SHANNON AIRPORT is to be separated from the Dublin Airport Authority and combined with elements of Shannon Development into a new State-owned entity with a commercial mandate to drive tourism and economic growth in the area.
In addition the Government has decided that Shannon Development’s functions in relation to indigenous enterprise and foreign direct investment will transfer to Enterprise Ireland and the IDA respectively.
Its tourism functions will be moved to Fáilte Ireland.
The DAA will continue to operate Dublin and Cork airports and other entities, including duty-free group Aer Rianta International, which was founded in Shannon.
To reflect the change in its structure, the DAA is to be renamed. Shannon’s separation from the DAA has been on the cards since 2003, when the then Fianna Fáil-led government announced plans to give the three State-owned airports independence.
A steering group will be set up in the next week or two to decide the organisational structure of the new entity, including its financing, with recommendations expected before the end of this year.
The IDA, Enterprise Ireland and Fáilte Ireland have also been asked to draw up business plans to reflect the transfer of activities to them from Shannon Development.
It is not clear how many people will serve on the steering group or who will be its chairman.
Sources in the mid-west suggested yesterday that former Kerry Group chief and successful businessman Denis Brosnan might be asked to chair the group. This could not be confirmed last night.
No time frame has been set out for the break-up of Shannon Development and the establishment of a new airport entity.
New legislation could be required to effect the various changes, which would inevitably delay the process.
This decision signals the break-up of Shannon Development, which was founded in 1959 and acted as a mid-west version of the IDA. It employs 106 staff, who now face an uncertain time as their futures are decided.
Redundancies at both the airport and Shannon Development are thought likely as a result of this reorganisation.
Shannon Development owns and runs 55 business parks and industrial estates in Clare, Limerick, north Tipperary, southwest Offaly and north Kerry covering about 2,000 acres.
This land bank generated a rent roll of €13.3 million in 2010 and is valued at €97 million.
It is understood that a majority of the landbank, if not all, will be combined with the airport as part of the new entity.
Minister for Transport Leo Varadkar said this marked a “new era” for Shannon Airport, which made a loss of about €8 million last year and has seen its passenger traffic halve in the downturn to 1.6 million.
He said the Co Clare airport would have no net debt under this proposal, with legacy debts of about €100 million remaining with the DAA.
About half of the airport’s loss last year related to interest payments on its debts, which will now be assumed by the DAA.
Minister for Enterprise and Jobs Richard Bruton said creating “a strong aviation hub” at Shannon was important for economic development in the region and the long-term development of the airport.
Fianna Fáil Transport spokesman Timmy Dooley said: “Shannon Airport is currently receiving €8 million a year from the Dublin Airport Authority and there is no clear funding stream for the airport outlined by the Government after it is cut loose from the DAA.”
A Ryanair spokesman said: “Today’s transfer of Shannon from one semi-State quango to another is a missed opportunity to introduce real change and reform as well as real competition between the government-owned airports.”
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