[Article] Row over Cork airport debt coming to a close

Zoney

Schuhart wrote:

We’ve already allowed Shannon to isolate us from a potentially lucrative market because of the SIBNAL mindset (“Shannon – Ireland’s Barrier to the North Atlantic”).

Yes, this hasn't been sensible. How can one justify this without even having decent transport links so people from a large cachement area can get to the Airport?

Until 2001 or so, the only remotely sensible road in or around Limerick (and between there and Galway) was the N18 between the city and Shannon. That's it. Total cachement area was realistically not much more than Limerick - which is pop. of what? 100,000? North Tipp and the Midlands should be able to access the airport via N52 and N7 (again, current projects Limk-Nenagh and Limk SRR will fix a lot of this). People in Cork should have a choice between Cork or Shannon - with decent roads (completion of Limerick Southern Ring Road , which is happening, and Croom-Mallow which is on the long finger) Shannon would be 2 hours away at most.

Things will be better for Shannon even just in a couple of years with the completion of Limerick Southern Ring Road and Limerick-Nenagh dual carriageways, and not long after, Ennis-Athenry. But it could well be too little too late. Considering the survival of the airport thus far, imagine if it had had the expanded cachement area from the beginning? It wouldn't have needed anything like the amount of State support. The Midwest would be in far less danger of regressing to a basketcase region too if it had had decent transport links at an earlier stage.

It's absurd people worrying about the cost to the whole country of upgrading the "Atlantic Corridor" road and rail. This forgets that in the longer term there will be less need to support those regions and indeed they will be contributing more to the national economy. Imagine if Cork and Galway were little more than 2hrs30 from each other with Limerick and Shannon inbetween. It'd make far more of a difference than the "inter urbans" to Dublin, I'll tell you that.

Schuhart

Zoney wrote:

People in Cork should have a choice between Cork or Shannon

Just a thought - what happens if Limerick people, faced with the same choice, decided to give their business to Cork? As it stands, its seems to have more passengers than Shannon (i.e. comparing to real Shannon passengers, and not hijack victims).

Zoney wrote:

It's absurd people worrying about the cost to the whole country of upgrading the "Atlantic Corridor" road and rail.

Its never absurd to worry about cost, but what is absurd is the tolerance for chucking money at something just because its there. That said, clearly decent links between the regional cities are necessary. I don't think anyone has a particular problem with links between Cork/Limerick/Galway. Its when that starts getting extended around until the 'corridor' turns into a fantastic journey all around the island for no apparent reason other than to convince people in Letterkenny that our piles are bleeding for them.

I can recall reading threads here about the Western Rail Corridor, most of the cost of which relates to relaying a tramway between (I think) Claremorris and Collooney. But most of the people arguing in favour of the concept were, like yourself, talking about Limerick and Cork.

Zoney

Schuhart wrote:

what happens if Limerick people, faced with the same choice, decided to give their business to Cork?

I think it would be more a case of giving business to Cork at the expense of Dublin.

That said, based on my two most recent experiences, I might well consider greater inconvenience in getting to Cork even with current transport links, because Dublin Airport was hell. Talk about dysfunctional.

merlante

Schuhart wrote:

But Waterford Airport seems to get ¬22.3 million out of this fund, which suggests that being in the BMW Region is not essential (presumably, particularly if you’ve a Minister responsible for the relevant portfolio).

The South East region is in a worse state than the BMW region as has been pointed out. The BMW region only exists to wrangle funds out of the EU anyway. If it were geographically feasible (and if the government really wanted to chance its arm), the SE would have been lumped in here too.

The recent funding awarded to Waterford Airport is once off capital funding that will upgrade facilities that haven't been touched in decades. The airport runway will be extended in order to cater for medium haul flights. With this investment in facilities, the airport is expected to achieve passenger numbers in excess of 300,000 within a decade (as other airports are achieving). Without it, Waterford Airport would not be able to fully serve the region.

This is by far the biggest grant that Waterford Airport has ever seen. It will not be happening again any time soon. I do not think or expect that regional airports such as Waterford are in receipt of funds that should be reserved for the international airports of Dublin, Cork or Shannon. These airports receive real funding on an ongoing basis, as they should.

