Kevin Toland CEO daa Seanad Special Select Committee on the UK's Withdrawal from the European Union June 7
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Seanad Special Select Committee on the UK’s Withdrawal from the European Union June 7 Kevin Toland CEO daa
Discussion Points 1 Brexit Overview – What we know so far? 2 Why Aviation Matters 3 Actions to Address & Secure the Opportunities
Brexit: What we know so far
No Safety Net for Aviation – Critical Consideration for Talks
• The UK has initiated the process for withdrawal by formally giving notice to EU.
• There is a two-year timeframe for negotiations (This timeframe can only be extended by unanimous EU vote)
• EU 27 will negotiate as a collective e.g Ireland will be unable to negotiate or complete bilateral agreements with the UK outside of EU
agreements.
• There are two elements to be negotiated:
A) Withdrawal Agreement (Article 50) - including what is exit bill for Britain to pay? Estimated at €60bn
B) The new relationship between the UK & EU (Article 218)
• Prime Minister May has confirmed the UK will leave the Single Market and is seeking a “new deep and special partnership”
• UK will refuse to contribute to the EU budget post Brexit.
• UK has stated that the European Court of Justice (ECJ) will have “no future role” in UK laws Post Brexit – an alternative, binding, method for
conflict resolution between the EU27 & UK will have to be found.
• Leaving the Single Market, refusal to contribute to EU budget and participate in ECJ means we can expect a “Hard Brexit” & uncertainties to
remain over the coming months.
• Danger of “Cliff Edge” scenario at the end of the two-year timeframe – no agreement reached, default to
WTO tariffs for trade but no default position for aviation.
Very Complex Negotiating Process
Complex for all Parties
• UK
• EU27
• Ireland
Confidential 5
It is Likely That A Bespoke Solution Will Be Needed Confidential 6
Why Aviation Matters
In 2016 45.8m Passengers Travelled to/from the Island of Ireland
Island of Ireland Passengers
40,652
(ROI Domestic Passengers Excluded)
37,468
36,909
36,899
33,250
33,156
31,550
30,606
30,198
29,858
40,000
Passengers (000’s)
30,000
Overall growth
20,000 in pax numbers
5,937
5,618
5,548
5,363
5,322
5,255
5,190
5,166
5,108
5,096
10,000 driven by air
0 travel
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
2016 Island of Ireland Air/ Sea Percentage Split Air Sea
Air Access 89% (40.7m Pax) - Sea Access 11% (5.1m Pax)
Sea traffic
In 2016 35.6m Passengers Travelled to/from ROI relatively flat at
Republic of Ireland Passengers 5.1m pax
32,549
(ROI Domestic Passengers Excluded)
29,538
29,196
29,012
26,311
25,642
24,601
23,649
23,293
22,762
Passengers (000’s)
30,000
20,000
Dublin Airport
3,586
3,411
3,354
3,209
3,196
3,180
3,162
3,104
3,073
3,063
10,000
provides 68% of
0 air capacity to
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
the island
2016 ROI Air/Sea Percentage Split Air Sea
Air Access
Confidential 91% (32.5m Pax) - Sea Access 9% (3.1m Pax) Confidential
8
daa Airports have been Growing Connectivity
Island of Ireland Market Share 2016 Owing to our island
nation status, Irish
people have a high
propensity to fly.
In 2016 there were just
under 33m air
passenger journeys.
Circa 17%-20% of those
journeys are for
business.
Up to 80% are for
tourism (inbound &
outbound)
Confidential 9
daa Group Passenger Volumes Growth to a Record 30.1m Passengers in 2016
35
30.1m
30
27.1.2m
25 23.9m
22.8m 22.4m
Million Passengers
20
15
10
5
0
2012 2013 2014 2015 2016
3 Airports - Dublin, 2 Airports –
Cork & Shannon Dublin & Cork
Confidential 10Ireland’s Success is Built on Connectivity
As an island nation, Ireland’s connectivity & accessibility is a key Dublin Airport
supports 3% of
enabler for economic growth – without it, tourism cannot thrive, Ireland’s GDP
Ireland would be an unattractive location for business and the
economy would not prosper.
