Michael O'Leary comes Courting

[mairteenpak]

Michael O'Leary was before the Joint Committee on Transport today.

Micheal's visit was like that of an ageing wealthy bachelor, who was seeking the hand of the young Virgin Daughter of the aged couple who had only one child.

The suitor explained that the girl's future was secure, only if she married, that he wished to have her, or the rest of her , at any cost, that they were as well to be resigned to her fate, as his trophy bride, that he would do right by her, that he would be good for, that he was of benevolent character, that at least they knew his people, that she would aways be near her home with him, and that since her only security was in wedlock, her only other choices were to wed a Parisian, or a Frankfurter, or an Englishman, and that she could not survive as the Virgin Beauty Queen that she was in her youth.

Beside since he owned all the land and water around their farm she could not compete with him, if she tried to carry on the farm on her own, when they were gone.

'It would be better for Aer Lingus to be owned by a man from Mullingar who guarantees no fuel surcharges, than some anonymous person in Frankfurt or Paris', he said.


http://www.rte.ie/news/2008/0716/air.html

[Schuhart]

I actually found this bit more interesting

Mr O'Leary told the Committee that there was no future for airports at Donegal, Galway, Sligo, Waterford and that Knock was 'pretty flakey'.

He said this was to do with fundamental economics, that Ireland is a country of 4m people with 11 airports, when it only needs one.

And he said at a time when we need hospitals, the State is subsidising rich people to fly from Knock and Shannon to Dublin.

Looking at the Committee transcript, he did his best to introduce a note of reality to the discussion. Predictably, the honourable members spent their time clutching at straws to find a way of preventing Dublin. Aine Brady was notable as announcing her allegience to Galway, which Kildare North voters might consider before handing her a seat the next time out. I've very little time for assiduous constituency workers, but electing someone who is working for someone else's constituency seems frankly bizarre.

Anyway, my fav bits of reality dawning, and being quickly ignored.

Chairman:That is my point. Will Mr. O’Leary elaborate on how more of the traffic that is going through Dublin might be diverted to Shannon, for the sake of argument?

Mr. Michael O’Leary: With lower prices, but it is very difficult. One cannot get away from the reality. When one is trying to market Ireland in Europe, probably 75% of European passengers want to go to Dublin. One cannot force them. It is somewhat like the old Shannon transatlantic stopover. We forced them to go to Shannon, despite the fact that they wanted to go to Dublin, and sent them around the island by bus.

Chairman: Those of us who travel regularly have to go to Dublin, invariably, to get many of the flights, even Ryanair flights, because we do not have the services. That is why I am saying, as regards the outbound traffic, every person who lives on the Sligo-Mullingar-Tullamore arc should be able to fly from an airport other than Dublin, if we had the services.

Mr. Michael O’Leary: If the Chairman really considered that arc, there would only be one airport in Ireland. I will go back to the Bristol example. It is a city of 10 million and has one airport. Ireland is a country of 4 million people and should have only one airport.

Deputy Paul Connaughton: We live in different places, however.

Mr. Michael O’Leary: I live in Mullingar so I bow to nobody as regards trying to develop the regions, but Ireland is a tiny country.

Deputy Paul Connaughton: It does not look like it from the way Mr. O’Leary is talking.

Mr. Michael O’Leary: We have developed a base in Shannon in recent years on which we lose money. We have a five-year commitment there and Shannon gives a very low cost base. We have developed 31 routes into Shannon. People have no idea how difficult it is to fill flights from Frankfurt into Shannon in the middle of November. I challenge the committee to come up with an advertising slogan that would extol the attractions of Shannon and Clare in November, although I am sure Deputy Dooley would be able to do so. The only way we can fill those flights in the middle of December is with free seats, including taxes, fees and charges. We pay Shannon Airport out of those. We get nothing from the passenger. We try to live off sandwich sales and baggage charges.

Deputy Pat Breen: What will be the situation after 2010?

Mr. Michael O’Leary: If there is any increase in the Shannon cost base in 2010, our base there will be devastated. We have said that openly to Shannon as well.

Deputy Pat Breen:Ryanair has 60% of the business in Shannon at present.

Mr. Michael O’Leary: We have 60% of the business in Shannon because we have doubled the business in the past five years. It is not as if we went in and took it off somebody else. We created that business. One of the great things the late Minister for Transport, Deputy Séamus Brennan advocated a couple of years ago was freeing Cork and Shannon from the dead shackles of Dublin Airport. That initiative has not been completed yet, but the only future for Shannon and Cork is to have their airports run locally in their respective interests, not in the interest of Dublin Airport.

Deputy Paul Connaughton:I have a final question. In so far as spatial strategy is concerned, is this a fairy tale in Mr. O’Leary’s world?