I am continually amazed at how much attention every penny spent in Waterford receives, when other cities and regions seem to receive a steady flow of investment on a continuous basis without so much as an eyebrow being raised.

If people think that Waterford is being 'spoiled' with this 'cash from the minister' they might want to head down to Waterford Airport and take a look at the facilities themselves and then tell us that the investment is not justified!

Schuhart

Zoney wrote:

I think it would be more a case of giving business to Cork at the expense of Dublin.

But isn’t that a little ostrich like? If you envisage Cork people travelling to Shannon – effectively a smaller airport – why not the idea of services consolidating in Cork? And is the idea of an airport putting, say, 5 million passengers per year be a more convincing alternative to Dublin’s 20+ million than two airports – one with 3 million passengers, and the other with maybe 2 million (real) passengers?

merlante wrote:

I am continually amazed at how much attention every penny spent in Waterford receives, when other cities and regions seem to receive a steady flow of investment on a continuous basis without so much as an eyebrow being raised.

I’m mainly raising it here to point out that being in the BMW region does not seem to be a requirement for funding, if the political will is there. However, your post sparked a few more thoughts.

merlante wrote:

I do not think or expect that regional airports such as Waterford are in receipt of funds that should be reserved for the international airports of Dublin, Cork or Shannon. These airports receive real funding on an ongoing basis, as they should.

The point is, of course, where is this real ongoing funding of which you speak? I’m not commenting one way or the other on the value of this investment in Waterford. But compare it pro rata to Cork (taking your figure of 300,000 pa and comparing it to Cork’s 3 million). This is the equivalent of Cork getting a cash grant of €200 million – basically enough to get its new terminal for free, without any need to hamstring the DAA with a debt. Compare it to Dublin, and consider the references you'll see frequently to €1 billion being invested there as if those resources were being raised by taxing farmers in Mayo rather than by charging the people using the facility. The Waterford investment, pro rata, would be the rough equivalent of the State giving the DAA a gift of €2 billion – more investment than they would know what to do with, and no need to persuade any regulator of the need to raise passenger charges if they want to both invest in Dublin, pay for new terminals in Cork and Shannon and subsidise Shannon.

When you consider it in these terms, I think its clear that terms about the ‘generous’ treatment afforded to Dublin or any other city are massively misplaced. Large sounding numbers like ‘€600 million for Luas’ are allowed to cloak the chronic underinvestment Dublin in particular. I honestly can’t understand why reality isn’t allowed to surface more frequently. For example, why is anyone allowed to say Knock Airport is a success and not reflect on its utter meaninglessness in the context of regional development? Does public discussion always have to be as superficial as a PR handout?

merlante

Schuhart wrote:

The point is, of course, where is this real ongoing funding of which you speak? I’m not commenting one way or the other on the value of this investment in Waterford. But compare it pro rata to Cork (taking your figure of 300,000 pa and comparing it to Cork’s 3 million). This is the equivalent of Cork getting a cash grant of €200 million – basically enough to get its new terminal for free, without any need to hamstring the DAA with a debt.

Maybe it is an unusually large investment package in terms of a regional airport to be made in one go, however, averaged over the past 20 years and over the years that are to come, it's not all that much.

I am sure that if you compared the Cork Airport of 20 years ago and the Waterford Airport of 20 years ago to their modern counterparts it would be clear that Cork has been heavily prioritised for investment. I have no problem with this if Cork is providing the function of one of the state's main/international airports. But Waterford Airport needs a serious upgrade, and it is only correct that it is receiving it.

You have to understand exactly how little funding Waterford Airport received up until recently. A few years ago it was on the verge of closure because the facilities were so poor (and the investment non-existent) that it struggled to facilitate/attract airlines. Now the situation is being rectified, and passenger numbers are increasingly strongly year on year, proving that the airport is far from a white elephant.

Schuhart wrote:

Compare it to Dublin, and consider the references you'll see frequently to €1 billion being invested there as if those resources were being raised by taxing farmers in Mayo rather than by charging the people using the facility. The Waterford investment, pro rata, would be the rough equivalent of the State giving the DAA a gift of €2 billion – more investment than they would know what to do with, and no need to persuade any regulator of the need to raise passenger charges if they want to both invest in Dublin, pay for new terminals in Cork and Shannon and subsidise Shannon.