Dublin Airport is Ireland’s
gateway to world, is the 12th
best connected airport in
Europe & has further
potential to grow
Confidential 11Dublin in Competition with European Airports to Enhance Connectivity
Number of Destinations Served outside of Europe & North Africa
Population within 2 Hour Catchment Area
Brussels 25m
Manchester 21.5m
Zurich 12m
Duesseldorf 19.3m
Copenhagen 4m
Stockholm 9m
ROI Population Alone is Only 4.6m
Opportunity to improve Dublin’s connectivity (currently strong reliance on North American
connectivity)
Dublin & Ireland’s competitors for airline business are other large European city airports
Those airports have advantage of much larger population densities on their doorsteps to
drive demand for air services
This is evident in the connectivity they provide across continents
If Dublin loses they will gain – not smaller Irish airports.
Ireland’s international gateway needs to retain its licence to grow.
Confidential
Confidential 12Some of the EU27 May Not be as Concerned About Implications for Aviation links to the UK as we are
EU-27 Airports UK Airports
Share of UK / Non UK Pax Share of EU27 / Non EU27 France
Traffic Pax Traffic
UK Only
11.5% Depend on
UK for 6.8%
of Traffic
Non-UK Non-EU27 EU27
53.5% Germany
Only
Depend on
UK for 6.1%
of Traffic
Source: ACI Europe, 2015
1 in every 2 passengers handled by UK Airports are flying to/from the EU27
1 in 10 passengers handled by EU27 Airports are flying to/from the UK
UK Market is heavily dependent on the EU
Confidential 13Brexit Creates Particular Challenges for Irish Aviation due to Strong Traffic Flows
2016 UK Market Share
36%
58%
EU27 Countries with a >15% dependency on UK Passenger Traffic
Ireland is the EU Country most dependent on UK Passenger Traffic
Confidential 1478 % of all Ireland UK Trips are made by Air
Percentage of EU - UK Trips made by Air Value of UK Tourism:
• €1.1bn Revenue
generated from 3.8m
visitors to ROI from GB
in 2016
• 42% of Inbound Visitors
to Rep. Ireland are from
GB.
Confidential 15Traffic to/from UK represents 36% of Dublin Airport’s Business
30,000,000
25,000,000
860+ flights per week to Britain
20,000,000 with over 370 going to London
airports.
15,000,000
Dublin/London is busiest air route
10,000,000 in Europe, 2nd busiest in the world.
30% of transferring passengers are
5,000,000
37% 36% 36% on UK-Dublin routes.
0
2010 2015 2016
Confidential 16Traffic to/from UK represents 58% of Cork Airport’s Business
3,000,000 Cork Airport has a strong
2,500,000
dependency on UK Routes
Excellent connectivity with the
2,000,000 UK – flights to 13 different UK
1,500,000
airports from Cork
Regional destinations under
1,000,000
biggest threat from Brexit
500,000
50% 58% 58%
0
2010 2015 2016
Confidential 17Currency Fluctuations Can Damage Tourism Potential
Two Year View of € Euro to £ Sterling Movements (30.05.17)
• Brexit referendum caused a 15%-20% drop in value of £Stg
• ROI more expensive for UK visitors
Confidential 18Strong Leisure Traffic Component Heightens Concerns re Brexit Impact
Departing Passengers Routes
2016
Purpose of Trip London UK Provincial
• VFR & Business the
Main/Annual Holiday 14% 7% main reason for
travel from Dublin
Additional Holiday 12% 20%
Airport to the UK in
Visiting Friends/Relatives 31% 29% 2016.
• Challenges
Business 26% 22% emerging:
Personal/Family 13% 19% - Staycation
- Weaker Currency
Work 3% 2% - UK Regional
Other 1% 1% Tourism
Total 100% 100%
19
Confidential
Source: DAP Passenger Survey 2016.Strong Correlation between UK GDP & UK Air Passenger Volumes since 1993 – Vulnerable to
Brexit Shock
• Strong correlation
between UK GDP &
air passenger
volumes
• Negative impact on
UK GDP as a result
of Brexit could
reduce passenger
volumes
Confidential 20Business Traffic Could Be Hit
Business Trips Between EU27 & the UK by Country
• Strong Ireland/UK
econ relationship
facilitated by ease
of access.
• 44% of all
Irish/EU business
trips are to/from
the UK
• Any reduction in
air access will
reduce this.
Confidential 21Open Skies and a Liberalised Market has Provided a Platform for Increased Connectivity
Pre- 2015 Percentage
All of EU Liberalisation Change
Number of EU
Domestic city-pair 813 953 17% Pax Growth:
routes 1989 – 5.1million
Number of domestic 2016 – 27.9million
routes with more than 106 439 414%
one carrier
Number of intra-EU
city-pair routes 692 3,218 465%
Number of intra-EU
Routes with more than 61 646 1059%
two carriers
Liberalised aviation market has driven down the cost of air transport
Increased competition benefits the consumer, increases the
attractiveness of travel & drives tourism growth
Confidential 22This Has Improved EU Connectivity
Available Seat Miles
(Number of Seats Available)
• Single EU aviation
market created ease
of access &
improved
connectivity across
Europe
• Increased level of
supply
• Also created
greater levels of
competition for
consumers
Confidential Confidential
23And enabled growth in traffic at home
Dublin Passenger Numbers 1986 - 2016
Failure to maintain liberalised European aviation market would decrease the level of supply.
