby group were at rent seeking and padding out staff numbers.

gobdaw

invincibleirish wrote:

it is ridiculous that Cork airport will be saddled with 1/2 the debt of the airport after being promised otherwise

But what I cann't see, is why Dublin Airport should be saddled with ANY of the debt for Cork Airport!

"We'll rob their jobs and call it decentralisation. We'll rob the price of improving other locations but we wont use taxation."

Why are people cynical about politicians?

MorningStar

Chris_533976 wrote:

Hmmm.

This is basicially whats happened.

Government: "We'll let Dublin pay for Corks new airport"

Government: "Now that its almost built, we'll make Cork pay for it after all"

Government: "By the way, you can pay for it under our terms. You cant have flights to America to make money, they go to Shannon, who have lots of money"


FFS taxes at Cork Airport are crazy anyway. They'll skyrocket now

Actually Dublin paid for Shannon too and the Great Southern Hotels. The only place being screwed here is Dublin no matter what way you look at it. So much for the real capital that can't even sort out an airport. Bear in mind the government is local first

SeanW

Hmmm ... it looks like Cork Airport is in serious trouble then ...

A man named Michael Grimes is currently having a lot of fun with Cork Airport's management.

Victor

MorningStar wrote:

Actually Dublin paid for Shannon too and the Great Southern Hotels. The only place being screwed here is Dublin no matter what way you look at it. So much for the real capital that can't even sort out an airport. Bear in mind the government is local first

Realise there is more to the company than just the airports and the hotels.

Lennoxschips

I think it's unfair that the terms are being changed. If Cork had known that they would have had to saddle the debt, then they could have built a much cheaper terminal building. As it is they were told they wouldn't have to pay the debt, so they went all out.

Perhaps Aer Rianta should be reformed.

Victor

Lennoxschips wrote:

As it is they were told they wouldn't have to pay the debt, so they went all out.

Actually, its DAA (formerly AR) went all out.

ishmael whale

Lennoxschips wrote:

If Cork had known that they would have had to saddle the debt, then they could have built a much cheaper terminal building. As it is they were told they wouldn't have to pay the debt, so they went all out.

As is hopefully clear from my contributions above, I think Cork's case deserves a hearing. But suggesting, as you do, that they went wild because they thought someone else was paying is not (to me) an argument that evokes much sympathy.

Aidan1

The design for the new terminal was fixed long before the separation of the DAA and CAA was agreed. There can be no direct linkage drawn between Cork 'finding out' that they were not goign to have to carry the debt and 'going mad' on the new terminal. If anything, the decision to reduce to number of airbridges shows that DAA still has/have some control over the budget.

ishmael whale

Some more coverage for those interested in following this. In terms of how these things work out, something has to be said about the way that Shannon manages to sneak away leaving Cork banging on Dublin’s door for a large lump of money. And all the time in the background the Government lobbies the US to keep the ludicrous stopover in operation for as long as it can.

http://www.irishexaminer.com/pport/web/ireland/Full_Story/did-sg8mdLkmXnMUIsg0aewFBADppk.asp
….. Its new €160 million terminal, which is at the centre of the controversy, will open on May 10, airport management confirmed over the weekend. But with a cloud of doubt still hanging over who will pay for the building, the city's Lord Mayor, Deirdre Clune (FG), will host a crunch meeting in City Hall this morning of the city's 12 Oireachtas members. She hopes to build a joint political effort to ensure the airport gets what was promised by the Government in 2003 debt-free status once it begins independent operations.

When announcing plans for the break-up of Aer Rianta, then Transport Minister Seamus Brennan pledged that both Shannon and Cork would start independent operations debt-free. However, the Dublin Airport Authority (DAA) has been at loggerheads with the Cork Airport Authority (CAA) since over who should bear the costs of Cork's €160m terminal. Statements by Junior Minister Tony Kileen in the Seanad last week suggested Cork would have to bear some debt to comply with company law. Some reports suggest the debt burden could be up to €80m.

http://www.examiner.ie/pport/web/opinion/Full_Story/did-sgrng9gKQV2FQsg0aewFBADppk.asp
13/02/06
Airport lost in fog of gobbledegook
THERE is speculation that the Cork Airport Authority will have to absorb half the cost of the new terminal building there. This sum could be up to €80m. At last, Cork's Fianna Fáil TDs are getting stirred up. Junior Minister Tony Killeen was dispatched to the Seanad to field questions from the Cork contingent. His replies included the following: "Dublin airport authority will only be able to make the transfers when it has available sufficient distributable reserves to match the value of the assets being transferred."

What kind of gobbledegook is this? Myles na gCopaleen would break out in a paroxysm of coughing if he had to read that old guff. Two things must happen. Firstly, the Cork airport authority needs to be far more robust in its dealings with the Dublin airport authority. Look at how the clever people at Shannon have been good at being 'bolshie' for decades so much so that even ministers like Mary O'Rourke were only putty in the hands of the mid-west airport support groups who successfully defended the status quo on the stopover.

Shannon has also enjoyed a major competitive advantage over Cork for decades in terms of a superb airport infrastructure that includes air bridges, a long runway, etc. In these circumstances, Cork has been unfairly disadvantaged, especially in relation to flights to New York.

Secondly, Cork people must consider the airport issue carefully now. Even with half the debt, the airport will be going nowhere fast over the next 10 years because of the huge repayments. Business will be lost because there will be few, if any, flights to new destinations and even holding on to current traffic will be a struggle.

Cork airport had a bumper year in 2005, but if Cork's politicians, especially the Fianna Fáil members of Oireachtas, let Cork down on this crucial issue, it will be to their great shame. It really is time for blood and honour for the sake of Cork airport. Our airport.

Thomas Whelan
61 Father Matthew Road
Turners Cross
Cork.

http://www.examiner.ie/pport/web/opinion/Full_Story/did-sgiUcabWS26Mcsg0aewFBADppk.asp
13/02/06
Debt u-turn could cripple air authority
When the Government announced the break up of Aer Rianta in 2003, then Transport Minister Seamus Brennan promised the airport authorities in Shannon and Cork would start independent operations debt-free. But now it seems the Government is reneging on the promise and trying to saddle Cork Airport Authority with half the debt for its new €160 million terminal.

The terminal has been badly needed for years and on the basis of the Government’s promise it was constructed. It is due to open on May 10. If the Cork Airport Authority has to pay €80m for the terminal, it will mean raising landing charges and passenger fees, as well as car parking charges.
It was always going to be difficult for the airport to function in a commercially viable way, but this unforeseen debt could prove crippling. ….

ishmael whale

As the story develops, one clear feature is the way that local public representatives in Cork from all parties are quick to row in on CAA’s side. On the other hand, Dublin’s public representatives are silent. This means there is no public advocacy of the reality that Dublin Airport is getting stuffed with a debt incurred to build new terminals in Shannon and Cork while its own is grossly overcrowded.

