Published on April 28th, 2015 | by Jim Lee0
Is Cork Airport in decline and what can be done?
Speaking in the Dáil on 21st April, the leader of the opposition Deputy Micheál Martin outlined the “great concern” being felt throughout Cork city, the county and the region about the situation pertaining to Cork Airport. He noted that in recent years, Cork Airport’s traffic or passenger numbers have fallen by approximately 40%, which he said was “rather dramatic”. Last year alone saw a reduction of 6.6% in passengers to the airport. For the coming year, the airport authority is projecting a 5% decline so he believes “action is required”. As evidence of the airport’s decline he noted that Aer Lingus and Ryanair have announced the cancellation of routes on top of a reduction of further flights to continental Europe, including the ending of the Cork to Lisbon, Cork to Nice and Cork to Brussels routes. The recent announcement by Aer Lingus Regional to reduce its service “is a further blow to the situation at the airport” he added. There has been a serious decline in the number of flights to and from Cork which will have an obvious negative impact on the tourism industry and the economic and industrial future for the region.
Micheál Martin has been leader of Fianna Fáil since January 2011 and represents the Cork South -Central constituency and was a Minister in the previous administration. Given that all politics is local, his interest is obvious, but in saying that Cork Airport was “never really given any new lease of life by the Government” and it is at a severe disadvantage now, might sound like rhetoric, it is a widely held local view. Claiming that the Government has directly intervened “elsewhere” he went on to make the party political point that the present Minister for Finance, Limerick based Michael Noonan, “was influential in terms of the Shannon situation” and that Shannon Airport “can offer deals to Ryanair that Cork Airport cannot”. He went on to claim that “approximately 100,000 passengers were going through Cork and they are now going to Shannon because of the deals that can be offered”. “That is what daa (Dublin Airport Authority) officials are saying behind the scenes. They are clear and straightforward about it” he added.
Another contentious issue is the level of debt being shouldered by the airport. Much of the Cork Airport debt was incurred in financing the new terminal and other infrastructure at the airport. Following mediation on the matter in 2008 it was agreed that the Cork Airport Authority would take responsibility for €113 million of the debt in return for the transfer to it of net assets of €220 million. This was to be part of the separation of the airport under the State Airports Act 2004. That decision was controversial in Cork particularly as the board of Cork Airport Authority only agreed by one vote to accept responsibility for the debt and only to secure independence from Dublin Airport. Many believe that the decision was forced on them and was despite government commitments that the Cork Airport Authority would be established on a debt-free basis.
The government’s decision on the airport’s separation from the daa was initially postponed until 2011, due “to the impact of the recession on the aviation sector” but the Government decided in November 2012 that the existing ownership structure would be maintained for the present. The 2011 Booz & Co. Report on the Future Ownership and Operation of Cork and Shannon Airports found that Cork Airport performs well under daa ownership and management and operates to a sustainable business model
Micheál Martin’s stated position is that in the event of full separation of Cork Airport, as provided for under the State Airports Act, 2004 is “that the sharing of this debt between the Cork and Dublin Airport Authorities would have to take account of what is commercially and financially feasible for both authorities”. A neat compromise!!
Apart from the delicate solution of debt sharing, what other solutions has Micheál Martin proposed? Essentially he had two: – First he believes that “the pitch must be levelled somehow in terms of facilitating growth in Cork”. A route development fund is essential for Cork Airport, or else a regional support fund for tourism activities in the region. Route development funds have been successful in the past in developing regional airports and increasing connectivity elsewhere, including Scotland, Northern Ireland, Wales and northern England.
As importantly, he expressed the view that the Cork Airport board should be re-established if for no other reason other than it “would allow for a strong board that could advocate for Cork Airport”. “That would mitigate the sense, which is now very strong in the region, that certain issues are being muted because of the daa’s relationship with the Department and its political masters, that daa officials are not allowed to raise awkward questions and that they do not want to publicly articulate awkward questions” he added.
His party colleague, Michael McGrath, who represent’s the same constituency, has previously called for the establishment of a public-service-obligation (PSO) route between Cork and Dublin Airport because of what he said was “the need for air connectivity between the country’s two largest cities”. Criteria for the establishment of a PSO are set out in Article 16 of EC Regulation 1008/2008 and a key criteria is that the availability (or lack of it) of other modes of transport serving the route. Such modes of transport, such as rail and road, should not have travel times of less than 3 hours. As Cork and Dublin are linked by both motorway and rail, with journey times of less than the 3 hours and have sufficient frequencies and suitable times in the case of rail, it is not possible to introduce a PSO on the Cork – Dublin route. Significantly the Kerry-Dublin route operates as a PSO and the total subvention paid in the years 2012 to 2014 was over €12 million, €3,917,964 in 2012, €4,021,261 in 2013 and €4,061,373 in 2014.
