[Article] Rural airport passengers cost taxpayer €15 per flight

n97 mini

Rural airport passengers cost taxpayer €15 per flight
State has shelled out almost €90m in 'lunatic' subsidies over past six years

By Barry Duggan and Ralph Riegel
Monday April 11 2011
TAXPAYERS are subsidising passengers who use the country's regional airports by an average of €15 for every flight they take, an Irish Independent investigation reveals.

Around €90m in levies has been paid to subsidise domestic flights from six regional airports over the last six years.

In the case of Sligo and Donegal airports, the taxpayer is paying a massive €69 for each passenger using the facilities.

The subsidy agreement -- which concerns domestic flights on Public Service Obligation (PSO) routes from the regional airports to Dublin -- will terminate in July.

In total, since 2005, some €131m has been spent by the State supporting Donegal, Galway, Kerry, Knock, Sligo and Waterford airports.

This includes the €90m to underpin PSO routes and another €41m in operational supports and capital grants.

Fears

But with the taxpayer-supported PSO contracts due to end in two months, fears are mounting for the viability of four airports -- Galway, Waterford, Sligo and Knock.

The Irish Independent has learned the Government will only financially assist Kerry and Donegal airports with renewed PSO routes. Transport Minister Leo Varadkar will not be intervening in the policy set out by predecessor Noel Dempsey, who gave three-year PSO contracts to Kerry and Donegal, which are due to begin in October. The cost to the taxpayer for these domestic routes is unknown as they are still at the tendering process.

A spokesman for Mr Varadkar last night said the Government was encouraging other regional airports to attract their own investment and new routes. In the six years to the end of 2010, a total of 8.3 million passengers used the country's six privately owned regional airports -- a cost breakdown of €15 per passenger on the €131m handed over by the State.

In the case of some regional airports, the actual cost per passenger to the taxpayer is substantially higher.

Between them, Sligo and Donegal airports received almost €37m in state aid and saw just over 500,000 people go through their doors from 2005 to November 2010 -- meaning the average taxpayer support per passenger for the two airports was €69. Both airports received the largest PSO subsidies during that period, almost €32.5m, which is more than a third of all such subsidies paid since 2005.

Knock Airport registered almost 3.5 million passengers since 2005 to last November.

Galway enjoyed almost €20m in levies and a further contribution of €7m from the taxpayer.

With almost 1.5 million passengers travelling through the western airport since 2005 to last October, it cost the taxpayer an average of €19 per passenger. Galway Airport managing director Joe Walsh said 40pc of traffic to the western airport came from international hubs beyond Dublin.

"We are serving directly here to multinational and indigenous industries. There was a €31m return to the Exchequer in 2009 from all sectors in Galway and a €2.1m return from the 180 people employed here," Mr Walsh said.

The Western Development Commission -- set up to promote economic and social development in Donegal, Leitrim, Sligo, Mayo, Roscommon, Galway and Clare -- has called on the Government to continue to fund regional airports. But DAA boss David Dilger said the current taxpayer funding of Ireland's regional airports was "little short of lunatic".

Leading academic Dr Ed Walsh called on the minister to conduct an integrated national transport study before making any decisions on the future of the regional airports.

"Ireland in the world competitiveness report doesn't rank very highly in terms of its transport structure," Mr Walsh told the Irish Independent.

- Barry Duggan and Ralph Riegel

Irish Independent

Am a big fan of the American model: you can have it if you pay for it. Subsidies are fine until you run out of other people's money.

BuffyBot

Am a big fan of the American model: you can have it if you pay for it

...except if you're at an airport with subsidised air service, paid for by the US Taxpayer..

dowlingm

Former Amtrak chief David Gunn was asked by John McCain to give up subsidies, Gunn replied that he'd give up train subsidies when McCain cancelled subsidies for airlines serving places like... Arizona. McCain was quietened by that but Gunn got the push soon after

Cookie_Monster

Donegal, Galway, Kerry, Knock, Sligo and Waterford airports

you could argue the validity of Galway and Waterford I suppose but why do the others even need airports ffs?

Subsidise bus services to those areas from proper airports, much much cheaper.

mgmt

Cookie_Monster wrote: »

you could argue the validity of Galway and Waterford I suppose but why do the others even need airports ffs?

Subsidise bus services to those areas from proper airports, much much cheaper.

The state subsidised Derry Airport too.

n97 mini

Cookie_Monster wrote: »

you could argue the validity of Galway and Waterford

You couldn't as both are connected to the capital by motorway.

n97 mini

BuffyBot wrote: »

...except if you're at an airport with subsidised air service, paid for by the US Taxpayer..

I stand corrected. Not sure how that one slipped through the net as Americans generally aint fond of subsidising other people.

Cookie_Monster

n97 mini wrote: »

You couldn't as both are connected to the capital by motorway.

so are Cork and Belfast, should we get rid of them too?

SandyfordGuy

I think when there is good forms of other transport between the two areas we should not be funding these regional flights.

Can someone give a list of exactly what flights are operated to/from regional airports.