My own feeling at this stage is a subsidy to Cork and Shannon is either justified, in which case they should get it from central government, or not justified, in which case there’s no reason for Dublin Airport to get stuffed with it. As we know, Dublin is the main net contributor to tax revenues, so even if a grant is given out of State funds, Dublin will still have made a substantial contribution to Cork Airport's development.

http://www.examiner.ie/pport/web/ireland/Full_Story/did-sgZbC9Q-AyK-w.asp
24/02/06
Airport talks broker asked to withdraw
By Eoin English
THE company brokering talks on the €160 million debt impasse between Cork and Dublin airports has been asked to withdraw from negotiations because of a conflict of interest. Labour and the Green Party called on business and financial consultants BDO Simpson Xavier to excuse itself from the talks after it emerged the firm had a previous commercial relationship with the Dublin Airport Authority (DAA). However, last night, the company strongly defended its position.

BDO Simpson Xavier was engaged by the DAA to facilitate the drawing up of business plans for Dublin, Cork and Shannon airports after the break-up of Aer Rianta. The firm is also advising the DAA on the sale of the Great Southern Hotels chain. But the DAA and Cork Airport Authority (CAA) are locked in a bitter dispute over who carries the €160m cost of Cork's new passenger terminal.

Labour TD for Cork North Central Kathleen Lynch said the revelations about BDO Simpson Xavier's previous role with the DAA could be seen as a conflict of interest.
"We should have had a neutral body to do the mediation, somebody who has no interest in the outcome one way or the other," she said.

Green Party TD Dan Boyle said the firm was compromised by the revelations. "How can we have faith that this is an impartial process when the supposed honest broker has previously had a commercial relationship with the body whose actions it is now adjudicating?" he said. Both Ms Lynch and Mr Boyle tried to raise the issue in the Dáil yesterday but were ruled out of order.

A spokesman for BDO Simpson Xavier said no conflict exists. He said the firm deals with all its clients with the utmost integrity and treats all with the strictest of confidentiality.

The firm would not have taken on these talks if there was a chance of a conflict of interests, he said. A recommendation is expected before Easter.

http://breakingnews.iol.ie/news/story.asp?j=173616696&p=y736y74xz
Govt accused of jeopardising future of Cork Airport
22/02/2006 - 13:50:14

A Fianna Fáil backbencher has accused the Government of jeopardising the future of Cork Airport by failing to resolve an impasse over the airport's debts.

Local TD Billy Kelleher said the Government promised when it broke up Aer Rianta that Dublin Airport would absorb all debts held by Cork and Shannon, including the cost of the new €160m terminal at Cork that is due to open this May…..

ishmael whale

I know the only people really interested in this topic are me and that guy over there who collects backissues of Metro, but has anybody any idea to what the reference to Fianna Fail TDs being divided refers to. I’ve only seen public statements by Cork based representatives. Have other TDs intervened on the DAA side and, if so, has this been reported anywhere.

http://www.sbpost.ie/post/pages/p/story.aspx-qqqid=12165-qqqx=1.asp
Martin warns against Cork Airport debt becoming a ‘political football’

26 February 2006 By Niamh Connolly
Cork minister Micheal Martin warned that the city airport’s €160 million debt was becoming a ‘‘political football’’.

There have been concerns that Cork Airport Authority (CAA) will have to pay half the cost of a new airport terminal, despite a government pledge in 2003 that the airport would be debt free.

Martin said BDO Simpson Xavier, which is acting as a mediator between Dublin and Cork airports over the debt dispute, should be allowed breathing space to deal with the row.

He told The Sunday Business Post that he had made clear to Minister for Transport Martin Cullen his reservations about the ‘‘edicts’’ from the Dublin Airport Authority (DAA) over the debt.

DAA chief executive Gary McGann said in a letter to the CAA before Christmas that it should bear responsibility for the debt.

‘‘My bottom line will be to ensure that whatever happens [this] is not responsible for increasing Cork Airport charges,” said Martin. ‘‘I would not agree with anything that undermines the viability of the airport going forward.”

However, Martin will await the outcome of BDO’s review before making a final judgment on which airport authority should pay for the debt.

The row over the airport’s debt has escalated with Fianna Fail TDs divided over a pledge from former transport minister Seamus Brennan that the CAA would start out debt-free.

MG

For me this comes down to three issues:

1. Has proper investment been made in Cork Airport over the years. For me the answer is no and this is therefore this is merely a timing issue. Had investment been made years ago there would be no debt to argue about.
2. Was Cork developed properly under the old AR structure. Again the answer is no, Dublin based executives empire built in Dublin and Shannon received a political helping hand but Cork was never developed as a business.
3. What is best for the consumer? For me, it is to allow the airports compete for business. Cork needs to catch up in terms of developing its business and infrastructure so that it can compete on a level playing field after years of being paid lip service. The price of this may be to start debt free. The DAA seems to be trying to stifle its competition before it………….. gets off the ground

parsi

invincibleirish wrote:

it is ridiculous that Cork airport will be saddled with 1/2 the debt of the airport after being promised otherwise, but maybe in return the Cork Airport Authority can put the foot down and demand that 4 Airbridges be put in place instead of one, and maybe even demand a far better airport bus service!!

I flew out last week and I'm fairly sure that there was more than one airbridge there (in fact I was surprised..)

ishmael whale

MG wrote:

The DAA seems to be trying to stifle its competition before it………….. gets off the ground

I'm pretending you're a Unionist, so that I start by concentrating on the points that we can agree on.

I think its fair to say that Cork, like all the cities, has only recently started to see the kind of investment it needs and is justified. State investment in airports, like state infrastructural investment in general, has followed the approach of scattering investment all around following parochial political agendas rather than any concept of what might actually make a contribution to regional development. Hence, the State chucke money at Knock, which does a great job in boosting the economies of Faro and Lourdes, where investment of the same resources in Cork might actually have achieved some benefit.

I know opinion is divided on whether Cork would actually have had a trans-Atlantic service if the Shannon Stopover wasn't there. But I suppose we could agree that the Stopover killed any possibility of a service. Can I suggest the existence of the Stopover suggests your picture of some cosy Dublin-Shannon partnership does not really catch the flavour of history to this point. Shannon has shafted both Cork and Dublin, but chiefly Dublin.

Shannon does seem to have developed a bloated payroll. Unions are strong in Dublin, but the operation seem to be able to turn out enough profit to subsidise the other airports and the hotel chain - so a charge of 'empire building' is hardly borne out by the facts.

Of the three AR airports, Dublin is the one location where the physical facilities are grossly inadequate to deal with current passenger numbers, never mind growth. So lumping Dublin in with Shannon as a location that has profited at Cork's expense is hardly credible. Cork's problem is with Shannon, Knock and elsewhere. Dublin Airport, like Dublin in general, has only received infrastructural investment long after its needed and, in the airport's case, after it has paid for everyone else's infrastructure.

Which brings us back towards the kind of thoughts that first interested me in this issue. Cork and Dublin are squabbling as a result of a policy that favour Shannon ahead of both of them. The presentation of the issue is of Cork needing to defend itself from nefarious Dublin. And there's complete silence from Dublin public representatives, so it looks like the decision as to how much of the debt Dublin will have to carry will be decided on the basis of how much can be left on Dublin's balance sheet without making the DAA insolvent. Consideration of the need to invest in Dublin Airport features nowhere in this agenda.

As an example of how these things go, I think its got all the elements.

