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Ireland West Airport Knock Study Group Report

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Ireland West Airport Knock Study Group Report Ireland West Airport Knock Study Group Report Final Report December 2013 i ii FOREWORD ............................................................................................................................ v 1. Introduction and overview ................................................................................................ 1 1.1 Ireland West Airport Knock ........................................................................................ 1 1.2 The Airport in its catchment ....................................................................................... 2 1.3 The existing policy support framework for regional aviation .......................................... 3 1.4 The Study Group: composition and terms of reference ................................................. 4 1.5 The work of the Study Group ...................................................................................... 5 1.6 Structure of this report .............................................................................................. 6 2. Recent Performance and Emerging Challenges................................................................... 7 2.1 Overview .................................................................................................................. 7 2.2 The recent past – passenger numbers, revenues and costs............................................ 7 2.3 The underlying financial position .............................................................................. 10 2.4 Fiscal constraints .................................................................................................... 12 2.5 The challenge ......................................................................................................... 14 3. Framing the Business Plan.............................................................................................. 15 3.1 The policy context ................................................................................................... 15 3.2 Options for viability and growth ................................................................................ 17 3.3 The Airport in its catchment: offering the scope for growth ........................................ 19 3.4 Economic prospects in the region and beyond............................................................ 20 3.5 Tourism.................................................................................................................. 22 3.6 Charting a path to sustainability ............................................................................... 24 4. Making it happen ........................................................................................................... 25 4.1 A business plan for growth and viability .................................................................... 25 4.2 Actions required ..................................................................................................... 25 5. Conclusions .................................................................................................................. 30 5.1 The work of the Study Group .................................................................................... 30 5.2 Recent performance, emerging challenges and the scope for growth ........................... 30 5.3 Making it happen ..................................................................................................... 30 iii iv FOREWORD I was pleased to be invited by An Taoiseach, Enda Kenny T.D. to chair this Study Group to examine the potential for the future of Ireland West Airport Knock. It represented an opportunity and a challenge against the backdrop of changing policy positions at both a national and European level. The current Exchequer Funding Programme for regional airports will cease at the end of 2014. From the outset, therefore, it was understood that whatever recommendations evolved from the examination of IWA Knock, Ireland’s largest regional airport, they would have an important impact on the formulation of future Government policy for regional airports. Furthermore, at a time when the 2005 European Policy on State Aid and especially the basis for future supports for regional airports is being reviewed, those recommendations will also assist Ireland in contributing to the establishment of new parameters post 2014. My concern has been to ensure that the contribution made by regional airports to social and economic development in peripheral locations is fairly acknowledged at a national and European level. By using IWA Knock as a reference case, I believe this has been demonstrated. However, given fiscal constraints, it is also clear that Regional Airports must develop business plans for ongoing sustainability which recognise the lesser role that State supports will play into the future. I am confident that IWA Knock has demonstrated a capacity to do so and has also acknowledged the benefit of using a balance of local and national, public and private inputs to achieving its objective of commercial viability. Achieving this will require investment and that will need to include state support. I do not believe that a reduction in State funding can be achieved in the short term and I hope that Government will recognise the need to develop a new programme for Regional Airports for a defined period from 2015 based on the conclusions of this Report. The Group comprised representatives from the range of local and national interests including the airport Board and management, Government Departments, local business, State Agencies and Local Authorities, and were assisted by EY. I genuinely believe it gave the different participants a new insight into the difficulties and challenges faced in other sectors. I wish to take this opportunity to express my sincere appreciation to all the members of the Group for their work. I am confident that this Report will be of significant benefit, not only in terms of IWA Knock’s future, but also in developing policy on regional airports in Ireland. John O’Mahony T.D. Chairman v vi 1. Introduction and overview 1.1 Ireland West Airport Knock IWA Knock was established in 1985 and was officially opened in 1986 in response to a campaign led by Monsignor James Horan, a local parish priest. The initial idea conceived of by Monsignor Horan was to give pilgrims easier access to Knock Shrine and to provide a link with other Christian sites across Europe. From that modest beginning, the Airport has grown to be a key channel of connectivity to the region and is now the largest non-State owned airport in Ireland. Passenger numbers have displayed a continued upward trajectory and, following a slight dip in the early years of the economic downturn, have shown resolute growth in the face of considerable headwinds. In 2012, a record number of passengers used the Airport and revenues surpassed 2007 levels for the first time. • Airport Officially Opens The Airport is now a critical piece of the • First flight from Knock to Rome 1985 • First scheduled route to Luton launches economic and social infrastructure of the region and provides vital connectivity to the West of Ireland. • Passenger numbers pass 100,000 1988 IWA Knock is unique in the Irish aviation industry in that it is operated as an • Paris and US charter flights commences independent airport by Connaught Airport 1990 Development Company (CADCO) Ltd, a private company responsible for its day-to- • Stansted route commences day operation. The Board of Directors 1992 consists of twelve members and the sole shareholder in CADCO is the nine-member • Passenger numbers pass 250,000 Horan International Airport Trust. The 2002 responsibility of the trustees is to ensure that all profits generated by the Airport are • Passenger numbers pass 500,000, Easyjet Commences services • Wins Best Regional Airport 2004 re-invested in the Airport with a focus on 2004 • bmiBaby commence Manchester Route providing support to the surrounding • Passenger numbers pass 620,000 region. Through this structure, a level of • Wins Best Regional Airport 2006 community and regional-economy 2006 • Scheduled Transatlantic services commence involvement is brought to bear on the • New route launched with carriers Ryanair, bmiBaby and XL.com Airport’s focus not common elsewhere. • Terminal and ILS projects completed 2008 • New routes with Aer Lingus and Ryanair The role and importance of IWA Knock in the local and regional economies and wider community contribution form an aspect of • New European Routes initiated 2010 the backdrop to this study. • Record Passenger numbers (685,000) The challenge now, is to assess – and work • Revenue levels surpass 2007 to safeguard – the future of the Airport. 2012 Crucially, this must be achieved within a framework of sustainability: both from a • Study Group on future for Knock initiated financial perspective and from the 2013 perspective of State-support. 1 1.2 The Airport in its catchment IWA Knock is an important access point to the West, North West and Midlands Region. Across the world, regional airports make a valuable contribution to social and economic development in what might otherwise be peripheral locations. On this theme, a recent report conducted on behalf of the European Commission underlines the important role that airports can play in meeting EU regional development goals. The report noted that better accessibility is one of the means to improve conditions in peripheral locations and regional airports are an important option for improving
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