Negatively impact Ireland’s connectivity & increase costs for consumers.
Confidential 24Actions to Address the Challenges & Secure the Opportunities
Brexit Raises Challenges and Opportunities
Limitations to Free Movement of People & Goods: Border Control, Schengen & Visas
Threat to Common Travel Area: Maintaining its current form
Tourism Decline: Tourism Ireland forecasts UK visitor decline in 2017,
1st in 5 years, UK increasing regional tourism spend
Freedom of Skies/Liberalised EU Air Transport hampered: Air Agreements
Inconsistent Safety, Security & Other Regs: Incl State Aid
Currency Movement/Broader Economic Effect: Sterling etc
Potential Duty Free Opportunities: UK Routes
Transfer Pax Opportunities from Non-EU to EU for Dublin Airport
FDI Relocation Opportunities: Ireland only English-speaking state in EU
Confidential 26Maintaining Current Traffic Rights is Key The overall economic effect of BREXIT on the UK and European economies is likely to be negative with a consequential downward pressure on the overall level of aviation activity. The air service agreements, which underpin air travel to and from the UK, lapse under Brexit and need to be renegotiated. In a hard Brexit scenario, and in the absence of a replacement arrangement by the time the UK exits the EU, traffic between the UK and Ireland could be seriously curtailed. The market should remain fully liberalised and deregulated, thus ensuring no disruption to airlines, business, tourism and personal travel. Methods to maintain the integrity of the Common Travel Area (CTA) and its associated rights need to examined and solutions for maintaining the CTA in its current form found Schengen Membership is unlikely to be a viable option. It would create significant challenges to the passenger flow which could negatively impact our hub development strategy. Trusted traveller schemes should explored and methods of implementation post Brexit agreed to limit scope for disruption to Ireland-UK passenger flows Maintaining liberal approach to markets is key to enabling benefits to continue for consumers – no return to protectionist policies around the granting of traffic rights Confidential
Dublin Airport & Global Connectivity is a Key Enabler of Irish Economic Growth
864
flights to
Great Britain
per week
33
flights to
Canada per
week 1,155
flights to
Europe per
week
174
flights to
USA per
week 6
flights to
1 Africa per
flight to week
Jamaica per
week 53
1 flights to Asia
flight to & Middle East
Mexico per per week
week Existing Destinations
New Destinations 2017
• Dublin Airport is the 5th best connected European Airport to North America
• Dublin – London is the busiest route in Europe & 2nd busiest in the world
• Without Dublin Airport’s extensive connectivity the Irish economy would not be as large, affluent or diverse
as it is today.Further Connectivity is Essential to Overcome the Challenges Brexit Presents
Dublin
China
• Further long-haul route connectivity is essential e.g China
• Continue to make Ireland the leading destination for business & tourism
• Put infrastructure in place to meet market requirements – North Runway must have
ability to meet operational needs.Ensure Infrastructure is in place to Capitalise on Growth Opportunities
Delivering North Runway is key to developing
Dublin Airport’s network in the future & ensuring North Runway Operating Conditions Must be Addressed to Avoid
Reductions in Traffic
Ireland remains the preferred location for
Annual Traffic Impact
Business & Tourism:
• Increased runway capacity at peak times to
78m total lost passengers
cater for increasing demand
• Longer runway to cater for new long-range
destinations, allowing for new routes and 6.3m loss by
airlines 2037
• Extended global connectivity (e.g. Asia, Dublin-
China) 2.4m loss in 2020
• Further development as a European gateway to
the US
North Runway will facilitate:
• Circa 30% increase in connectivity
• €2.2bn growth in GDP
• Circa 31,000 new jobs (7,000 of those by 2023;
1,200 during development)
….and ensure it can to operate at times that facilitate market demands
ConfidentialContinue co-operation on aviation safety and security standards .
The EU and UK must continue to closely cooperate on matters of aviation
security and aviation safety and ensure a high level of reciprocal recognition
of such standards.