Aidan1

The presentation of the issue is of Cork needing to defend itself from nefarious Dublin

Thats the key phrase. Presentation. The issue is being constructed by public representatives in Cork as a straightforward 'defence' of one from another. There is or has been no consideration of the broader policy issues. Its the same language as the Shannon activists tend to use.

Ultimately, its a function of the usual parish pumpology, complete with Olsonian pacts and 'free riding'.

The lack of public response from Dublin representatives is representative of this also. To constructively engage in the issues would mean that they would look like they were equivocating on the subject. Or 'giving in'. And to publicly attack the debt transfer is too complex, to the political mind, to be of any real worth in terms of votes in Dublin.

ishmael whale

For those who like jam on it. Sorry, the top is off the Typex bottle again. For anyone interested in following the Cork Airport story.

The subtext seems clear. Everyone expects the consultants report to tell us what we already know - that hanging Dublin with the debt screws it completely and hanging Cork with it screws them. Hence all the stuff about this being a 'political' commitment as in 'the Minister gave a clear political undertaking that the law of gravity would be amended so that fat people weigh less. Now he's trying to weasle out of this agreement by commissioning a report from the Chief Engineer of the Starship Enterprise to see if its possible to change the laws of physics, a topic on which Mr Scott's opinions are well known.' Which, presumably, is pretty much what's happening. However, clearly the story will be dragged out for a little longer until such time as BDO Simpson Xavier issue their report.

http://www.irishexaminer.com/pport/web/ireland/Full_Story/did-sgvz9Ks2IfMrUsglO-LCk0lQvU.asp
07/03/06
Meeting with Cullen on airport debt ‘unlikely’
By Eoin English
HOPES faded last night that Cork’s political representatives would obtain an urgent meeting with Transport Minister Martin Cullen to discuss the potentially crippling €80 million debt facing the city’s airport.

Enterprise Minister Micheál Martin said such a meeting is unlikely to take place before the conclusion of a mediation process between the Cork and Dublin airport authorities. “That process is now under way,” he said. He also defended former Transport Minister Seamus Brennan who, during the announcement of the break-up of Aer Rianta in 2003, said Cork and Shannon airports would start independent operations debt free. “Seamus had a very clear vision,” Mr Martin said. “But the practical working-out of that process still needs to be done.”

Mr Martin was tasked with arranging a meeting between the current Transport Minister, Mr Cullen, and a cross-party delegation of Cork politicians following a meeting on February 13, which was called by Lord Mayor Deirdre Clune (FG), to deal with the airport debt issue. But last night, Mr Martin said the timing of any meeting with Mr Cullen was for him to decide. He said it was unlikely to happen before the talks between the two authorities are complete. “Ultimately this will be a political decision,” he said.

But Fine Gael’s Bernard Allen called on Government ministers to stop hiding behind consultants. “This is a smokescreen. They must come out from behind the shield of consultants,” he said. “It was a political promise that Cork Airport would start independent operations debt free and it requires political action.”

BDO Simpson Xavier were appointed to broker the talks between the two airport authorities. That appointment itself sparked controversy in Cork given the firm’s previous business relationship with the Dublin Airport Authority (DAA). Despite the controversy, they are expected to issue a report on who should carry the 160m cost of Cork Airport’s new terminal before Easter.

There are fears that the Cork Airport Authority (CAA) may have to carry half the cost of its new terminal, due to open on May 12. The CAA is considering massive hikes in its landing and passenger charges to help it service any future debt levels. Ryanair has threatened to axe some of its nine routes out of Cork if charges go up.

http://www.rte.ie/business/2006/0307/ntr2.html
…Minister Cullen also told the Dail there were not enough assets to allow Dublin Airport to fund its new terminal project and pay off the debts at Cork Airport. Mr Cullen told deputies that he was not going to impose artificial deadlines on the process of the three state airports preparing their business plans to allow them compete with each other in the market.

He was responding to questions from opposition TDs, including Fine Gael's Olivia Mitchell, who asked why assets from the sale of Great Southern Hotels could not be diverted to Cork Airport.

MG

Further evidence, if it were needed, that it would be anti-competitive and anti-consumer for Cork to carry the debt.

From RTE:

Ryanair reduces Cork-Liverpool service

March 08, 2006 11:28
Ryanair is reducing its services from Cork Airport. The airline is cutting the Liverpool-Cork route from seven a week to four a week.

Ryanair says this cut is due to Cork Airport Authority increasing costs at the airport. It says that 38 cost rises for various services at the airport have been introduced. It says these increases are a direct result of the debt which the airport has inherited from its new terminal.

However, Ryanair said that it will start a new three times a week service from Liverpool to Kerry.

Ryanair says the cost of building the new Cork terminal makes the airport 'massively uncompetitive' against its peer airports throughout Europe.

ishmael whale

MG wrote:

Further evidence, if it were needed, that it would be anti-competitive and anti-consumer for Cork to carry the debt.

I’m agree with your essential sentiment, but I think your choice of words does not express the full reality.

As Ryanair point out, the implication is that Cork will be uncompetitive compared to other airports of its size elsewhere in Europe. Put another way, they are essentially saying such a costly terminal should never have been built. (Which means you can guess what their attitude would be to the argument over air bridges.)

They are happy to move to Kerry, and as we know that’s fine for Ryanair ala ‘Frankfurt Hahn’. However, meaningful regional development would probably be better supported by this business staying in Cork where it would yield benefits of scale.

On the other hand, as the article below from the Irish Examiner illustrates, Dublin Airport is a national resource. Crippling it to pay for Cork’s terminal is hardly a solution, as that just perpetuates the impoverishment of the country for the sake of one region that we had with the Shannon stopover. There’s no easy solution to this, but I think the economic priorities are clear enough. How the political system handles them is another matter.

http://www.examiner.ie/pport/web/business/Full_Story/did-sgen6yOhthfQksglO-LCk0lQvU.asp

07/03/06

Dublin airport expansion ‘vital for tourism’

By Louise Hogan
THE planned expansion of Dublin Airport must be urgently completed as it is a vital link in the future growth of the tourism industry, it was warned yesterday. Richard Bourke, president of the Irish Hotels Federation (IHF), said industry would be stunted unless the construction of an extra pier at the terminal was completed on schedule.

“Delays in the delivery of crucial infrastructural projects have long impacted on the spread of tourism across the country. We have waited 20 years to reach this stage and the Dublin Airport Authority’s (DAA) awarding of the contracts is most welcome,” he said. At the IHF’s 68th annual conference in Dublin, he claimed: “The lack of capacity is already undermining UK passenger numbers through the airport. Whilst this impact is currently slight, if the new capacity is not made available swiftly, this could eventually be a huge issue for our most important overseas market.”

He said any delays in the airport’s expansion plans would negate the long-term impact on visitor numbers which could be expected as a result of events such as the Ryder Cup.

“High-profile events like the Ryder Cup are hugely beneficial and unique to showcase Ireland internationally both as a business and leisure destination and to increasing our visitor numbers. However, the sad truth is that the lack of capacity at Dublin Airport means that we cannot accrue the full benefits that could be expected.”

The IHF warned Pier D must be completed by the end of 2007 at the latest, with the second terminal finished by 2009. Mr Bourke claimed underlying capacity issues were highlighted by figures from the DAA indicating a decline in the number of passengers travelling to and from Britain.

