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Government must act to guide Irish aviation through Covid-19 turbulence

Dómhnal Slattery


 

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Shannon Airport’s survival is at stake
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Shannon Airport’s survival is at stake

As we all try to get through this lockdown as best we can it can sometimes be difficult to look too far ahead. While that is understandable in our personal lives, economically the bigger picture for our country always needs to be uppermost in our thoughts and planning.

A global crisis should not change that mindset. One thing is certain, the pandemic will end.

The first rule of any crisis is to deal with the facts. Today, much of our economy is under extreme pressure and needs urgent financial supports to survive. That undeniable fact was broadly addressed in the 2021 Budget. This was the correct fiscal strategy employed by our Government because our economy needs that investment to survive this crisis. Where Covid is concerned, the only objective is survival.

However when I read through the long list of valuable Government supports I saw almost no mention of aviation, a crucial component in our economy, and of Shannon Airport, a vital strategic asset to the Midwest region.

Shannon Airport is a core national asset and one of the key drivers of economic growth in both the industrial and tourism sectors in the Midwest and along the Atlantic seaboard. Shannon Group activities, which include the airport, generate in excess of €3.5bn within the Irish economy and contribute €1.1bn in tax revenue to the exchequer per year. Directly and indirectly, Shannon Group's existence supports over 46,000 jobs throughout the Midwest region.

This economic contribution and, more importantly, the livelihoods of thousands are now at serious risk if action is not taken urgently to ensure Shannon's survival.

As with many businesses throughout Ireland, Covid-19 has had a devastating impact on the airport as the travel market was effectively shut down. When the scale of the pandemic's impact on the aviation sector quickly became clear, the management team at Shannon Group took immediate and decisive actions to reduce its cost base, the primary objective being to protect business and jobs in the long-term. Operating costs at Shannon Airport have been reduced by more than 30pc since March.

The company has had to implement difficult measures to reduce its payroll costs, including temporary lay-offs, reduced working and widespread pay reductions. It has been cut to the bone. Shannon has dealt with the facts, now it is our Government's turn. Its support is required, and it is required now, so as to fund operating costs to keep these regional airports alive. Shannon will need at least €15m from our Government in 2021 for operational and capital funding to help it navigate its way through this crisis.

Such Government action requires leadership. It requires bravery. It requires conviction. We need the Irish Government to follow the example of other countries and rapidly introduce tangible supports for our regional airports, like Shannon, which are of crucial strategic and economic importance. The Covid-19 pandemic has seen unprecedented support from governments across the European Union for the aviation industry. They are dealing with the pandemic facts.

EU governments have accepted the responsibility to ensure that their airports can continue to survive in these extraordinary conditions by providing support totalling over €43bn across European airlines and airports. While the majority of this is focused on airlines, airports are also receiving direct financial support. Ireland's contribution to the aviation sector amounts to 0.02pc of this total. Given our rich aviation heritage, the importance of the sector, abandoning our airports in such a fashion is short-sighted. The EU template is there, our Government needs to follow the approach taken by many of our European partners and implement the necessary operational supports.

While the shape and timing of recovery in the aviation sector remains uncertain, it will ultimately recover, although aviation will be much changed post-Covid. Shannon Airport must also re-imagine itself following this crisis. It too needs to articulate a compelling vision for the future, one that matches our Government's support and confidence in the entire Midwest region.

I was born and grew up in Ennis, Co Clare, just 15 miles from Shannon Airport. My father's vegetable shop relied heavily on the airport for its survival. Some 40 years later the importance of the airport to the region has not changed. The Midwest needs Shannon to survive. So does our Government.

Dómhnal Slattery is chief executive of Avolon, the third-largest aircraft lessor in the world. He is also a member of the Clare Economic Taskforce

Sunday Indo Business

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