New study highlights Cork Airport’s crucial economic role in the region
Mr. Martin’s comments come as a new study reinforces the crucial role Cork Airport has in the economy of the South of Ireland. The Economic Impact Study, carried out by InterVISTAS Consulting, found that Cork Airport is fundamental to the growth of the local economy and has key catalytic impacts that contribute directly towards tourism, trade, investment and productivity for the whole of the region. Without the airport, the regional economy in Munster would not be as large, affluent or diverse as it is today. The airport’s importance to the region is reflected in the fact that it supports or facilitates 10,710 jobs made up of direct, indirect, induced and catalytic employment. Cork Airport directly supports 1,920 jobs at the airport, with airlines, ground transport, handling, maintenance, food and beverage, logistics companies, Government agencies and hotels. There are 1,170 indirect jobs facilitated by Cork Airport, relate to suppliers and supporting businesses involved in the supply chain of the airport’s activities and 1,420 induced jobs, generated by the employees of firms directly or indirectly connected to the airport spending their income in the local economy.
The InterVISTAS study also found that there are 6,200 jobs facilitated through catalytic impacts or wider economic benefits of Cork Airport. Air transport to and from Cork Airport creates catalytic impacts primarily through increased connectivity and improved regional economic performance through tourism, tourism, trade in goods and services, investment and increased productivity.
Cork Airport also contributes €727 million to Gross Domestic Product (GDP), which equates to 2.2% of the total South West economy. This is made up of €134 million GDP as a result of direct jobs, €82 million for indirect, €90 million for induced and €421 million for catalytic impact.
While there are a number of factors that contribute to the economic success of the region such as government policy, taxation and local skill set, the level of direct routes from Cork is important when deciding to locate or expand in the region. The Cork Chamber of Commerce Biennial Business Air Travel Survey 2014, supported this view and of the views of 139 businesses sought, 93% said that the airport’s level of connectivity, (which is the highest outside of Dublin), is crucial in generating more trade, drawing more foreign direct investment as well as attracting more tourists.
Given the airport’s significant role in the local economy, Cork Airport’s Managing Director, Niall MacCarthy has called for more local support. “We have one of the most modern terminals in Europe serving the most passengers in Ireland outside of the capital. While we have a loyal customer base in Cork, we need the ongoing support from business and leisure travellers to ensure we continue the best choice of destinations from Munster. This support will ensure our continued contribution to jobs and growth as well ensuring the region remains connected to key destinations across the UK, Europe and beyond.”
Mr. MacCarthy added, “Cork already has a reputation for attracting some of the biggest and best global companies and we know that the connectivity from the South of Ireland is one of the reasons these companies chose to do business here; it is a necessary element for growth and development. Cork Airport’s connectivity is unrivalled by any other airport in the region. As well as connecting to key destinations in the UK and across Europe, we have direct routes to international hubs at London Heathrow, Amsterdam Schiphol and Paris Charles de Gaulle.”
The InterVISTAS study highlighted that air services directly facilitate to the large volume of tourists that visit Ireland as well as accommodating business growth. According to Tourism Ireland, “the Southwest attracts 28%, and as the most visited region outside Dublin, a successful, sustainable Cork Airport gateway is crucial to the continued success of the of the region as a destination.”
Currently however, only 37% of the passengers using Cork Airport are inbound visitors. Mr. MacCarthy has called for more financial support to help market the region. “The South of Ireland has massive potential to increase visitor numbers but we need funding to promote the excellent tourism product aboard. While we have a broad network of routes already, this will help encourage airlines to introduce new routes and increase traffic at the airport,” he said.
The Government’ response
Responding to Deputy Martin, the Minister for Transport, Tourism and Sport, Paschal Donohoe was quick to emphasise that the market for air services in the European Union is fully liberalised. Any European registered airline is free to operate any service between any two points in the European Union. It is, therefore, a matter for airlines, to decide what routes they service based on their commercial judgments. Similarly, under the Open Skies agreements, there are no regulatory obstacles for airlines who wish to operate transatlantic services from Cork. Currently Cork airport are actively seeking an airline to operate a service to the east coast of the US. In addition the airport authority is also engaging with airlines about the potential re-introduction of a Cork/Dublin service as a feeder for transatlantic services at Dublin Airport. He also wanted to make it clear that he has no involvement in those decisions.