“It is worrying upon analysis to see that there has been a 1% decline in numbers to and from the UK attributed partly to capacity reasons,” Mr Bourke said. “It reduces the impact of marketing efforts if airport capacity results in visitors’ first and final engagement on our island being less than positive.” ….

The original Ryanair press release is here:

http://www.ryanair.com/site/EN/news.php?yr=06&month=mar&story=gen-en-080306

08.03.06

RYANAIR ANNOUNCES REDUCTION IN ITS SERVICES TO CORK
NEW ROUTE FROM KERRY TO LIVERPOOL

Ryanair, Europe's leading low fares airline, today (Wednesday, 8th March 2006) announced a reduction in its services to Cork Airport following recent cost increases there. Cork Airport Authority recently announced a range of cost increases (38 in total) for various services at the airport including a 300% increase in the rental charge of check-in and ticket desks. These increases will push up Ryanair's costs at the airport by over EUR30,000 per annum. The increases, which are a direct result of the debt, which Cork Airport has inherited as a result of its new, Taj Mahal-like, terminal now makes Cork Airport massively uncompetitive against its peer airports throughout Europe and has made other destinations for Ryanair much more attractive. The Liverpool to Cork route will reduce from 7 flights per week to 4 per week.

On the good news front Ryanair also announced that it will be starting a new three times weekly service from Liverpool to Kerry as a much cheaper alternative to Cork. Announcing the reduction in services in Cork today, Ryanair's Deputy Chief Executive, Michael Cawley, said

"Cork Airport is in danger of pricing itself out of the market with these outrageous price increases. Cork Airport has to realise that it is in competition with hundreds of other airports throughout Europe for passengers whose only concern is to get low fares. The Cork Airport Authority has spent EUR180M on a terminal for 3 million passengers. Both Frankfurt Hahn and Düsseldorf Weeze built the same capacity for EUR13M and EUR15M respectively. If, by forcing the airport to assume the debt burden arising from this expenditure, the Government insists that Cork Airport is to charge a premium for its services then it will lose out on the hundreds of thousands of passengers which Ryanair and other airlines have brought to the region. For the sake of a cost increase of EUR30,000 the region is going to lose 20,000 incoming tourists and business visitors, the income from which runs to approximately EUR8 million. This is an idiotic way to run an airport and is a direct result of the Government's transport policies of overspending and making its regional airports uncompetitive by building lavish and expensive facilities which passengers and visiting tourists are not prepared to pay for.

"Consequently, Ryanair is reducing its services on the Liverpool route to reflect the reduction in demand which we expect will ensue from this cost increase.

"The good news is that we are able to salvage the tourists with the help of Kerry Airport. We are delighted that we will now be moving these passengers to Kerry Airport who have offered us an extremely competitive cost base, much more reflective of what is available in Continental Europe and we are delighted that, while passengers may not be passing through Cork Airport, they will still be coming to the region, served through a much more efficient and low cost airport".

Chris_533976

The Cork Airport Authority has spent EUR180M on a terminal for 3 million passengers. Both Frankfurt Hahn and Düsseldorf Weeze built the same capacity for EUR13M and EUR15M respectively.

Says a lot about this country that does.

ishmael whale

Indeed it does, but just in case there's a misunderstanding, bear in mind that what Ryanair mean is that all you need is a basic terminal like Hahn to move passengers in and out of.

I'm not saying they're necessarily wrong, but bear in mind that, for example, there was an amount of contoversy over the lack of air bridges in the new Cork terminal. Ryanair would see air bridges as inessential extravagance. Others see them as essential if Cork is to attract transatlantic business.

So its not that the cost of the Cork Airport terminal is necessarily excessive for what was built (and I really don't know whether is it or not). The Ryanair point would be they should have built a much less elaborate terminal with a view to bringing in lots of passengers on low fares airlines.

http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1535821&issue_id=13495

CORK Airport's €150m new terminal will be fully operational by next May - six months later than planned and with a bitter row over air-bridges still unresolved.
.........
But Cork faces a bitter row over the number of air-bridges at its new terminal. The airport currently has just a single air-bridge deemed for operations in the new terminal - with Ryanair's Michael O'Leary slating the facility and vowing that his airline will not use air-bridges at Cork.

However, Cork politicians have expressed outrage at the revelation - and warned that it is absolutely absurd for passengers to have to endure rain, wind and even snow while boarding their plane. One Cork TD, Kathleen Lynch (Lab), said it represented an unacceptable treatment of the elderly and disabled.

The high-tech terminal - aimed at relieving chronic overcrowding at the booming airport - was originally proposed with four air-bridges but this was reduced, on cost grounds, to just two. But now it has emerged that Cork will have just a single air-bridge when the terminal opens in 2006.

invincibleirish

it is a farcical situation that has taken place. but my own solution would be that the imminent sale of the great southern group should fund the cork airport debt. the group was transferred to the DAA but surely the profits from that alone will not only cover that but help pay for some of the dublin airport expansion.

parsi

Is it perhaps possible that Ryanair are cancelling the flights because no-one wanted them ?

Their London flights would have similar costs structures but are very well laden but perhaps Liverpool just isn't a place anyone wants to go to but their commercial failure has to be tarted up as someone elses fault.

It is a valid point that Ryanairs ideal terminal would have tarmac, lights and a wheelbarrow with a red bucket of water for the fire service if they thought they could. Unfortunately in the absence of this they have to use (in Ireland) the ordinary airport which also serves airlines whose passengers wouldn't mind an auld bit of comfort - covered area while waiting, warmth, toilets etc.

One solution would be for the Government to let them build a new airport Cork-Kanturk and they coluld kit it out whatever way they want.

ishmael whale

parsi wrote:

Is it perhaps possible that Ryanair are cancelling the flights because no-one wanted them ?

You could well be right – I suppose the proof of the pudding will be how well the Kerry service works out for them.

invincibleirish wrote:

..... my own solution would be that the imminent sale of the great southern group should fund the cork airport debt. the group was transferred to the DAA but surely the profits from that alone will not only cover that but help pay for some of the dublin airport expansion.

Unfortunately, that money already seems to have plenty of claimants. So the same essential point emerges – if you take the GSH money to clear the Cork debt you leave Dublin financially strapped at a time when it needs substantial investment.

http://www.timesonline.co.uk/article/0,,2095-2046950_1,00.html

…… BDO Simpson Xavier has been appointed to find a buyer for the nine-hotel GSH as “a going concern”, a condition that is bound to depress the price achievable for the chain. GSH currently has a balance sheet value of €100m, but while the hotels should fetch more on the open market, the group could struggle to make more than €150m.

How the DAA uses the proceeds of the GSH sale could be determined by the flotation of Aer Lingus, one of its main customers. The airline is slotted for its stock market debut in June. On flotation, Aer Lingus is expected to raise €200m to shore up an actuarial deficit in its pension fund. Currently the Aer Lingus workers are part of the same pension fund as former Aer Rianta workers in the Dublin, Shannon and Cork Airport Authority companies.

The pension fund is expected to split before Aer Lingus floats. However, if Aer Lingus contributes €200m to its pension fund, DAA will be expected to stump up to €100m to shore up its fund. Such a proposal is unlikely to be greeted warmly at the DAA. There is a suspicion that the smooth change of heart over GSH could be accompanied by a suggestion from the government that part of the proceeds from the hotel group sale be used to wipe out the airport workers’ pension deficit.

