Launching the business case for a multi-annual, fully-funded regional air access recovery and growth plan for regional airports: (front) Stephen Keogh, president Shannon Chamber and Elaina Fitzgerald Kane, president, Irish Hotels Federation (IHF) with (back l-r): Dermot Kelly, chair, Shannon branch IHF; Darragh McAllister, incoming president, Ennis Chamber; Donnacha Hurley. President, Limerick Chamber; and Ken Deery, CEO, Galway Chamber. Photo: Eamon Ward. [COVID-19 social distance protocol observed.]
Shannon Chamber, in collaboration with the Irish Hotels Federation, and supported by Ennis, Limerick and Galway Chambers, has prepared a business case for a multi-annual, fully funded regional air access recovery and growth action plan for presentation to Government.
The objective of this undertaking is to demonstrate that, while the funding allocated by Government to date to support Irish airports is welcome, a reform of funding strategy is needed given that the recovery, restoration, and growth of regional air access will require a sustained period of multi-annual funding until at least 2024 and as late as 2029, depending on when traffic returns to 2019 levels. Restoring connectivity is a critical element of this recovery.
This collective business and hospitality representative grouping want the Government to consider providing three forms of sustained multi-annual funding to Shannon and other regional airports to ensure that they can sustain operations as they recover from the crisis and to ensure that critical routes to and from North America, UK, and Europe return as soon as possible.
The first form of funding – Multi-year CAPEX funding – will, the grouping say, be required to enable the smaller State-owned airports, such as Shannon Airport, to navigate their way out of the current crisis. This type of multi-year funding arrangement is vital and would be comparable to the Regional Airports Programme providing CAPEX funding to Donegal, Knock and Kerry airports for the coming years.
The second type of funding – A fixed Euro amount per passenger – would be used to subsidise airport charges for airlines and is the type of funding needed to grow traffic at regional airports. The grouping argues that, as set out in the Aviation Taskforce, the State must directly provide the airports outside Dublin with a common fixed sum per passenger to enable the airports to stimulate traffic by reducing airport charges for airlines. This scheme should apply for the duration of the aviation sector’s recovery from the pandemic.
The third type of funding – the provision of a Regional Route Marketing Fund – should be allocated to Tourism Ireland, also on a multi-annual basis, as the restoration of Ireland’s air services is essential to connect our island to global markets which drive our industrial, tourism and international service sectors. A similar request has been made by the Aviation Taskforce, who, in their submission to Government in 2020, called for increased investment in international marketing funding for Tourism Ireland, which they felt will be necessary to rebuild inbound tourism.
This request for a changed funding structure for regional airports is being made by the Chambers and the IHF in light of the devastating impact COVID-19 has had on the aviation sector and, by association, on the tourism, leisure and hospitality sectors; the fact that EUROCONTROL’s most optimistic forecast for the recovery of European air traffic to 2019 levels is 2024 at the earliest or as late as 2029 and that; to restore and grow air access to North America, UK and Europe, Ireland’s regional airports will need to be financially attractive to airlines to recover routes lost and to grow new routes and passenger numbers.
Acknowledging and welcoming the €280 million funding already allocated to the aviation sector, the Chambers and the IHF point out that while €200 million of this funding is linked to COVID-19 related subsidies, €60million to regional and State airports’ capital and operating expenditure, only €20 million is earmarked for providing route incentives and airport charges’ rebates at Dublin, Cork and Shannon airports. The crux, as they state, is that there is no indication of how much of this funding each airport will receive, the operating rules for accessing the funding and, whether it is ‘once-off’ support or will be provided multi-annually.
Making the case for a multi-annual funding plan, the representative grouping say that regional airports will require this type of sustained financial support if they are to compete globally and win back business.
“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 have to be enabled to compete,” they state.
The International Air Transport Association (IATA) has already flagged the types of measures that financially viable airlines will be seeking. These include temporary waivers or suspensions of government charges, taxes, and fees to reduce flight costs and lower travel costs for passengers; route subsidies for flights to local and regional destinations to support connectivity for rural communities and business; financial incentives in the form of rewards for operating flights, or seats flown, which can support airlines while load factors or yields are too low; advance ticket purchases that governments can use for future trips or distribute to the traveling public in the form of vouchers to support travel and tourism and; passenger travel subsidies in the form of vouchers for passengers or as a percentage cash-back on overall travel costs.
Presenting their case, the grouping said that the collapse in international travel, through effectively halting aviation in Ireland, has the potential to cause further severe and long-term damage to a critical driver of our economy, if not given adequate long-term support.
“The aviation sector contributes an estimated €8.9 billion to Ireland’s GDP, with foreign tourists making a further €8.7 billion GDP contribution, it supports 140,000 jobs and attracts 8.8 million overseas tourists, arriving by air. That’s why we need a meaningful plan to restore connectivity to this island.
“In Shannon’s case for example, we need to restore the 40 flights a week from London to Shannon and the 45 transatlantic summer services that the airport had at peak schedule; the 16,000 North American and the 1,600 UK room sales that the airport delivers to Dromoland Castle Hotel annually; the 9,500 North American and the 1,500 UK room sales to the Shannon Springs Hotel; the 15,000 North American and the 3,000 UK room sales to the Great National South Court Hotel, Limerick; the 3,291 room sales that airline crews deliver to the Clayton Hotel, Limerick in addition to the 7,873 overseas leisure tour room sales and the 4,456 room sales delivered by Corporate groups with an average seven-day stay; the chauffeur services provided by Pat Keogh Chauffer Services to 20,000 overseas visitors arriving by air and the 3,723 air crew transfers provided by the company on an annual basis.
“Shannon and other regional airports must provide direct access to source markets, supply chains and key destinations for tourism, international business and leisure.
“Shannon will need year-round scheduled services to at least one hub in the UK, Europe and North America, peak season services to multiple destinations, a sustainable mix of long and short-haul services with a focus on quality of routes and markets served rather than volume,” the grouping state.