Diverging standards and requirements between the EU and the UK on such
matters would create detrimental burdens for EU and UK aviation:
• It could require security searches after inbound flights, potentially
changing the way airlines are allocated at the airport to prevent mixing
on inbound 3rd State passengers.
• It would create increased demand on airport infrastructural resources
as there may not be sufficient space to address segregation
requirements
• It would increase passenger confusion which would require increased
airport costs to address
Ultimately result would be higher travel costs for the consumer.
The loss of the UK as a key ally in relation to airspace, safety and security
regulatory developments will require Ireland to align itself with Member
States and air navigation service providers with similarly minded aviation
interests – need to identify and solidify these partnerships as soon as
possible.
Confidential 31Tourism is a Key Contributor to Rep. of Ireland Economic Growth
€4.7bn Revenue 9m Visitors 220k Jobs in the
+10% vs. 2015 +12% vs. 2015 Sector
1 in 9 People are 3.8m UK visitors to Tourism Marketing
employed within Rep. of Ireland Funding Increase
the tourism & generated €1.1bn Critical
hospitality sector
Confidential
2016 – Record Year for Irish TourismWhile Overall Passenger Growth Continues
to be Positive for Dublin YTD 2017 vs. 2016
Dublin Airport traffic up 7%
Transatlantic increase of
26% & outbound
passengers a key driver
Challenges are beginning to
Emerge for UK Tourism
Market
February – April 2017
Trips by residents of
Great Britain to ROI
decreased by
10.7%
33
ConfidentialImmediate Action Required to Protect Tourism from Brexit
Maintain & improve Defend current UK
competiveness rate visitor market
- Retain 9% VAT rate share
Continue & further
Protect joint Irish/UK
initiatives grow market
- VISA waiver scheme diversification
strategy Increase of €12m
required in
Tourism Marketing
Successfully Budget
compete with UK
regions post Brexit
Confidential 34Re-establish Duty Free for UK Flights daa pioneered duty free shopping in 1947 and has seen our business now grow in North America, Middle East, Australasia, India and Europe. ARI is Ireland’s leading global retailer providing an international shop window & unique worldwide reach for Irish products such as whiskey. Restoration of duty free on UK routes post Brexit required. Upon the UK becoming a ‘third country’ at the end of the two-year EU exit process, duty free sales should commence immediately for air and sea travellers to and from the UK, regardless of any transitional Confidential arrangements. 35 Confidential
Opportunity to Position Ireland as the Business
Destination of Choice with Offerings Like Dublin
Airport Central.
• State-of-the-art office building creating a
new category of Dublin office campus
• Offering unrivalled connectivity –
international, national and local – 15
minutes from Dublin city centre via the
Port Tunnel, just off the M50, access to 38
countries on 4 continents
• Access to an established commercial hub
- 250 business already in operation out of
Dublin Airport including global couriers,
car parking, restaurant and leisure
facilities
Confidential
Confidential 36Summary of Key Actions 1. Aviation is a Key Economic Enabler. Global connectivity is essential to ensure that Ireland remains open & accessible to the world & also enable the continued economic growth & prosperity for the island. The Irish government should proactively seek methods to support, maintain & further grow Ireland’s connectivity. Enabling key infrastructural developments such as the North Runway in Dublin Airport are essential to achieve this. 2. Continued Liberalisation of EU Air Transport/Smooth Transition of Aviation Agreements between the EU & UK is critical. The EU’s commitment to continued liberalisation of aviation needs to be maintained & any new agreement must continue to facilitate air connectivity & avoid the potential of any “cliff edge” scenarios. Prioritise aviation during negotiations & ensure transitional arrangements are utilised to remove any uncertainty for aviation. 3. Tourism/Free Movement of People/Maintenance of the Common Travel Area (CTA)/Exploration of Trusted Traveller Schemes. Methods to maintain the integrity of the CTA and its associated rights need to be examined and solutions for maintaining the CTA in its current form found. Investigate potential technological solutions that could be implemented to maintain the free movement of people between Ireland & the UK. Confidential 37
Summary of Key Actions 4. Continued co-operation on aviation safety and security standards is crucial. Continued close EU & UK cooperation on aviation security and safety standards is crucial. Diverging/Non recognition of standards would create huge cost and complexity challenges for Irish airports 5. Take advantage of opportunities – re-establish duty free and position ourselves as the preferred option for businesses seeking to re-locate from UK. Actively engage in capturing potential opportunities for Ireland. For example: Attracting London based firms seeking to relocate in EU Member State. Ensure that there is no delay to the return of Duty Free on UK routes. Confidential 38
You can also read