DAA has other designs on the proceeds of the sale of GSH, principally to boost its reserves. The airport company has already stated that the increase in landing charges, sanctioned by the airports regulator last year, will not be sufficient to fund the development of the new terminal at Dublin. Ultimately, the construction of the new terminal at Dublin may be funded through the sales of DAA stakes in Birmingham and Dusseldorf airports.

MG

ishmael whale wrote:

Put another way, they are essentially saying such a costly terminal should never have been built. (Which means you can guess what their attitude would be to the argument over air bridges.)

Just to be clear, Michael Cawley, deputy chief executive of Ryanair, is quoted in the Times today as saying " I think Cork airport are the victims here. The prices are a symptom of the problem and the problem is the debt."

ishmael whale wrote:

On the other hand, as the article below from the Irish Examiner illustrates, Dublin Airport is a national resource. Crippling it to pay for Cork’s terminal is hardly a solution, as that just perpetuates the impoverishment of the country for the sake of one region that we had with the Shannon stopover. There’s no easy solution to this, but I think the economic priorities are clear enough.

Unfortunately, there is no point in crippling Cork airport, a national resource, either. The difference is that it would be a hindrance for Dublin, it would kill Cork (I believe Dublin plans to spend 1.2 bn or so on itself). Cawleys suggestions was to sell off GSH, Dusseldorf and Birmingham.

ishmael whale

MG wrote:

Just to be clear, Michael Cawley, deputy chief executive of Ryanair, is quoted in the Times today as saying " I think Cork airport are the victims here. The prices are a symptom of the problem and the problem is the debt."

Indeed, but I’m not sure that you are clear on the point that Ryanair are happy to operate out of small, basic airports as their focus is simply on keeping the fare down. Cawley's point is really that no more than €15 million should have been spent on a Cork terminal. They derisively refer to Cork’s terminal as a ‘Taj Mahal’.

I’ve posted the full Ryanair press statement above, where you will clearly see them saying ‘This is an idiotic way to run an airport and is a direct result of the Government's transport policies of overspending and making its regional airports uncompetitive by building lavish and expensive facilities which passengers and visiting tourists are not prepared to pay for.’

Now, on the other side of the coin, many Cork people have an interest in seeing a direct trans Atlantic service going, which up to this has been a complete non-starter because of the Shannon stopover. This is where the ‘air bridge’ issue starts coming into play. If your ambition is to have trans Atlantic services, you’ll want a decent terminal. If you’re Ryanair and you just pile the seats high and sell them cheap and have no interest in trans Atlantic services, you just build a big barn for half nothing.

MG wrote:

Unfortunately, there is no point in crippling Cork airport, a national resource, either.

I agree that its important that Cork is given a solid basis for development. But its also important to acknowledge that Cork Airport is a regional resource, and not a national resource like Dublin Airport.

Putting figures on it, the approach the York Aviation consultancy take to assessing the economic impact of an airport is to divide them into these categories:

1. International hub airports such as London Heathrow with about 50 or 60 million passenger movements a year. They serve more passengers per year than our national total, so this concept does not apply to us.

2. International airports with about 15 or 20 million passengers per year. According to York when assessing the economic benefits of these airports “The primary focus should be on the regional impact of these airports, although national and sub-regional/local effects may also be examined.” Dublin would fit into this group, and you can take it that ‘region’ in this context means Ireland.

3. Regional airports with of the order of 7.5 million passenger movements. No Irish Airport fits into this category.

4. Local airports carrying maybe 3m to 1.5m passengers a year. Cork and Shannon would fit into this category. York do not expect any macro level benefits – “The focus should be on the sub-regional/local impacts of these airports.”

(Related URL: http://www.yorkaviation.co.uk/docs/rpt-acistudykit.doc)

By the by, Knock would not register on this scale which figures, seeing as how it thinks its doing brilliant because its getting more passengers than ever before but there’s no apparent downstream benefits for the Western region.

Yes, we need to have regional development. But that’s not an excuse for denying reality or for pretending that things are other than they are. If Cork Airport is screwed, that brings costs to the Southern region. If Dublin Airport is screwed, that brings costs to the Southern region and the entire country.

MG wrote:

The difference is that it would be a hindrance for Dublin, it would kill Cork (I believe Dublin plans to spend 1.2 bn or so on itself). Cawleys suggestions was to sell off GSH, Dusseldorf and Birmingham.

I don’t doubt the process will end with the sale of every ancilliary DAA asset, but as we can see there are many demands queuing up for a share of them. But I wouldn’t be airy about the DAA wanting to spend €1.2 billion on itself, as if it was Zsa Zsa Gabor going nuts in Tiffany’s.

What we’re talking about is national air access, although in fairness that has traditionally been sacrificed in favour of protecting a few jobs in Clare. It is acknowledged that lumbering Dublin with the debt creates a real national problem, that the available assets do not solve the problem, and that heavy investment in Dublin is long overdue.

http://www.rte.ie/business/2006/0309/presswatch.html
Dublin airport too weak to pay Cork's debt - The Minister for Transport Martin Cullen has admitted that Dublin airport is not financially strong enough to absorb the debts of Cork airport, writes the Irish Independent. Politicians and business leaders in Cork are anxious that Cork becomes debt-free over the next few months. However, in parliamentary replies this week to Fine Gael transport spokeswoman Olivia Mitchell TD, this appeared to be ruled out by Mr Cullen. Under the 2004 State Airports Act, the three airports are to become autonomous bodies.

When the Bill was introduced, the then minister for transport Séamus Brennan said he hoped Cork airport would be debt-free under the new structure. But rising debts at Dublin airport, caps on passenger charges and losses associated with the Great Southern Hotel group have weakened the balance sheet of the Dublin Airport Authority (DAA). The DAA is also committed to spending over €1.3 billion on airport infrastructure. This week Mr Cullen said: 'We both know the assets available to the Dublin Airport Authority are not sufficient to leave all these elements debt-free.'

jackofalltrades

It is a valid point that Ryanairs ideal terminal would have tarmac, lights and a wheelbarrow with a red bucket of water for the fire service if they thought they could. Unfortunately in the absence of this they have to use (in Ireland) the ordinary airport which also serves airlines whose passengers wouldn't mind an auld bit of comfort - covered area while waiting, warmth, toilets etc.

I've been in a few "Ryanair Airports" and they always seemed on par with larger airports less the hundreds of shops that is.

The CAA seem to have written themselves a blank cheque, at Dublin airports expense and built a completly unnecessary terminal on the back of a political promise. They should have built a new terminal to cater purely for low-cost operations, which would make up the vast majority of its business rather that having far flung ideas of appealing to transatlantic business.

Dublin Airports already saddled with the debt of one white elephant it shouldn't have to deal another. The DAA should only have to accept about €15 million (what the terminal should have cost) of the debt, it should be up to the CAA and the cork area to sort out the rest.

And the clowns that decided on a €180 million terminal should be given the sack.

MG

The main objective in a monopoly break-up is not the “fair” division of assets but rather ensuring a competitive environment. The consumer should come first, not special interest groups.