Dublin Airport has massive congestion problems, but it is far from a third world airport, which is where Waterford is coming from. Nobody is saying that Waterford should be built as a major state airport, but the facilities that are there should be as modern as any other.

Schuhart wrote:

When you consider it in these terms, I think its clear that terms about the ‘generous’ treatment afforded to Dublin or any other city are massively misplaced. Large sounding numbers like ‘€600 million for Luas’ are allowed to cloak the chronic underinvestment Dublin in particular. I honestly can’t understand why reality isn’t allowed to surface more frequently. For example, why is anyone allowed to say Knock Airport is a success and not reflect on its utter meaninglessness in the context of regional development? Does public discussion always have to be as superficial as a PR handout?

Knock Airport always seemed like a joke to me. Waterford Airport has a city nearby, and a large populous region of 450,000 people. Big difference.

Still I take your point about Dublin, but I don't worry about Dublin Airport. It's problems will be sorted -- the media will see to it.

Zoney

Schuhart wrote:

But isn’t that a little ostrich like? If you envisage Cork people travelling to Shannon – effectively a smaller airport – why not the idea of services consolidating in Cork? And is the idea of an airport putting, say, 5 million passengers per year be a more convincing alternative to Dublin’s 20+ million than two airports – one with 3 million passengers, and the other with maybe 2 million (real) passengers?

How would you consolidate services in Cork? Do you seriously envisage people from Galway and the west, Clare, North Tipp, and Limerick all having just two alternatives of Dublin or Cork? With regard to Galway and the West, would you recommend Knock instead? If we're cutting back on airports, would it seriously make sense to keep Knock and lose Shannon? The facilities at Shannon could cater for vast amounts of traffic. I'm sure people here could rant about that, but it would serve no purpose; the fact is that Shannon is over-specified and should be used rather than moaned about. It can be far far better utilised just by putting in place transport links that are needed *anyway*!

dowlingm

The problem with Waterford Airport is its location - if it had been built NE of Waterford near the Rosslare/New Ross road and rail links it might have done better previously instead of a boreen - it might have kept the rail link to New Ross open perhaps!

Now that Waterford's roads are improving and the runway will take a B737/A320 maybe so will its prospects.

Schuhart

Zoney wrote:

Do you seriously envisage people from Galway and the west, Clare, North Tipp, and Limerick all having just two alternatives of Dublin or Cork?

I'd leave that to Darwin. I think the point is just that Shannon seems bereft of a case, and we're hardly short of potential airport locations. Yes, its a crying shame that money was spent there for no obvious reason and no apparent hope of any return. I suppose I just don't see a need to throw good money after bad.

In fairness, if the workforce in Shannon was showing more than simply a desire to keep its collective snout in the trough without any consideration for the cost on the rest of us then the case might have a more fertile context. But, to be honest, people in the West do need to ask themselves how they allowed things to come to a pass when their largest airports are at Shannon and Knock.

With regard to Galway and the West, would you recommend Knock instead?

I wouldn't recommend Knock, but equally I've never understood what local politics stood in the way of Galway Airport taking up that offer to move to a site where they could develop. Consider Galway with a proper airport vs a Limerick chained to Shannon. Sit back, and watch gravity create a single concentration on the West coast - making an irrelevance of all that 'corridor' nonsense.

merlante

dowlingm wrote:

The problem with Waterford Airport is its location - if it had been built NE of Waterford near the Rosslare/New Ross road and rail links it might have done better previously instead of a boreen - it might have kept the rail link to New Ross open perhaps!

Now that Waterford's roads are improving and the runway will take a B737/A320 maybe so will its prospects.

Indeed, although the real problem has been a complete lack of investment down through the years. Now with the M9, N25 improvements, bypass, outer ring road, and airport road upgrade, the access will be quite good, especially when compared with Dublin.

For years we had an airport with inadequate facilities, sitting in the middle of nowhere on a country road. There is no point in having an airport if the facilities are poor, there is no prospect of expansion and the access is terrible.