Mr. Michael O’Leary: In the airline industry there is only one spatial strategy in this country. Ireland has 4 million people and should, by rights, have one airport. We have at least three or four jet runways, therefore three or four possible airports that could be sustainable. The non-jet runways, Waterford, Galway, Sligo and Donegal, are a waste of time. Stop giving them PSO subsidies because they are going nowhere. We are investing-----

Deputy Paul Connaughton: We did the same for the trains and the roads. We subsidised them for a very good reason. We would only have little boreens going to Galway now if it were not for the subsidies.

Mr. Michael O’Leary: I can solve the air access problems. The Government will have to solve the road and rail problems on its own.

And

Mr. Michael O’Leary: When the value of aircraft collapses, as we suspect it may do this winter or next spring, if oil remains at $140 a barrel. It will be approximately 18 months to two years after such a collapse in aircraft values. At present, aircraft values are high. Ryanair is selling seven and eight year old second-hand aircraft for more than we are buying new aircraft. That is because our aircraft orders were placed five years ago in the aftermath of the attacks on 11 September 2001. It probably is at least two years away.

As for the need for Shannon Airport to upgrade its facilities and services, poor old Pat Shanahan is blue in the ear from listening to me stating he should stop upgrading Shannon Airport’s facilities and services. They are absolutely fine and one should stop wasting money on the place.

Deputy Timmy Dooley: I was talking about runways, taxiways and similar facilities.

Mr. Michael O’Leary: The runway is fine. There is nothing wrong with it. Airports have a compulsion to spend money to upgrade things. They become nervous unless they are wasting money doing so. The airport is fine. There is a brand new terminal there and now its management wishes to upgrade something else. It is perfect as it is and one should stop wasting money. As I stated publicly at the time, Ryanair has a major problem with Shannon Airport. It paid out between €30 million and €50 million in voluntary redundancies to people who had not been very busy in Shannon Airport in recent years. While there is a human element to that, someone must pay for such €100,000 redundancy packages. Unfortunately, it will fall back on Shannon Airport because the cost should have been picked up by the DAA. Shannon does not need the level of upgrade of facilities and services that it thinks it needs. It simply needs low costs and more routes from Ryanair and other airlines in there. Unfortunately, 78% of the traffic is inbound. I appreciate that the Deputy would have been a frequent user of Shannon Airport but when he is there on a Tuesday in November on the Frankfurt flight, it is almost all Germans. The good people of Ennis are not going to Frankfurt in November. It is generally German, French and Italian people coming back in there. It is logical with the demographics of Shannon. The hinterland of Shannon, which takes in Ennis, has a population of approximately 150,000 people. I have friends in Nenagh who will always drive to Dublin rather than go to Shannon Airport.

Deputy Tom Hayes: Why?

Mr. Michael O’Leary: The road connections to Dublin are so much better.

Chairman: That is the point we put to Mr. O’Leary earlier. The road connections with the Atlantic corridor are now being built, with motorways coming west as well as going east. There is a great opportunity to change that.

Mr. Michael O’Leary: I cannot change the habits of the people who live in Nenagh. I can put cheap fares-----

Deputy Timmy Dooley: Mr. O’Leary did in most parts of the country.

Mr. Michael O’Leary: I can put cheap fares into Shannon and have put cheap fares into Dublin. The fares in Shannon are lower. They will still drive to bloody Dublin.

Chairman: We believe Mr. O’Leary is the one man who can change that kind of mindset and develop all of the western seaboard, particularly Shannon so that it becomes the main hub instead of having to come to Dublin.

Mr. Michael O’Leary: It will never become the main hub. One cannot get away from the reality that 70% of European visitors and probably 85% of-----

Chairman:We are talking about people from places like Nenagh and Galway.

Mr. Michael O’Leary: There are not enough people in Nenagh to sustain seven day per week year-round services to-----

Chairman: The point is that, by and large, we are all going to Dublin.

Mr. Michael O’Leary: This is because there are one or two from Nenagh, one or two from Mullingar and one or two from Sligo who all converge on Dublin. The Government has done a spectacular job in recent years in improving the motorways from Nenagh and everywhere else to Dublin. The focus will still be on Dublin.

Chairman: However, they are also coming west on the same motorways.

Mr. Michael O’Leary: We are putting the flights and infrastructure into Shannon. We offer 31 routes out of Shannon. Almost all of those routes are also on offer out of Dublin. I cannot just close the routes in Dublin and tell everyone “sorry lads, you’ve got to go to Shannon if you want to fly to those 31 destinations”. We must service both.

Chairman: Is it possible to offer cheaper flights out of Shannon than it is to Dublin to encourage more people from, say, Mullingar? Why would one wish to go from Mullingar to Dublin when it would be quicker to go to Shannon to a much more comfortable airport than the crowds up in Dublin?

Deputy Áine Brady: The parking is cheaper.

Chairman: Car parking is cheaper.

