Is Ireland's aviation sector moving to pastures new?

For the Irish aviation industry, 2018 could be a crucial year as its overall positive story is threatened by political movements largely beyond its control.

Estimated figures reveal that in 2017, a total of 1.15 million flights were managed by the Irish Aviation Authority (IAA), a 3% increase on the previous year. This record number of flights includes those handled by the three state airports of Dublin, Cork and Shannon as well as flights in Irish controlled airspace.

Peter Kearney, Chief Executive Designate of the IAA said, “Air traffic has expanded again this year on top of the 8% expansion last year, driven by very strong lifts at both Dublin Airport and through Irish airspace on flights between Europe and North America.

“Dublin airport handles about 85% of all flights in/out of Ireland and we are projecting an increase of about 4% for the full year 2017 to around 215,000 commercial movements. We’ve started work on the construction of a new Visual Control Tower at Dublin Airport so that the IAA is ready to support the ATC operational requirements for the new parallel runway in the years ahead.

“Once the UK leaves the EU a new Air Service Agreement will have to be put in place between the EU27 and the UK. If that agreement constrains the ability to fly easily between Ireland and the UK or for Irish airlines to operate freely around the EU, then that will be bad for the Irish economy in general.”

“Both Cork and Dublin are expected to handle a similar number of aircraft movements to last year and they’ve both expanded their route networks in 2017. Traffic between Europe and North America is continuing to expand and we expect it to be around 5% this year. It’s a strong indicator of the level of economic demand between Europe and the USA.

“We’ve a great team of professional and dedicated staff. 2018 will bring new challenges, however the IAA operates a state-of-the-art air traffic management system, which has the capacity to handle more traffic in 2018 and the years ahead.”

However, while the picture is positive, Ireland’s future remains in the balance as Brexit negotiations over the UK departure remain in the balance. Ireland is the only one of the 27 EU members staying in the group to share a land border with the UK meaning both countries’ economies are heavily entwined.

As a result, Ireland is more exposed to Brexit than other EU countries and while it remains unclear as to how the negotiations are going, concerns remain in Ireland that a hard Brexit could be implemented.

Border forces

A hard Brexit would see the UK leave both the EU’s single market and customs union, leading to a significant divergence in economies. In a worst case scenario, it could also lead to no agreement on future air services and even the reintroduction of a hard border between Ireland and Northern Ireland, preventing free flowing traffic between the two countries.

Given that the UK market accounts for more than 60% of capacity from Shannon, Kerry and Knock and more than 40% of Dublin passengers, the impact could be grave. Indeed, as early as February last year, the IAA’s former CEO Eamonn Brennan was warning of the need to avoid a hard Brexit.

While the threat of a hard Brexit appears to have diminished since his speech, the authority remains concerned that should the negotiations sour again, it might yet be back on the table.

An IAA spokesman says: “Ireland is more exposed than most other EU states to the impact of Brexit, due to our strong trading links with the UK and geographical proximity. Naturally, air connectivity between the UK and Ireland is important for trade and tourism in both.

“Once the UK leaves the EU a new Air Service Agreement will have to be put in place between the EU27 and the UK. If that agreement constrains the ability to fly easily between Ireland and the UK or for Irish airlines to operate freely around the EU, then that will be bad for the Irish economy in general.”

The stance is backed up by Cork Airport MD Niall McCarthy, who adds: “A hard, unstructured, cliff-edge Brexit would be disastrous for both Irish Tourism and Irish aviation. DAA and Cork Airport both fully support the Irish government position that a planned and structured transition period is the best result for Ireland in terms of Brexit.

“Airlines and airports need certainty and we are moving into planning winter 2018 now which stretches from October 2018 through April 2019. Clarity on the key questions of borders and markets, including Open Skies, which hopefully will be forthcoming early in the new year, will greatly facilitate that planning.”

Like everyone else though, we may have to wait a while to find out exactly how the story ends.