- Funding model described as innovative.
- TRSS model shows Chambers’ and IHF commitment to providing solution for aviation recovery.
A business case, setting out the urgent need for a multi-annual, fully funded, regional air access recovery and growth action plan for the aviation sector, prepared by Shannon Chamber and the Irish Hotels Federation with the support of Ennis, Galway and Limerick Chambers, has been unanimously endorsed by the Oireachtas Committee on Transport and Communication.
This endorsement followed a presentation made to the Committee on Wednesday, 23 June by Shannon Chamber director Kevin Thompstone and IHF president Elaina Fitzgerald Kane. It has been issued in advance of a Chambers’ and IHF meeting with the Minister for Transport, Eamon Ryan scheduled to take place on Friday, 16 July.
The business case outlines the three levels of multi-annual funding State-owned regional airports will require until at least 2024, and potentially as late as 2029, to restore international connectivity to 2019 traffic levels, a time span based on EUROCONTROL’s most optimistic forecast for a return of Europe’s air traffic to 2019 levels.
This funding levels called for include:
- Multi-year CAPEX funding in the order of €32m annually.
- A doubling of Tourism Ireland’s Tourism Marketing Fund from €47m to €94m and an Industry Activation Fund of €92m over 3 years.
- A fixed Euro amount per passenger to subsidise airport charges to enable airlines to restore critical routes to/from North America, UK, and Europe as soon as possible.
Welcoming this endorsement by the Oireachtas Committee, Mr Thompstone stated: “The Chambers and the IHF have been working on this business case since February 2021. Our decision to develop a comprehensive solution of this nature was to assist Government in developing a plan to aid the restoration of air connectivity to Ireland. We particularly wanted to work out a financial model for the airport charges’ element of the business case. This model, which we describe as a traffic recovery support scheme (TRSS), is based on a review of international traffic and route support schemes in operation in countries such as Spain, Denmark, and Cyprus, and has been prepared using Shannon Airport’s 2019 traffic levels to estimate the level of funding required”.
Elaina Fitzgerald Kane stated: “As an island nation, our connectivity is critical, and this has been decimated by the impact of Covid-19. Before the pandemic, some 70% of tourism jobs were based outside of Dublin. Shannon Airport and other regional airports are the lifeblood of their surrounding areas from a tourism perspective as well as in terms of FDI. Rebuilding our connectivity is key and the TRSS is an innovative solution for government in restoring connectivity and the many thousands of livelihoods dependent on it. The adoption of this and the other recommendations is pivotal in revitalising regional tourism and the broader economy and it is for this reason that the Irish Hotels Federation is 100% committed to this initiative”.
The current assumptions in the financial model show a total cost range of between €20m and €39m (for Shannon Airport), for the period July 2021 to June 2024, calculated on giving airlines a percentage refund of monthly all-inclusive passenger charges (AIPC) based on the percentage of traffic they deliver to an airport compared to the same month in 2019. To be eligible for a refund, an airline would need to achieve or exceed monthly traffic thresholds.
While calculations are based on Shannon Airport’s traffic figures for 2019, the model can be used to quantify the funding requirement of all airports, based on their 2019 traffic levels.
Having the TRSS and the business case endorsed by the Committee is hugely gratifying for the Chambers and the IHF. The case was previously presented to Minister Hildegarde Naughton and Department of Transport executives, and to regional Oireachtas members. Their collective recommendations were taken on board to quantify the financial requirement of the airport charges’ element, which was not included in the initial draft.
The TRSS presented to Government is a solution for stimulating aviation recovery in Ireland. It has been prepared against a background where the International Air Transport Association (IATA) has been consistently making the case for international government action to stimulate market recovery in the face of the devastating impact of the COVID-19 pandemic on the aviation, tourism, and hospitality sectors.
Ireland must adopt this approach, given that global governments have given €173 billion to their airlines since the onset of COVID-19, up to December 2020. The aviation sector will be a competitive marketplace once travel restrictions lift, with airlines favouring airports with lower airport charges and route support, facilitating fare reductions to attract and reignite passenger numbers’ growth. Ireland’s regional airports simply must be enabled to compete.
That is why a clear, actionable, and fully funded plan to restore connectivity to this island is needed. The Chambers and Irish Hotel Federation look forward to presenting the case in detail to Minister Eamon Ryan on 16 July.
These 3 funding levels included in the business case are:
- Multi-year CAPEX funding in the order of €32m annually, based on current levels, to ensure that the smaller State-owned airports, such as Shannon Airport, can sustain operations as they recover from the crisis.
- A doubling of Tourism Ireland’s Tourism Marketing Fund from €47m to €94m, and an Industry Activation Fund of €92m over 3 years, as called for in previous Task Force reports to Government; and
- A fixed Euro amount per passenger, also recommended by the Aviation Recovery Task Force, to subsidise airport charges to enable airlines to restore critical routes to/from North America, UK, and Europe as soon as possible.