Mr. Michael O’Leary: The committee has the wrong person in here. It needs to get the SAA and the DAA if that is the issue. We will simply put in the services and allow people to choose-----

Chairman: Mr. O’Leary has been hammering Dublin Airport for all the right reasons and we fully agree with him but is there not an opportunity to develop Shannon?

Mr. Michael O’Leary: We are the people who are developing Shannon. We put 31 routes in there and it loses money. Would I take all my Dublin routes and put them down in bloody Shannon? Yes, I would if the people would move to Shannon.

[locke]

It was interesting that the two viable regional airports were the two that Ryanair fly into :mrgreen:

I'm not really sure that Kerry is more viable than Waterford.

[odie1kanobe]

He was clear in stating that supporting uneconomic routes via PSO is a waste of money and attempts by politicians to look after local interests by having an airport is a waste of time and money that the country cannot afford.

The building of €200 million terminals in airports that cater for 3 million people a year is part of the Culchie mentality "Dublin has this big airport so we must have it", overlooking the fact that people given the option still want to go to Dublin.

Money spent on upgrading the train services is better value for money for the taxpayer.

MO'L is pretty close to the truth in his submission.

Regional airports cannot survive so a cull is perhaps a good idea.

[locke]

If the Dublin Metro had served Heuston that may have had some point.

I take it you're refering to Cork with the E200m terminal? You might want to look at what actually went in there in terms of new access roads and new airport infrastructure as well. It wasn't just the terminal even though it makes a good soundbite.

On a pro-rated basis, it's the equivalent of spending E1.2bn in Dublin, which with Pier D, the Metro, the new runway and the new terminal will easily be accomplished.

If you're searching for wasted money, the 30m spent on Waterford, which doesn't even handle 100K passengers is a much bigger issue.

[odie1kanobe]

If the Dublin Metro had served Heuston that may have had some point.

I take it you're refering to Cork with the E200m terminal? You might want to look at what actually went in there in terms of new access roads and new airport infrastructure as well. It wasn't just the terminal even though it makes a good soundbite.

On a pro-rated basis, it's the equivalent of spending E1.2bn in Dublin, which with Pier D, the Metro, the new runway and the new terminal will easily be accomplished.

If you're searching for wasted money, the 30m spent on Waterford, which doesn't even handle 100K passengers is a much bigger issue.

MO'L has been clear there is no need to spend €1.2 in Dublin.

Cork Airport is a White Elephant that couldn't exist as a stand alone business. Its passenger numbers are going nowhere, it doesn't have the population to serve the airport.

Marseille which serves a much bigger area built a terminal for €10 Million.

[locke]

The problem with Michael O'Leary is that he thinks of what is good for Ryanair, while other people have to think of what is good for Ireland. For example, Michael O'Leary has no interest in making Dublin's second runway more than 2km. He can get anywhere he needs at that length.

Going back to Cork Airport, so many inaccuracies.

"Its passenger numbers are going nowhere" - They doubled between 2000 and 2007.

"it doesn't have the population to serve the airport." - Well, we know it has the population to serve 3.2 million passengers. And yet the old terminal was designed for 1.1 million, so it definitely needed replacing.

"Marseille which serves a much bigger area built a terminal for €10 Million." - Marseille had an exiting terminal and built a specific one for Lo Cost airlines. It didn't upgrade any of the other airport facilities. Cork also built access roads, a multi-storey car park, a new control tower, a new fire station and new airport office facilities. Effectively, it took a 1960s airfield and gave it the infrastructure to last for another 50 years. And even with all the argument about who gets the debt, it's only working out at E1.50 per passenger per year to service it.

[Schuhart]

The problem with Michael O'Leary is that he thinks of what is good for Ryanair, while other people have to think of what is good for Ireland. For example, Michael O'Leary has no interest in making Dublin's second runway more than 2km. He can get anywhere he needs at that length.

Very pertinent points, IMHO. Ryanair is a success, and Michael O'Leary is worth listening to. But at the end of the day he has no interest in anything other than what he needs to run low fares routes within Europe. He has a mild interest in developing a transatlantic business - but makes it very clear in his contributions to the Committee that he's thinking in terms of linking Europe to the US, so Ireland might not even feature in his plans.

On the other hand, we know that Dublin could attract more long haul business with a longer runway. It just won't be Ryanair.

That said, I'd temper everything we might say about air transport with the thought that oil prices won't be going down any time soon, nor will environmental concerns be going away. That frankly does make me wonder whether we need any of this investment in the long term.

Going back to Cork Airport, so many inaccuracies.

"Its passenger numbers are going nowhere" - They doubled between 2000 and 2007

Indeed, and it should be acknowledged that Cork Airport achieved this despite a problematic location. One of those lost opportunities is what might have been achieved if Cork, and not Shannon, had guaranteed US flights and a special tax district in the days when such measures were possible. If we're serious about regional development we should be noticing where there are areas with genuine strengths that can be built on. All the money poured into Shannon has left no lasting legacy. We might as well have poured it into the sea.