SPECIAL REPORT: EUROPE’S REGIONAL AIRPORTS
Ireland’s regional powerhouse After using the traffic downturn to rebuild its main runway, Cork Airport’s managing director, Niall MacCarthy, feels that the Irish gateway is in a good position to bounce back better. How important is your airport to the city and region you serve in terms of connectivity, jobs and its economic and social impact? Prior to the COVID-19 pandemic, Cork Airport was the Republic of Ireland’s busiest and best connected regional international airport and the second busiest in the country after the capital city, Dublin. As well as operating over 50 direct routes to the UK and Europe, Cork Airport also provided daily long-haul connectivity through major hub airports such as London Heathrow, Amsterdam Schiphol and Paris CDG. We are a key part of the South of Ireland economy directly and indirectly supporting 12,180 jobs and contributing €904 million to the economy across the region in 2019. This was a combination of direct, indirect, and catalytic economic impact through aviation, inbound tourism, employment, and supply chain. COVID has obviously affected these figures, but with a strong summer forecast, in 2022 we expect to be at 75% of 2019’s economic impact or around €675 million in terms of our contribution to the South of Ireland economy.
How would you describe the airport’s current situation in terms of its recovery from the COVID pandemic? Cork Airport’s traffic declined from 2.6 million in 2019 to 530k in 2020 and 259k in 2021. In 2022, our traffic is forecast to grow by a multiple of seven to eight times 2021 levels. We availed of the opportunity presented by low traffic levels during COVID to rebuild our main runway in 2021 and renew our airside electrical infrastructure as part of a €40 million overall investment in the airport’s capital expenditure. We closed for a period of 10 weeks and this high-profile project was completed on time and slightly under budget by a very competent project team. Now that Europe is emerging from COVID, we are very confident of our airport’s recovery. The pandemic has done significant damage to networks and airport and airline balance sheets. We lost both Flybe and Stobart Air to liquidation during COVID and business traffic will take a while to recover. Nevertheless, we emerge from the pandemic confident
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AIRPORT WORLD/ISSUE 1, 2022
for the future of our airport and with eight strong scheduled airlines and 43 routes. Full recovery will take up to three years, but we are off to a strong start from April 2022.
Traditionally, what are the biggest opportunities/ challenges you face as an airport? Traditionally, attracting strong new routes is a key challenge and attracting them is very much based on securing a price per passenger that ensures that they are profitable. It is a very competitive market competing against hundreds of other cities across Europe for airlines to place routes and base aircraft in your particular airport. Creating sufficient operating profits through our aeronautical and commercial revenues to cover our capital expenditure is also challenging due to the high cost of airport infrastructure, including mandatory safety and compliance costs, as well as more recently the increasing costs of sustainability projects to meet our 2030 carbon reduction targets. People assume our airport is grant funded or state supported but up until COVID-19, all funds for capital expenditure and operating expenditure were commercially generated within our company without direct state subvention. It is the same challenge that any commercial company in any market faces… funding the short-term and the long-term in a highly competitive market.
Does the airport traditionally make a profit? Generally, airports handling between two and three million passengers per annum make an operating profit and can fund day to day capital expenditure, but do not generate enough cash flows for large scale infrastructure development. For us, pre-pandemic, our aero and non-aero revenue split was just under 60/40. So, aero revenue would still make up the majority of our earnings, but commercial revenue sources are growing and becoming more important all the time. Our three largest commercial revenues are car parking; car hire concessions; and retail/duty free concessions. However, other elements such as F&B, property rent etc are also hugely important to both revenue and our