Victor

Last time I checked, this thread was called "Row over Cork airport debt coming to a close"

Bards wrote:

The S.E is far worse off than the BMW region and yet BMW have two large Cities in Galway & Limerick with 2 Universities, 2 International airports & 1 regional

Limerick isn't in the BMW region and neither is Shannon.

Schuhart

Victor wrote:

Limerick isn't in the BMW region and neither is Shannon.

He’s right, you know. Nor is Kerry – although Farranfore is getting €17.7 million. Which means heading on for half of this €86 million is being spent outside of the BMW region.

I’m the most reasonable of people when I make an effort. Can anyone now explain why, in principle, Cork Airport cannot be given a direct State investment/grant of €100 million seeing as how regional airports which, combined, are of less national significance have been given an allocation of the same ballpark amount?

Calina

You can be absolutely certain that someone will find away of saying "Europe won't allow it".

merlante

Schuhart wrote:

He’s right, you know. Nor is Kerry – although Farranfore is getting €17.7 million. Which means heading on for half of this €86 million is being spent outside of the BMW region.

I’m the most reasonable of people when I make an effort. Can anyone now explain why, in principle, Cork Airport cannot be given a direct State investment/grant of €100 million seeing as how regional airports which, combined, are of less national significance have been given an allocation of the same ballpark amount?

If only politics in this country was so simple. :cool:

Is it not the case, though, that this money, or some of it, is coming from Europe and has been designated for regional airports?

It may well also be the case that the government want to chasten Cork Airport with a debt in order to compel it to become more efficient and financially responsible. It is not always the best idea to throw money at a company that is in debt. In any case, I'd say that as soon as Cork starts to make inroads into the debt, the government will clear the balance at some point.

Also, granting funding to clear a debt is a more questionable use of public funds that granting funding for capital investment. Clearing a debt may or may not lead to Cork's continued expansion and growth, building out straight forward facilities in regional airports -- up to a point that is consistent with the role of regional airports -- invariably will lead to expansion and growth.

Zoney

If Cork can't be given money directly, why not do the same thing I'm suggesting for Shannon? Just provide it with more passengers by the simple option of providing transport links that should be there anyway.

In the most extreme case, provide light rail from the city centre to the airport, and ensure all sides of the city and outlying areas can easily access the city centre using public transport. The latter should already be the case (but isn't).

In the long term this would do a lot more good than handing €100 million to the airport directly, even were such a thing permissable. It would benefit all manner of business in the area. €100 million would surely buy a fair bit of transport.

Schuhart

merlante wrote:

Is it not the case, though, that this money, or some of it, is coming from Europe and has been designated for regional airports?

Fine, then lets start calling Cork a 'regional' airport. Knock styles itself as an 'international' airport whenever it fancies, but it doesn't stop it getting a fat cheque.

merlante wrote:

Also, granting funding to clear a debt is a more questionable use of public funds that granting funding for capital investment.

I think you need to reflect on this statement. The debt was incurred because capital investment was funded by borrowing money rather than by Government injecting capital. My understanding is that the Government has a perfect right to own companies and make commercial investments in them - we're members of the EU, not the USSR. All that's blocked under EU rules, as I understand it, is support that distorts markets - say, chucking money at Knock even though it should never have been built.

Zoney wrote:

If Cork can't be given money directly, why not do the same thing I'm suggesting for Shannon? Just provide it with more passengers by the simple option of providing transport links that should be there anyway.

I've no problem if, given €100 million, the CAA said 'actually, the best thing we could do with that money is build a Luas from here to the city centre'. But I doubt that's the case. Has anyone raised a particular problem with access to the airport? (Subject to the usual old ****e of locations for infrastructure usually being decided on any basis other than where people might actually need it.)

Zoney wrote:

€100 million would surely buy a fair bit of transport.

