Airports

Published on July 12th, 2017 | by Mark Dwyer

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daa Profits Up as Work Begins on North Runway

Daa profit after tax increased by 75% to €108 million last year due to growing passenger numbers at home and abroad, improved commercial income and the impact of new overseas businesses. Overall passenger numbers at Dublin and Cork airports increased by 11% to a record 30.1 million in 2016. daa welcomed more passengers at its two Irish airports last year than it did during any year when it operated three airports in Ireland.

Turnover increased by 17% to a record €793 million, with aeronautical and commercial activities showing good growth and international turnover benefitting from the impact of Air Rianta International’s (ARI) new retail operations in New Zealand and daa International’s contract to manage a new airport terminal in Saudi Arabia. The profit generated by ARI’s overseas retail operations and investments increased by 11% to €24 million in 2016. ARI benefitted from strong sales growth across its portfolio, an excellent performance in Cyprus and the first full year of operations at its stores in Auckland.

ARI operates in many airports around the world including Abu Dhabi International Airport

Group earnings before interest, taxation, depreciation and amortisation increased by 20% to €247 million for the year. Operating costs increased by 14% to €381 million due to the impact of new businesses overseas and additional staff hired to cope with growing passenger numbers. In the first four months of this year traffic at both airports continued to grow, as Dublin traffic increased by 7% to 8.3 million and Cork passenger numbers increased by 2% to 602,000.

The 38% growth in traffic at Dublin Airport since 2013 is putting pressure on some areas and daa is currently investing about €100 million per year in capital expenditure to maintain, expand and improve facilities at Dublin Airport (see North Runway section below).

Dublin Airport handled a record number of passengers for the month again in May, 2.6m, up 5% on May 2016.  Cross-channel route passengers were 843,000, up 1%, Continental routes 1.4m, up 4%, transatlantic 321,000, up 18%, other international, mainly Middle East, 56,000, up 3%. Passenger numbers on domestic routes decreased by 9% with over 8,000 passengers travelling on domestic flights last month.  Up to May this year, more than 10.9 million passengers travelled through Dublin Airport, a 6% increase compared to the first five months of last year. The number of passengers using Dublin Airport as a hub to connect to another destination increased by 51% with 330,000 passengers connecting through Dublin Airport in the year to date.

Dublin Airport’s passenger growth has helped create almost 20,000 new jobs in the Irish economy over the past four years, an economic study has found.

North Runway Project

The procurement contract for the main phase of construction for North Runway will be placed next year and construction is projected to be complete in 2021. Work has already begun with Construction Package 1 and the following works had been completed up to May.

  • over 5km of temporary site security fencing and 1.4km of post and rail fencing has been erected;
  • fencing for the main construction compound is complete;
  • all hedge and tree felling is complete, as are associated mulching works;
  • the majority of archaeological site investigations are complete;
  • daa’s ornithologist continues to work with the contractor and Dublin Airport Fire Service to manage bird hazard risks;
  • preparing to erect the Forrest Tavern monument at its new location opposite the Boot Inn;
  • ongoing implementation of the Construction Environmental Management Plan.

However the North Runway project has not been without its problems. A Judicial Review action, brought by Friends of the Irish Environment (FIE), alleges the Fingal local authority ‘failed to provide satisfactory explanatory reasons for granting the extension to the original decision to allow a third runway at Dublin Airport’.

According to FIE Director Tony Lowes’ affidavit, the Council confined consideration to a number of ‘entirely general observations in relation to the International Civil Aviation Organisation and the possibility of certain actions being taken by the European Union in 2017 and 2018. ‘These observations do not discharge the Council’s obligations under the legislation to have regard to four criteria – the national mitigation plan, the national adaptation framework, the implementation of the national transition objective, and the objective of mitigating greenhouse gas emissions – before deciding to grant the extension.’

Last week at the Commercial Court, Mr Justice Brian McGovern allowed Ryanair become a notice party to actions being brought by FIE. In a sworn statement, Ryanair’s Director of Operations Adrian Dunne said the airline has significant interest in the construction of the proposed runway and consequently in the outcome of the legal actions. If built, Ryanair expects to be the biggest user of the new runway which it considers key and essential to Ryanair’s expansion and development. Mr Dunne added the project will benefit the State. It will also reduce taxi times from its aircraft thereby reducing unnecessary fuel burn, lowering carbon emissions and noise associated with increased taxi times all to environmental benefit, he said.

daa Annual Report

daa says the Commission for Aviation Regulation role in regulating Dublin Airport charges is unnecessary given its low charges in the airport’s peer group, the negotiating strength of the two main users, the conflict between short-term priorities of airlines the longer-term approach of airports and the need to adapt facilities and expenditure to growing demand faster than the CAR allows.