The propaganda war has already started. Yesterdays claim that it is a national problem for Dublin to take on the debt is to be expected as it is not unusual in monopoly break-ups to claim the sky will fall in, that it heralds the return of fascism, that people will starve or other such exaggerated claims. There are no arguments to accompany this claim. It’s just a good sound bite and plays well with the casual tribal observer but will be seen as unfounded scaremongering by any reasonable, interested individual. Neither would they confuse “national resource” with the terms “international airport” and “regional airport” be accepted. Alas, it’s politics now and not reason and unfortunately national air access might be compromised to protect a few jobs in north County Dublin.

It’s clear that the main problem for Cork is the debt – Rynair would be perfectly happy to fly from there if the landing charges were not hamstrung by the debt (the DAA plan to spend 1.3 bn on themselves).

The main problem for Dublin is not the debt but the additional competition so it makes sense for the DAA to try to ensure the competition is as uncompetitive as possible.

Hopefully the consumer will win out and spin, the politics of job protectionism and anti-competitive practices will not prevail.

ishmael whale

The consumer should come first, not special interest groups.

This pure bluster, as its clear you are engaged in special pleading for the CAA. The remark you make to the effect that ‘It’s just a good sound bite and plays well with the casual tribal observer’ is more correctly applied to your post. However, I agree that your contribution ‘will be seen as unfounded scaremongering by any reasonable, interested individual.’ One key difference between my posts and yours is I have substantiated what I am saying.

Yesterdays claim that it is a national problem for Dublin to take on the debt … no arguments to accompany this claim.

It is backed here by a relevant quote from the IHF reported in the Irish Examiner. It is also simply a fact that Dublin airport fits into a different category to Shannon and Cork, and I have substantiated this with a relevant reference even though it is intuitively clear. Its not a case of ensuring competition, because Cork doesn’t compete with Dublin. Cork needs to compete with other European locations of its size, and that consideration seems utterly missing from your thinking. It’s as if you’re lost in the Shannon stopover mindset that the solution to regional development is to hamstring Dublin rather than looking outwards.

unfortunately national air access might be compromised to protect a few jobs in north County Dublin.

I think at this stage its clear you can see the validity of what I’m saying, and you are reduced to repeating my lines back to me even though this description of the Shannon stopover is clearly meaningless when applied by you to Dublin.

It’s clear that the main problem for Cork is the debt – Rynair would be perfectly happy to fly from there if the landing charges were not hamstrung by the debt.

You need to take a reality check. If you build an airport terminal then, all things being equal, you should expect it to be able to generate the income it needs to pay for itself from the traffic it handles. That’s not to say that there are not potentially valid reasons for supporting Cork on regional development grounds. But you have to be clear that what Ryanair are saying in not that €160 million should have been spent on a terminal, and that the DAA should pay for all but €15 million of it. What they are saying is that a basic terminal should have been built that costs no more than €15 million. That reality is not caught by your statement, although I have clearly backed what I am saying with a direct quote from Ryanair’s press release.

(the DAA plan to spend 1.3 bn on themselves).

And Zsa Zsa Gabor is high maintenance. Look, its just not credible to pretend that Dublin Airport is not long overdue investment. It handles an incredible amount of traffic for its shoddy condition and tiny size.

The main problem for Dublin is not the debt but the additional competition so it makes sense for the DAA to try to ensure the competition is as uncompetitive as possible.

This statement bears no relationship to reality whatsoever, and ignores the national risks identified. Dublin is competing with other European locations of its size, not with Cork. It needs the wherewithal to continue its achievement.

Lennoxschips

at the end of the day, the government should be paying for cork airport, and the government should be paying for dublin airport as they are vital pieces of national transport infrastructure

look at all the most successful airports in the world and they are either run by national governments, city councils or the airlines themselves. but airports running themselves doesn't really hack it. look at heathrow, it's a complete mess, because because BAA has shareholders to please and debts to pay. the people of london and england are made to suffer shoddy infrastructure as a consequence

the government needs to stop playing cork and dublin off against each other and do their job; running the country - and that includes airports

ishmael whale

A little more background on the Ryanair perspective.

http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=NEWS%20FEATURES-qqqs=news-qqqid=12549-qqqx=1.asp
Ryanair shows restraint at Cork Airport

12 March 2006 By Laura Noonan
News of the reduced number of Ryanair flights from Cork Airport last week, in protest at escalating charges at the airport, had been widely expected. The airline had marked Cork Airport’s card last month when it said it would review its operations there after Ryanair was hit with a €30,000 increase in charges at the airport. What raised eyebrows, however, was the scale of the reduction.

Earlier in the week, some experts had predicted that Ryanair was on the verge of announcing a full withdrawal from the airport, or at the very least, a substantial cutting in the number of routes.
Instead, in an unusual display of restraint, the airline revealed it was taking three flights a week on the Cork-Liverpool route and replacing them with Kerry-Liverpool flights. The impact of the reduction will be that 860,000 Ryanair passengers, and not the 900,000 passengers that were expected, will use the airport this year.

‘‘You don’t take a sledgehammer to crack a nut,” said Ryanair chief executive Michael O’Leary. ‘‘You’ve gotta send these guys a message. If Cork Airport is going to continue to whack up costs, it’s going to continue to lose flights. What we hope to achieve is to persuade the nincompoops that the way to grow your business down there is not by putting up charges. The reality for Cork is they put up costs by €30,000, and they have now lost 40,000 passengers a year, and that will cost them €240,000. Get them to explain how that makes ****ing business sense. If there was any sanity down there, they wouldn’t have done this. And they can’t say they were surprised. We told them this was what would happen if they got a cost increase.”

Despite O’Leary’s explanation, Ryanair’s behaviour is puzzling. The airline’s deputy chief executive, Michael Cawley, a Corkman, was sent to Cork on Wednesday to break the bad news to the local media.
At the press conference, he spoke at length about the €180 million terminal that is being constructed at Cork.

‘‘The Cork Airport Authority (CAA) has spent €180 million on a terminal for three million passengers,” he said. ‘‘Both Frankfurt Hahn and Dusseldorf Weeze built the same capacity for €13 million and €15 million respectively. If by forcing the airport to assume the debt burden arising from this expenditure, the government insists that Cork Airport is to charge a premium for its services, then it will lose out on the hundreds of thousands of passengers which Ryanair and other airlines have brought to the region.”

However, the CAA has yet to assume the debt for the new terminal, and therefore the terminal has yet to lead to any increased charges. Ryanair’s increased €30,000 bill represents just one cent per passenger, according to a statement from the CAA. Given the tiny scale of the increases, some industry insiders doubt that the charges could have been the real reason for Ryanair’s move.

‘‘I’d say it’s just an excuse to pull routes that weren’t making money,” said one insider.

O’Leary disagreed. ‘‘We don’t pay one cent increases per passenger,” he said. ‘‘We don’t pay cost increases.”

Cawley denied the move was motivated by the deal that Ryanair has been offered at Kerry Airport. Ryanair pays the CAA charges of €15.89, while the airline is paying less than €1 per passenger at Kerry.

‘‘We were always going to pull the flights out of Cork,” he said. ‘‘If they had not gone to Kerry, they would have gone somewhere else. We talked to about six airports about this in the last week, including one other Irish airport, and Kerry came up best.”