I suppose, looking on it slightly differently, we've already collectively spent €100 million on a lump of transport in the shape of half a new Cork terminal. The question is how to pay for it, while considering the national implications of the most likely candidate as alternative growth centre to Dublin being hamstrung with a debt laden airport vs the prospect of financially screwing our main national airport through which the overwhelming bulk of passengers to our fair island pass. Apologies on the long sentence, but hopefully the point is clear. We seem (many of us) comfortable with the idea of pissing the same amount of money away on regional airports, but struggle at the thought of using a similar amount of money where it might do some good.

Put another way, why not leave Knock and Farranfore blowing in the wind and spend the money yielded on public transport in Cork and/or Limerick? Why the easy acceptance of direct State grants for Sligo Airport, and the reluctance about Cork?

bjd

its the DAA the lumped Cork with 100m for the terminal - anyself respecting commercial manager would have been able to vastly reduce costs on that terminal project, there was no need at all for that spend. Its poor management and all the FF'rs are now changing their tune from what Seamus Brennan said, i.e. that the airport would be debt free. If only the Bert would call a snap election. I dont even WANT to vote for Simon Coveney seeing as he had the cheek to get voted into Europe and now hoovers up 2 salaries but I damned well wont be voting for FF.

merlante

Schuhart wrote:

I think you need to reflect on this statement. The debt was incurred because capital investment was funded by borrowing money rather than by Government injecting capital.

If Waterford Airport racked up, say, a 10 million euro debt., building facilities it felt it needed, I wouldn't automatically expect the government to bail it out. (The current spend being unprecedented and unlikely to be repeated.)

Should Cork have even been developed as an International Airport, given there was already one at Shannon? It's all fine saying that Cork Airport is there now and doing well, but it seems that it hasn't been paid for.

As for Knock, it can call itself whatever it wants, and good luck to it, but under no circumstances should it receive a level of investment on a par with Cork or Shannon. Three international airports is enough. Knock is a regional airport.

Hotblack Desiato

bjd wrote:

its the DAA the lumped Cork with 100m for the terminal - anyself respecting commercial manager would have been able to vastly reduce costs on that terminal project, there was no need at all for that spend.

So maybe if Cork were managing it from the start knowing that there'd be only limited funding available from Dublin, there would have been a better outcome for all concerned.

It's pretty hard from where I'm standing to justify the idea of Cork getting a 'free' facility off the backs of the passengers going through the black hole of Calcutta a.k.a. DUB. If State investment in Cork can be justified on regional aid grounds then by all means go for it, let the taxpayer in general pay for it then, rather than asking DUB passengers to pay more for the privilege of using inadequate facilities so that some other airport can be upgraded.

Its poor management and all the FF'rs are now changing their tune from what Seamus Brennan said, i.e. that the airport would be debt free.

Like every other of the frequent announcements made by Brennan in Transport, it was gobsh*te. Surely he knew, or should have known, that huge investment was needed in Dublin.

If only the Bert would call a snap election.

You make it sound like 3 years away, not 3 months. Any issue of burning local importance can be kept alive for 3 months, surely.

I dont even WANT to vote for Simon Coveney seeing as he had the cheek to get voted into Europe and now hoovers up 2 salaries but I damned well wont be voting for FF.

A topic for Politics, but FG's abuse of the dual mandate rather dents their credibility as a 'more ethical than FF' (c'mon guys, how hard can that be?) party.

Schuhart

bjd wrote:

its the DAA the lumped Cork with 100m for the terminal

The main comment I can recall from Cork based public representatives was about insufficient air bridges, which does seem to undermine that ‘arms length’ approach to the issue. I know Victor has mentioned something about €35 million, but I’m not clear what that relates to exactly – although I am open to any clarification.

merlante wrote:

If Waterford Airport racked up, say, a 10 million euro debt., building facilities it felt it needed, I wouldn't automatically expect the government to bail it out.

Indeed, but you’ll understand that the situation seems to be less about unauthorised expenditure and more about separating the debt from the asset that would be expected to pay for it. You seemed to be drawing a distinction between capital expenditure and debt, which doesn’t apply in this case as what is at stake is simply capital expenditure. Its Shannon that has the problem with meetings its day to day costs.

merlante wrote:

Should Cork have even been developed as an International Airport, given there was already one at Shannon?

