TRSS described as innovative by Mid-West elected representatives
Chambers of Commerce in the West and Mid-West, in collaboration with the Irish Hotels Federation (IHF), have presented a business case to Government setting out the urgent need for a multi-annual, fully funded regional air access recovery and growth action plan for the aviation sector.
The business case, prepared by Shannon Chamber in conjunction with the IHF and with the support of Ennis, Galway and Limerick Chambers, outlines the three levels of multi-annual funding 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.
The business case outlines the need for:
- 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 to enable airports reduce airport charges to airlines to drive the restoration of critical routes to/from North America, UK, and Europe as soon as possible.
A detailed traffic recovery support scheme (TRSS) providing costings for the airport charges’ element of the business case has been included in the presentation to Government. The model is based on a review of international traffic and route support schemes in operation in counties such as Spain, Denmark, and Cyprus, and has been prepared using Shannon Airport’s 2019 traffic levels to estimate the funding requirement.
The current assumptions in the financial model show a total cost range of between €20m and €39m for the period July 2021 to June 2024, calculated on giving airlines a percentage refund of monthly all-inclusive passenger charges (AIPC) linked to 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. This level of investment in rebuilding previous viable routes and restoring connectivity will leverage a return of people in and out of the regions which would concurrently lead to a restoration/growth in regional employment levels.
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.
The financial model has been described as innovative by elected representatives in the Mid-West and a clear indication that the Chambers and the IHF want to present a solution to Government to aid the restoration of air connectivity to Ireland and recover routes that were viable pre COVID-19.
“Recovery and growth of previously viable air services will require a substantial period of multi-annual funding until at least 2024 and potentially as late as 2029 depending on when traffic returns to 2019,” the Chambers and the IHF stated.
“We welcome the Government’s special package of €80m for aviation, which included an allocation of €20m for route incentives and charge rebates at Dublin, Shannon and Cork with EU state aid clearance, and the €200m provided to the sector through wage subsidies, rate waivers etc. However, our business case shows that the levels of supports provided to airports and airlines will need to increase substantially, and be multi-annual, to enable the restoration of key routes and sustainable regional employment not just in tourism but in terms of the broader economy.
“The TRSS costs over a multi-annual period, whether for Shannon Airport alone or for all state-owned airports combined, is a fraction of the economic impact of the aviation sector, which contributes €8.9billion to GDP and supports 140,000 jobs. The maximum 3-year cost of airport charges’ subsidisation at Shannon Airport is less than the annual local economy and exchequer spend of just three hotels, Dromoland Castle Hotel, Shannon Springs Hotel, and the Great National South Court Hotel.
“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. The TRSS presented to Government is our solution to stimulating such a recovery in Ireland at a national and regional level.
“In terms of outputs, we look forward to securing further key meetings with the relevant Government Ministers, committees and officials as part of our quest to restore connectivity at Shannon and in other regional areas.”