However, despite the rising costs at the airport, Ryanair has insisted it would not withdraw from the airport.

‘‘We didn’t threaten to pull out of Cork Airport and we’re not going to pull out of Cork Airport,” O’Leary said. ‘‘If Cork increase their charges, we will reduce flights and frequencies at Cork Airport wherever we can. But we don’t pull off routes; we don’t leave them there for competitors to exploit.”

However, Cawley said he believed other airlines could not afford to fill the void left by Ryanair at Cork.

‘‘There are no other carriers to come in at [an average fare of] €40, which is Ryanair’s average fare’’ he said. ‘‘Our cost base is much lower than any other airline, so we can profitably offer fares of €39 or €40. Those are the fares that are necessary to generate five million passengers at Cork. Easyjet can never do that; if it offers fares of €39, it is losing €23 per passenger.”

Ryanair has campaigned strongly for an independent second terminal in Dublin, frequently taking out full page ads in several national newspapers to make their point. However, the airline has ruled out a similar campaign to encourage politicians to resolve the issue of Cork’s debt.

‘‘We don’t have a very good track record,” said Cawley, referring to the airline’s failed campaign over the independent terminal at Dublin.

O’Leary said Cork Airport wasn’t important enough to merit a similar-sized campaign.

‘‘Cork is Mickey Mouse stuff,” said the Ryanair chief executive. ‘‘We are an airline that carries 42 million passengers a year. Do we care about Cork? Frankly no. Bristol is bigger than Cork, nearly everything is bigger than Cork.”

Lennoxschips

how can kerry charge 1 euro a passenger? that seems very unusual, to say the least

ryanair can go stuff themselves.

Aidan1

Its not a case of ensuring competition, because Cork doesn’t compete with Dublin.

Not sure thats entirely true. For 90% of the flights into Dublin, there is simply no competition in the state (in short, because Dublin has achieved the critical mass of a mid sized European city - even if it lacks the services and infrastructure just yet). But for a small number of flights, Cork can compete, not least in the immediate regional flight area (to Britain, in the main) but also in terms of holiday traffic. To put it another way, this is not to suggest that it is a manifest 'threat' to Dublin, but rather that management in Cork airport are aware that they have to be in a position to 'compete' for some surplus Dublin traffic (as Shannon will also be trying to do*).

The debt issue is important because if Cork were to have to carry it all, it would impinge on its ability to be competitive. As far as Cork ariport management, local business concerns and local politicians are concerned, this is not a Cork vs Dublin thing, nor is it a backhanded or malicious attempt to hamstring Dublin; its simply a campaign to get 'somebody else' to carry the can. I doubt very much if it matters to anyone where that debt 'goes'. There is even an acceptance that Cork will probably end up having to carry some of the debt, but how much remains to be seen. The debate in the media is simply a publicly conducted PR campaign by both sides to determine that amount.

In that sense, the Ryanair story is very convenient for Cork airport management.

As for 180m for a terminal, well, its as good an argument as you'll ever find for delegating capital spending responsibility to local management. If the money arrives in the hands of a Minister, Deus ex machina, theres obviously little interest in ensuring value for money, or the appropriateness of the infrastructure (even if this was planned before the CAA ever came into being). I haven't been on site, or seen detailed drawings, but it seems gold plated to hell and back from the figures.

*

Cork needs to compete with other European locations of its size, and that consideration seems utterly missing from your thinking.

The only other European airport that Cork has to compete with in the short term in Shannon, and at that for European traffic, not trans Atlantic. Thats what this is ultimately about, not competeing with Dublin.

D'Peoples Voice

Aidan1 wrote:

The only other European airport that Cork has to compete with in the short term in Shannon, and at that for European traffic, not trans Atlantic. Thats what this is ultimately about, not competeing with Dublin.

As regards competition
on the East coast/East Midlands, how many airports do we have for the following counties:
Louth, Cavan, Monaghan, Longford, Meath, Kildare, Wicklow, Laois, Carlow,Kilkenny & Wexford
Would I be right in saying

Dublin airport (I'm excluding Weston aerdrome and Casement aerodrome, Baldonnnel for obvious reasons)

While on the west coast/West midlands,How many airports do we have for the following West/midland based counties
Donegal, Derry, Sligo, Mayo, Roscommon, Galway, Westmeath, Offaly Clare, Limerick, Kerry, Cork, Waterford

Derry city airport

Sligo International Airport

Knock international airport

Galway international airport

Shannon international airport

Farranfore airport

Cork airport

As regards giving Cork EUR 180million, if John Purcell, the Comptroller and Auditor General signed off on it, I'm happy.
The question is, did he say it was a wise investment, almost one fifth of the total that will be going to Dublin airport, the one airport for the whole east coast/east midlands.
I've no problem with cork airport borrowing, but like any company who borrows to expand, you don't do so unless your business plan shows your future revenues can afford the repayments. If not, then why did they invest in something where clearly derives a negative NPV? Regardless who was making the repayments.

dowlingm

d'people's - if you're going to count every airport on the west coast you've got to count all of them on the east (WAT, BHD, BFS) - fair's fair!

patsyh

its cork airports own fault, airports in europe have built similar sized and bigger terminals for a third of the cost that they are paying

Amazotheamazing

What kind of space-age, state of the art, 22nd century terminal are they getting for their money? Whoever approved that cost should be fired (if he hasn't already been).

parsi

patsyh wrote:

its cork airports own fault, airports in europe have built similar sized and bigger terminals for a third of the cost that they are paying

Links please.

I see Luxembourgs new terminal is eerily similar to Corks and it has a budget of 162m (no details of the actual cost - http://www.luxairport.lu/Terminal/Terminal_e.htm )

Lennoxschips

their one seems to have a TGV station thrown into the mix as well

MG

ishmael whale wrote:

One key difference between my posts and yours is I have substantiated what I am saying.It is backed here by a relevant quote from the IHF reported in the Irish Examiner. It is also simply a fact that Dublin airport fits into a different category to Shannon and Cork, and I have substantiated this with a relevant reference even though it is intuitively clear. Its not a case of ensuring competition, because Cork doesn’t compete with Dublin. Cork needs to compete with other European locations of its size, and that consideration seems utterly missing from your thinking.

I think if you look at my posting I noted that it was the claim which was unaccompanied by arguments, the claim having been made by the IHF. If you read it, it is clear the IHF was referring to Dublin in a vacuum and a little bit of research suggests they are in favour of a debt free Cork airport and do believe that Cork competes with Dublin airport.

No-one is arguing that the terminal in Cork is not overpriced. The point is we are stuck with it (and lets not forget that Aer Rianta planned it) and it makes more sense to move forward with a healthy competitive Cork airport than one which is financially and competitively handicapped.