He added that the Government was “very conscious of the importance of Cork Airport”. It is after all the second largest airport in Ireland and vital for business and tourism in the Cork region. “With all this focus on and discussion about declining passenger numbers, let us not forget that it still had more than 2.1 million passengers last year, has 42 scheduled routes and offers passengers excellent connectivity into three major European hub airports. The airport has excellent passenger facilities and provides award-winning customer services” he added. Recently Cork Airport received two nominations in the 2015 Aviation Industry Awards shortlist announced by the Irish Aviation Authority. The purpose of the Aviation Industry Awards is to celebrate excellence and innovation in the industry and over 65 of Ireland’s most successful and emerging aviation businesses make the final cut. Cork Airport has been nominated for the Customer Service Award, which it won at last year’s inaugural ceremony. It is also one of just two nominees for the Aviation Sustainability & Environment Award.
While Cork airport’s figures for 2014 trail Dublin’s which recorded over 21.7 million passengers, it compares favourably to Shannon (1,639,315) and Knock (703,332). However in Northern Ireland, Belfast International handled 4.031,700 passengers in 2014 while Belfast City handled 2,555,111 both well ahead of Cork. In the first three months of 2015 Cork recorded 380,655 passengers down 21,372 or 5.32% on the 2014 figure of 402,027.
Regarding routes, while it is true that Stobart has announced reduced frequency on some routes, it is also increasing capacity on others or resuming summer services, as all airlines do over the year, depending on seasonality and passenger demand. In particular, the airline will recommence its twice-weekly summer services to Jersey and Rennes from Cork in early June. In addition at the beginning of March the Airport announced a new twice weekly (Monday and Friday) route from Cork to Ibiza for summer 2015. The route, which will be operated by CSA Czech Airlines, will add over 8,000 seats to Cork Airport’s schedule and will run from 11th June to 21st September. The OK320/1, operated by an Airbus A319, will depart Cork at 00:15 and arrive Ibiza at 03:50. It departs Ibiza at 04:40 and arrives in Cork at 06:15. More recently the Airport announced a new twice weekly all year round route from Cork to Cardiff. Commencing on 6th June and operating on Tuesdays and Saturdays, the 118 seat Embraer 195 aircraft will be operated by Flybe, which is a new carrier for Cork.
However, it is crucial that existing and new services are, therefore, supported by the people in Cork and the wider catchment area to ensure their sustainability. There are also opportunities to increase the number of incoming tourists in the Cork region, which is quite low by international standards but ultimately, creating new services and growing inbound tourism depends not just on the availability of competitive access but also on ensuring that potential visitors have a reason to visit. The daa has developed attractive incentive programmes to encourage the introduction of new routes and services and Tourism Ireland have undertaken significant co-operative marketing activity with carriers serving the airport to promote flights to Cork and boost travel to the wider regions. In 2014 alone Tourism Ireland invested €385,000 in co-operative campaigns featuring Cork Airport as a gateway to Ireland. A large proportion of that money focused exclusively on Cork Airport. In addition to the regional stakeholders, the Cork Airport Development Council (CADC), established by the daa should be pursuing every opportunity to highlight the tourism product that is available in the catchment area of the airport. East Cork is also being promoted as part of the new tourism proposition for the south and east of Ireland, Ireland’s Ancient East. Cork city and airport now have the opportunity to act as a gateway to both Ireland’s Ancient East and the Wild Atlantic Way.
As part of a recent marketing initative, the Portuguese Tourist Office held a hugely successful and informative workshop for travel agents and operators from the region at the Clarion Hotel in Cork on 15th April. The workshop gave the opportunity for the local travel trade to get an update on the Portuguese tourist offering as well as a chance to build further business connections with suppliers from all over Portugal. The Iberian nation’s tourism figures continue to grow with The Algarve the fifth most popular tourist destination among Irish holidaymakers and there are large numbers of passengers looking for summer sun on the flights from Cork Airport to Faro.
In relation to the question of greater autonomy for Cork Airport the daa has put in place arrangements for the airport to be run as a stand-alone business unit within the Company, properly resourced at management level locally. In addition, two of the members of daa Board represent Cork, thereby ensuring that issues pertaining to Cork Airport are considered at the highest level.
Rather than looking at the negatives the airport should emphasise the positives of airports of its size. For example as airports such as Dublin fill, meaning even longer walking distances, more terminals, bigger and more remote car parks, even busier security and most importantly the speed and convenience of flying all but forgotten, smaller airports can mitigate these factors. In doing so a local airport can garner strong local support with secure permission to grow, provide a fast and easy passenger experience, especially where there are good local transport connections, and a reasonable road network. Building on these strengths smaller airports can provide a relief valve for busy constrained hubs, vital feeder services to these hubs and point to point connections for short/medium haul flown with speed and convenience. Cork needs to build on these advantages and plan and build a long and sustainable future.