Average monthly Group staff numbers in 2016 were 3,598 up from 3,300 in 2015.  Average pay and related (excluding exceptionals) was €56,000, (2015 €55,100).  CEO remuneration was €399,063 (2015:€397,710) – a basic salary of €250,000 in each year plus pension contributions and other taxable benefits.  The full report is available here.

daa Chief Executive to Step Down

daa CEO Kevin Toland

daa recently announced that its Chief Executive Kevin Toland is to step down later this year to become Chief Executive of the publicly quoted food group ARYZTA AG. Mr Toland, who became daa Chief Executive in January 2013, will join ARYZTA following a six-month notice period. daa Chairman Pádraig Ó Ríordáin said it had been “a privilege to work with Kevin” over the past four and a half years.

“Kevin has worked tirelessly and with great vision to redevelop strategically the management structure and business approach of the Group, with compelling results. Under Kevin’s leadership, Dublin Airport was the fastest-growing major airport in Europe last year, Cork Airport is back to robust growth and our international businesses have expanded strongly. Kevin has contributed so much. We wish him every success in his new role and look forward to continuing to work closely with him over the remainder of his term.”

The Board of daa will now begin the process of identifying a new Chief Executive, Mr Ó Ríordáin added.

“It has been an absolute honour to lead daa, and I will remain fully focused on the business in the months ahead,” Mr Toland said. “I have greatly enjoyed working with staff and management. I have learned so much from my time with daa and am so proud of the fantastic job that our staff do for our customers and passengers across the globe on a daily basis.”

It won’t be all plain sailing for the next daa chief as Fearghal O’Connor from The Sunday Independent recently reported here.

Brexit

The effects of the UK’s decision to leave the EU will be visible from next spring, with airlines offering less routes to the UK, and at higher prices, Kevin Toland, CEO of the Dublin Airport Authority, told a Seanad Special Select Committee on Brexit.  He said that duty-free shopping between Ireland and the UK should commence immediately after the UK leaves the EU, and that Ireland should position itself as the ‘business destination of choice’.

Toland also warned the need to prioritise the airline industry in Ireland, advising that, out of the EU-27 members, Ireland is most dependant on the UK, with traffic to and from the UK representing 36% of Dublin Airport’s business. In comparison, France depends on the UK for only 6.8% of its air traffic and Germany 6.1%. Both Willie Walsh and Michael O’Leary have joined in the chorus of business leaders to call on the UK and EU to sign a comprehensive air transport agreement by September 2018 to give clarity to airlines planning schedules after March 2019. Walsh appears to be relatively upbeat about an agreement saying “With policy support it ought to be relatively straightforward to agree a deal on aviation that will be ready when the UK leaves the EU”. O’Leary on the other hand was quoted saying “I think that’s an impossibility because there is no goodwill in Europe towards Britain. The French and the Germans, when they have the opportunity to stick one into the British, they like nothing better.”

Capacity Needs for Dublin

The re-appointed Minister for Transport, Tourism and Sport, Shane Ross TD, announced that Oxford Economics and Cambridge Economics Policy Associates (CEPA) have been selected as the preferred tenderer to undertake the Review of the Capacity Needs for Ireland’s State Airports.

In the case of Dublin Airport only, the Review is expected to recommend the timeframe for the development of new terminal capacity – T3 – and its appropriate design and optimum location. It will also assess the relative advantages and disadvantages of the funding and operation of T3 by the existing airport operator in comparison to being operated on an independent basis.

This Review was announced by the Minister last September and concerns the long-term development of Ireland’s State Airports (Dublin, Cork and Shannon) to 2050. The Review will analyse, for each of the three airports, the capacity requirements to meet forecasted passenger throughput to 2050 and to identify priorities for infrastructure provision.

Ireland is already ensuring that in the medium term, our State airports have sufficient capacity for growth, particularly with the ongoing North Runway Project at Dublin Airport which will be operational early in the new decade.  The Capacity Review will consider the needs of the State airports in the longer term. It is anticipated that the review will be completed by the end of 2017.

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About the Author

Mark Dwyer

Mark is an airline pilot by profession flying the Boeing 737 for a major European airline. In addition he is also a Type Rating Instructor on the B737. Outside of commercial flying Mark enjoys flying light aircraft from the smallest 3 Axis microlights up to heavier singles. He also instructs on them including tailwheel differences training and is a UK CAA Examiner. He also flies the Chipmunk for the Irish Historic Flight Foundation (IHFF). Mark became the Chairman of the National Microlight Association of Ireland (NMAI) in 2013 and has overseen a massive growth in the organisation. In this role he has worked at local and national levels. In 2015, Mark won ‘Upcoming Aviation Professional Award’ at the Aviation Industry Awards sponsored by the IAA. Mark launched this website back in 2002 while always managing the website, he has also been Editor and Deputy Editor of FlyingInIreland Magazine from 2005 to 2015.



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