Ireland, backed by Brussels, pours extra €42.5m into aviation black holes

NGO Transport & Environment (T&E) has criticised the decision by the Irish Government, with Brussels’ backing, to grant €42.5 million to a number of small regional airports, a decision which will see public money propping up underutilised airports with questionable socioeconomic benefits. These public resources could have been better invested in developing a sustainable transport network in Ireland, T&E argues.

The move will see the Irish taxpayer being called on to fund loss-making airports serving overlapping catchment areas [1] while at the same time the government is unable to address Ireland’s chronic underinvestment in low-carbon public transit such as rail. 
 
The situation is especially bad in Munster where three of the province’s four airports serve the same route (Alicante, Spain) and all four serve London. All the while the biggest of the four, hugely indebted Cork airport, carries a significant debt repayment from the €113 million cost of the new terminal but also the continued control of the airport by the Dublin Airport Authority. 
 
Enda Buckley of the Irish Environmental Network (IEN) said: “Taxpayers would be better served by a strategy that consolidates airport capacity and uses the money saved to invest in a rail network that would better connect these catchment areas. This would boost tourism and industry in the regions while helping Ireland to meet its climate targets.” 
 
Andrew Murphy, sustainable aviation officer at T&E, commented: “With Knock airport having exceeded 700,000 passengers, it should be more than able to run its own operations with no subsidies. The fact that it is located in the Taoiseach’s own constituency means however that the Premier can proselytise with the public purse.” 
 
Further explanation required from Brussels decision-makers 
T&E also calls into question the claim that this programme conforms to EU state-aid guidelines. Those guidelines, revised barely a year ago, warn against funding airports in cases where catchment areas overlap, where similar destinations are served and where there is already underused capacity.
 
The Commission’s own impact assessment stated that Europe has too many underused and loss-making airports [2] and that any investment which deteriorates the medium-term prospects for use of infrastructure in the same catchment area cannot be justified and would simply be a waste of public money [3]. 
 
In drawing up the revised 2014 guidelines, the Commission also argued that aviation plays a fundamental role in the European economy, and that “improvements in connectivity contribute to the economic performance of the wider economy”. In this case the Commission would seem to believe that by connecting Irish people to holiday destinations like Alicante, the Irish economy will flourish. The reality is that investments in airports rarely result in the promised economic benefits [4].
 
The decision is especially surprisingly considering the publication of a recent report from the European Court of Auditors on public funding for airports, which found that investment in loss-making airports cannot be considered an effective use of public funds and does not result in additional jobs being created [5].
 
“State aid for loss-making airports does nothing to improve Europe’s competitiveness or create jobs. It is an enormous waste of scarce public money that goes directly towards making our climate crisis worse,” Andrew Murphy concluded. 
 
Note to editors:
[1] Waterford airport is 103km from Cork airport but serves exactly the same routes (London and Birmingham). Kerry Airport is within 100km of both Shannon and Cork airports and also serves similar routes (London, Alicante). Meanwhile Knock and Shannon airports are only 140km apart. This duplication will make it less likely that Ireland will develop a strong network of self-sustaining airports. 
[2] “There are many unprofitable airports with unused capacity and poor commercial prospects in the EU” http://ec.europa.eu/smart-regulation/impact/ia_carried_out/docs/ia_2014/...
[3] Regional airports, which are within the same catchment area may suffer from a cannibalisation effect, i.e. a split of traffic among several underutilised airports, which prevents all of them from growing to become more attractive, and results in higher costs as density/scale economies are not realised.
[4] “Many studies find a positive correlation between aviation and economic growth, but no causal relationship between connectivity and economic growth was found.”  http://www.cedelft.eu/publicatie/the_economics_of_airport_expansion/1363
[5] “There was also little evidence that additional jobs were created as a result of (this investment in airports)” http://www.eca.europa.eu/Lists/ECADocuments/SR14_21/QJAB14021ENC.pdf

Contact the press team

Nico Muzi
Communications Director
+32 (0)484 27 87 91 
nico.muzi@transportenvironment.org

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