Given that Cork handles more real passengers, I think the question makes more sense the other way. Does Shannon have any role, given the existence of Cork? Why have an airport as some kind of commemoration of the days when jets could barely get across the Atlantic?

ninja900 wrote:

If State investment in Cork can be justified on regional aid grounds then by all means go for it, let the taxpayer in general pay for it then, rather than asking DUB passengers to pay more for the privilege of using inadequate facilities so that some other airport can be upgraded.

Spot on. Its simply ludicrous to have the fate of Dublin and Cork Airports linked in this way while much the same money is pissed away for no return on regional airports.

ninja900 wrote:

Like every other of the frequent announcements made by Brennan in Transport, it was gobsh*te. Surely he knew, or should have known, that huge investment was needed in Dublin.

Absolutely, and most apt that the chickens are coming home to roost right now.

dowlingm

I suspect the definition of "regional airport" is a European statistical thing, under so many million passengers and so on. What an airport calls itself is a different matter.

Schuhart

I went digging for the EU clearance of the regional airports money. I did this with a general feeling of ‘I thought this was what we had journalists for’. An utter aside, but part of the reason public debate in this country is so crap is that our journalists are collectively worthless, and seemingly incapable of producing articles that comprehensively describe issues at stake.

I take the key paragraphs to be these:

41. The criteria laid down in Article 87(1) are cumulative. Therefore, in order to determine whether the notified measures constitute State aid within the meaning of Article 87(1) of the Treaty all of the following conditions need to be fulfilled. Namely, the financial support:
- is granted by the State or through State resources,
- favours certain undertakings or the production of certain goods,
- distort or threatens to distort competition, and
- affects trade between Member States.

42. The concept of State aid applies to any advantage, granted directly or indirectly,
financed out of State resources, granted by the State itself or by any intermediary body
acting by virtue of powers conferred on it.

The Government compelling the DAA to take on the CAA debt would strike me as meeting this definition of a State aid, assuming the investment in Cork Airport would be deemed to affect trade between member states.

According to the European Commission Guidelines on airports, Cork fits into the category of ‘C’ a large regional airport – which applies to airports between 1 and 5 million. (By comparison, Dublin is category ‘A’, as is any airport with more than 10 million passengers. This puts it well outside of any consideration for a State aid.)

I’ve browsed to what I think are the most relevant paras

(39).. Thus, public financing granted to national and Community airports (categories A and will normally be considered to distort or threaten to distort competition and to affect trade between Member States. Conversely, funding granted to small regional airports (category D) is unlikely to distort competition or affect trade to an extent contrary to the common interest.

(40) However, beyond these general indications, it is not possible to establish rules covering every possible case, particularly for airports in categories C and D. For this reason any measure which may constitute State aid to an airport must be notified so that its impact on competition and trade between Member States can be examined, and, where appropriate, its compatibility.

What I take of this is:
1. Relieving Cork Airport of a portion of its debt, as proposed, is a State aid. Hence, the idea that direct support is ruled out in principle because of State aid rules is bunkum. If support is ruled out, then Cork should be finding itself meeting the whole debt.

2. Cork Airport is deemed a Category ‘C’ large regional airport for purposes of EU State aid rules. Public financing of ‘A’ and ‘B’ airports is pretty much ruled out. A reasonably open attitude is expressed to financing category ‘D’ airports. Category ‘C’ airports are left open for a case being made.

3. Many of the arguments made for the grants scheme equally apply to Cork i.e. Transport 21, Spatial Strategy, Regional Development. Only the Objective 1 status is missing, and this is not essential as the clearance states openly that some of the regional airports receiving funding are not in Objective 1 areas.

I think the key point to remember is the first one. Any special treatment means that Cork is getting a State aid that needs to be consistent with EU rules on supports for airports. Hence, in principle, those rules apply anyway. The only question is whether the State provides that assistance out of tax, or by forcing another State body (DAA) to pick up the tab.

From what I can see, all that needs to happen is for a case to be made. Its well established that the real barrier to regional development is the gap in scale between Dublin and all of the regional cities. That strikes me as potential grounds to justify support for a category 'C' airport. The fact we have no category 'B' airports sort of underlines that drop in scale once you step outside the capital.