Personally I think we need Knock, Shannon, Cork, Dublin and Kerry. Nothing else.

Mr Simpson

Imho Shannon, Cork, Knock and Dublin are the only viable airports in Ireland. Possibly Donegal due to its poor public transport and poor motorway connectivity, but i'm not sure.

SandyfordGuy

The only reason I mentioned Kerry is it's not exactly well served by public transport.

Mr Simpson

I accept it's not very well served by PT. But most of Kerry is close enough to cork, so maybe the money given in pso funding would be better spent upgrading bus services

n97 mini

Cookie_Monster wrote: »

so are Cork and Belfast, should we get rid of them too?

Yes if they are subsidised.

Colm R

Is it only flights to/from Dublin that are subsidised. I'd doubt the Ryanair flights between Cork/Dublin are subsidised.

But considering how well connected Dublin is to the country now, I really think we should not be spending tax payers money on this.


If there was to be subsidised flights of some kind, I would prefer it to be where an economic gain is also included, such as between somewhere in the West and London, or possibly between Cork and Belfast (bit of tough subject considering the horrific events a few months back).

We are not a big country, so let the market take care of air transport, and lets get affordable ground transport for more.

LXFlyer

SandyfordGuy wrote: »

The only reason I mentioned Kerry is it's not exactly well served by public transport.

Not quite. It's actually better served than it ever was with 8 trains per day in each direction between Mallow and Tralee, all offering connections to/from Dublin and Cork (except the first westbound service).

ludermor

To what level is the bus and rail network subsidised? In fact is there any transport network in the counrty not subsidised?

SandyfordGuy

lxflyer wrote: »

Not quite. It's actually better served than it ever was with 8 trains per day in each direction between Mallow and Tralee, all offering connections to/from Dublin and Cork (except the first westbound service).

The thing is though, I'd disagree with that, it's over 4 hours away if you are coming from Dublin, and I know many tourists who were over here are missing out on the likes of the Ring of Kerry because of it takes forever to get there, which is why I think it's important it has it's own airport even on a small scale.

The vast majority of tourists in this country start in Dublin and then go on to other places, hence why I feel there should be an airport at Kerry. Even just asking people in the office around here they all say the same.

n97 mini

ludermor wrote: »

To what level is the bus and rail network subsidised? In fact is there any transport network in the counrty not subsidised?

There was an article in the paper last year about how state-subsidised air travel is competing with a state-owned rail and state-owned bus services. Lunacy.

BenShermin

For your info, the Dublin to Cork route is not subsidised.

One thing you seem to be forgetting when saying we don't need these regional airports is that they all have connections to Britain. Whatever about the viablilty of domestic airtravel these airports should be kept for business between the west of Ireland and Britain.

jimmycrackcorm

Why subsidize Dublin bus but object to rural airports?

Neworder79

jimmycrackcorm wrote: »

Why subsidize Dublin bus but object to rural airports?

Public transport is costly to provide and usually subsadised to some degree. But you have to evaluate what is necessary and delivers a real net benefit from what is waste and delivers little for the tax money spent in recession.

Dublin Bus provides a public transport system in a densely populated city area where there is often no alternative mode (poor rail infrastructure, lower car ownership). It can do so efficiently and is "vital" to functioning of life and business of any city. It does so for about €0.60 per passenger in subvention.

Air travel however is a very costly mode of transport, requires major infrastructure and support services and is mostly suited to long distance transportation between destinations of high demand. The PSO scheme was set up at a time when the Western regions were 4-6 hours drive on terrible roads with poor rail or bus alternatives as a means to facilitate business access. It ended up costing up to €90 per journey in subvention on some routes, along with the running costs of the smaller airports. The Government ordered a value for money review of regional airports in 09 which concluded that some airports provide poor return in terms of tourism and business contribution and value for money, and would become more dependent on the taxpayer as losses mounted in the coming years (Galway and Sligo in particular).

Some subsadised air travel may still be justified where remote transport bottlenecks remain or where a market still exists such as business or tourists travelers willing to pay for faster connections. But when there are brand new motorway, bus and rail corridors now connecting our regional cites, it cannot be said that there is a "vital" need for domestic air connections.

The previous government cut Sligo, Galway, Derry and Knock - Dublin subsidy (Waterford, Cork, Shannon never had PSO). Aer Arann last week said they would end those routes so they clearly see no, market without subsadised fares. Even with the subsidy numbers have fallen 75% at Galway for example.

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But putting PSO issue aside, it's also important to maintain direct international air access into the regions where gaps exist. I think the Government may be justified providing a reduced level of operational subsidy to a smaller number of strategic regional hubs along with the 3 state airports. Knock and possibly Kerry and Waterford look the most viable. Map below shows this would put most of the population within 1-1.5 hours of an international airport and would cost far less in operational subsidy as Knock and Kerry have built commercial operations and operated profitably for several years. Waterford would still need support however.

Victor

In total, since 2005, some €131m has been spent by the State supporting Donegal, Galway, Kerry, Knock, Sligo and Waterford airports.

And, eh, Dublin. Subsidizing these flights made it more difficult for other routes to operate.