Let’s consider a few quotes from the FAEI “ we are in favour of competition between airports” ………“Competition must be encouraged”

Lets also consider a study on competition between EU airports by Cranfield University. Unfortunately the Irish data is out of date, but there are some interesting aspects to it. On low cost airlines competition between airports exists between Brussels and Amsterdam, Madrid and Lisbon. For long haul, thee is competition between such places as Munich & Vienna, Prague-Budapest, Berlin-Waraw, Milan –Rome. For Short haul there was competition between Muich & Vienna, Paris Brussels, Billund-Copenhagen, Strasbourg Basle etc etc. Moreover catchment areas were across the EU were perceived by the airports themselves to be as high as 300 km, “the whole county” and 3 hours driving time. In Dublins case, they reckoned their catchment area to be 2.5 hours, which means that most of the swathe of land between the two cities are catchement areas.

To claim that Cork airport is not in competition with Dublin airport is both to fundamentally misunderstand the situation and to question the idea of the break up in the first place. I suggest you write to the chief executives of all the airport authorities and the minister to let them know they are not in competition.

ishmael whale

I think the balanced case has already been stated above by Aidan1

aidan1 wrote:

For 90% of the flights into Dublin, there is simply no competition in the state (in short, because Dublin has achieved the critical mass of a mid sized European city - even if it lacks the services and infrastructure just yet). But for a small number of flights, Cork can compete, not least in the immediate regional flight area (to Britain, in the main) but also in terms of holiday traffic. To put it another way, this is not to suggest that it is a manifest 'threat' to Dublin, but rather that management in Cork airport are aware that they have to be in a position to 'compete' for some surplus Dublin traffic (as Shannon will also be trying to do*).

You either want to see the point, or you don’t. If you do, the following quote from Ryanair’s press release should give you an indication of who Cork Airport’s real local competitors are. You might then reflect on the national spatial strategy idea that the real problem in promoting regional development was a lack of scale and concentration within the regions, and how this is reflected in the multiplicity of regional airports competing for essentially the same business.

You also might also reflect on the significance of the European angle, and remember you are part of a country called Ireland that no-one else has reason to particularly care about. It’s really down to whether you can lose the provincial mindset about Dublin. If you don’t, then you won’t want to see the point, and there’s no reasoning with you.

http://www.ryanair.com/site/EN/news.php?yr=06&month=mar&story=gen-en-080306
Ryanair, Europe's leading low fares airline, today (Wednesday, 8th March 2006) announced a reduction in its services to Cork Airport following recent cost increases there. ….. The Liverpool to Cork route will reduce from 7 flights per week to 4 per week.
On the good news front Ryanair also announced that it will be starting a new three times weekly service from Liverpool to Kerry as a much cheaper alternative to Cork.

MG

ishmael whale wrote:

either want to see the point, or you don’t. ....... It’s really down to whether you can lose the provincial mindset about Dublin. If you don’t, then you won’t want to see the point, and there’s no reasoning with you.

You took the words right out of my mouth
it must have been while you were dissin' me





You might also want to reflect on the Ryanair statement, with significant parts highlighted for your convenience.
“Ryanair, Europe's leading low fares airline, today (Wednesday, 8th March 2006) announced a reduction in its services to Cork Airport following recent cost increases there. Cork Airport Authority recently announced a range of cost increases (38 in total) for various services at the airport including a 300% increase in the rental charge of check-in and ticket desks. These increases will push up Ryanair's costs at the airport by over EUR30,000 per annum. The increases, which are a direct result of the debt, which Cork Airport has inherited as a result of its new, Taj Mahal-like, terminal now makes Cork Airport massively uncompetitive against its peer airports throughout Europe and has made other destinations for Ryanair much more attractive. The Liverpool to Cork route will reduce from 7 flights per week to 4 per week.
On the good news front Ryanair also announced that it will be starting a new three times weekly service from Liverpool to Kerry as a much cheaper alternative to Cork.
Announcing the reduction in services in Cork today, Ryanair's Deputy Chief Executive, Michael Cawley, said
"Cork Airport is in danger of pricing itself out of the market with these outrageous price increases. Cork Airport has to realise that it is in competition with hundreds of other airports throughout Europe for passengers whose only concern is to get low fares. The Cork Airport Authority has spent EUR180M on a terminal for 3 million passengers. Both Frankfurt Hahn and Düsseldorf Weeze built the same capacity for EUR13M and EUR15M respectively. If, by forcing the airport to assume the debt burden arising from this expenditure, the Government insists that Cork Airport is to charge a premium for its services then it will lose out on the hundreds of thousands of passengers which Ryanair and other airlines have brought to the region. For the sake of a cost increase of EUR30,000 the region is going to lose 20,000 incoming tourists and business visitors, the income from which runs to approximately EUR8 million. This is an idiotic way to run an airport and is a direct result of the Government's transport policies of overspending and making its regional airports uncompetitive by building lavish and expensive facilities which passengers and visiting tourists are not prepared to pay for.
"Consequently, Ryanair is reducing its services on the Liverpool route to reflect the reduction in demand which we expect will ensue from this cost increase.
"The good news is that we are able to salvage the tourists with the help of Kerry Airport. We are delighted that we will now be moving these passengers to Kerry Airport who have offered us an extremely competitive cost base, much more reflective of what is available in Continental Europe and we are delighted that, while passengers may not be passing through Cork Airport, they will still be coming to the region, served through a much more efficient and low cost airport".”

The significant point is that if Cork assumes the debt, it will be crippled. If Dublin assumes the debt, it will lose some flights to its competitors, for example Cork. It is not in the national interest to cripple Cork airport.

ishmael whale

The key point you keep walking by is plain fact that Ireland has to compete with other locations in Europe. As I’ve said, you are lost in a Shannon stopover mindset that sees the solution to regional development as hobbling Dublin – the approach that lead to massive emigration in the past.

The significant point is that if Cork assumes the debt, it will be crippled. If Dublin assumes the debt, it will be crippled to a lesser extent, but it will lose flights to its competitors, for example Manchester. It is not in the national interest to cripple Dublin airport as no other airport in the State has the same national significance.

Airports such as Shannon, Cork, Galway, Knock, Kerry, Donegal and Waterford to a greater or lesser extent compete with each other. But the plain fact is none of them, even Cork and Shannon which each handle as many passengers as the smaller airports combined, can offer the same array of services as Dublin.

Cripple Cork Airport, and you damage the Southern region. Cripple Dublin Airport, and you continue the hobbling of the country that we saw under the Shannon Stopover regime.

Subsidising Cork Airport is either justified on regional development grounds, in which case in can be funded by the State, or its not, in which case Cork should take the hit. But crippling Dublin Airport to get around someone’s dumb decision to spend too much money is not an acceptable national outcome.

ishmael whale

Another interesting perspective from Ryanair, re-enforcing the view that Cork’s real problem is and has been Shannon.

http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1590082&issue_id=13865
SHANNON has been given the nod ahead of Cork as the country's premier tourism hub beyond Dublin, with Ryanair announcing five new routes from the Limerick-based airport. According to the airline's chief executive, Michael O'Leary, Shannon was more strategically placed to service the western and southern region.

Speaking in Limerick yesterday, Mr Leary said Dublin and Shannon would not be competing for the same market. ……. Mr O'Leary rubbished suggestions that the airline was not committed to Shannon and would withdraw its services once Dublin Airport became less congested.

"Dublin and Shannon are different markets. Shannon offers access into the western seaboard and the southwest, whereas Dublin is for city access and the eastern seaboard." But he added there was "an issue whether Shannon and Cork can both grow rapidly without cannibalising the same market".