Challenges Facing Irish Aviation

1
Challenges Facing Irish Aviation

• Presentation by Julie ONeill
• Secretary General
• Department of Transport to
• French Connect 2009
• 23 April 2009

2
Aviation Vital to the Irish Economy

• Small Open Island Economy on the edge of Europe
• Our Aviation Strategy
• To promote regular, safe, cost-effective and
  competitive air services linking the country with
  key business and tourism markets
• Liberalisation of aviation market crucial to
  development of the sector in recent years
• We also need efficient, competitive airports to
  serve a range of business models (short haul,
  long haul, cargo etc.)
• Plan for the long term while meeting the changing
  needs of users in a very competitive and
  demanding market now

3
Overview of Gateways to Island of Ireland
4
Benefits to Ireland of Growth of Sector

• Passenger Numbers
• 30 million air journeys to/from Rep of Ireland
  each year
• 17 consecutive years of growth at our primary
  national gateway Dublin Airport
• Dublin Airport is now 14th largest airport in
  world for international traffic
• Dublin Airport caters for more international
  passengers than JFK, LAX, Rome or Zurich
• Range of services at Shannon dramatically
  increased
• Growth in air transport played a significant part
  in our economic success since mid-1990s. Will
  also play a key role in our economic recovery.

5
Irish people like to travel abroad

• In 2007, Irish people made 7.7 million trips
  abroad
• Highest rate of foreign travel in Europe
• Number of intra European journeys made by
  Irish is 5 times greater than the average for
  continental Europe, per head of population
• France, with 15 times Irelands population,
  generates only twice a many intra-European
  journeys per head of pop.

6
Growth in Passenger Numbers at State Airports
2004-2008
7
Passenger Growth at DublinGrowth of Aer Lingus
and Ryanair
8
Passenger Growth at Shannon and Cork 2004-2008
9
Growth in Passenger Numbers at our six Regional
Airports 2004-2008
10
Wide Range of Services in Irish Air Transport
Market

• Routes
• Wide range of services particularly in short haul
  and transatlantic markets
• This summer, almost 40 airlines will operate
  scheduled services from our three State Airports
  to over 200 destinations
• Competition and choice
• Our pro-competition policies help facilitate the
  growth of two strong competing independent
  airlines Ryanair and Aer Lingus
• Ryanair 110 routes Aer Lingus 80 routes serving
  Irish air transport. Falling air fares also a key
  feature.
• Key transatlantic market
• 5 airlines provide direct access to 9 US points.
  One-stop connectivity to/from over 40 additional
  US destinations available through Aer Lingus
  partners

11
Ireland - France Air Transport Market

• Ireland-France market is very significant approx
  1.6 million passengers through Dublin Airport
  alone
• Aer Lingus, Ryanair, Cityjet and Aer Arann will
  operate approx 30 scheduled services to 17 French
  airports this summer season from Dublin, Shannon,
  Cork and regional airports
• Number of visitors to Ireland from France 4 in
  2008 (414,700)

12
Aviation a Cyclical Business Impact of Downturn

• International trends
• 2009 is a very difficult year Global Recession
• Pax, loads and yields
• International Demand set to fall by at least 5.7
  and Yields to fall by 4.3 (per IATA)
• Irish experience similar
• Aer Lingus reduced long haul capacity Ryanair
  announced reduction of short haul capacity at
  Shannon and Dublin
• Impact on Airlines, Airports, Tourism
• Airlines facing two immediate challenges
  conserve cash and carefully match capacity to
  demand

13
Differential Impact of Downturn

• Airlines Legacy, Low Cost and Regional
• Cost Management and Flexibility the key to
  survival. LCCs better placed to react.
• Airports Hub vs Secondary
• Numbers at hub airports declining faster than at
  secondary airports. Implications for policy
  makers/regulators?
• Routes
• Long-haul routes and business class, in
  paricular, in serious decline at present
• Hub and Spoke vs Point to Point. There is a need
  to ensure that a wide range of connectivity
  options remains available

14
Opportunities and Threats in this Downturn

• Consolidation or Competition?
• Recent merger activity ClickAir/Vueling
  Lufthansa/BMI probably Lufthansa/Austrian,
  possibly BA/Iberia
• Development of alliances, particularly on
  transatlantic, eg. proposed BA/AA/Iberia and Aer
  Lingus/United
• Protectionism Vs Liberalisation
• EU Proposals onSlots Implications of proposed
  suspension of use it or lose it rule?
• EU-US Stage 2- Downturn underscores importance of
  reaching a second stage agreement and the
  relaxation of ownership and control barriers
• Short term Vs Long term view
• Focus on costs in short term Vs need to plan and
  provide infrastructure for the future to meet
  needs of all sectors

15
Wider Challenges

• Positioning for an Upturn in the Cycle
• Airlines cost / fleet management
• Airports cost management and appropriate
  infrastructure planning
• Policy Makers/Regulators ensure level playing
  field minimise regulatory burden where possible
  Air Traffic Management initiatives to improve
  efficiency
• Ensuring Connectivity to Growing Markets in Far
  East
• Department in consultation with China and India,
  and others, with a view to liberalising existing
  bilateral air service agreements
• Environmental Challenge
• Long Term price of Oil?
• Climate Change ETS and Post Kyoto