Shannon

Aviation Business Development Task Force Final Report

12 November 2012
Glossary

ATC Air Traffic Control

CAGR Compound Annual Growth Rate
CAMO Continuing Airworthiness Maintenance Organisation
CBP Customs and Border Protection
CFRAMS Catchment Flood Risk Assessment Management Study
DAA Dublin Airport Authority
DoECLG Department of Environment, Community and Local Government
DTTAS Department of Transport, Tourism, and Sport
EETC Enhanced Equipment Trust Certificate
EI Enterprise Ireland
EIB European Investment Bank
FDA Food and Drug Administration
GECAS General Electric Capital Aviation Services
HEA Higher Education Authority
IAA Irish Aviation Authority
IASC International Aviation Services Centre
ICAO International Civil Aviation Organisation
IDA Industrial Development Authority
IFSC International Financial Services Centre
LAP Local Area Plan
LCC Low Cost Carrier
LIT Limerick Institute of Technology
MPL Multi-crew Pilot Licence
MRO Maintenance, Repair and Overhaul
NRA National Roads Authority
NUI National University of Ireland
OEM Original Equipment Manufacturer
OPW Office of Public Works
SAA Shannon Airport Authority
SD Shannon Development
SFZ Shannon Free Zone
SME Small and Medium Enterprise
UL University of Limerick
Chairman’s Foreword

In May 2012 the Government made the decision in principle to separate Shannon Airport
from the Dublin Airport Authority, and to merge it with Shannon Development.

The Government established two task forces to advise on how best this could be done.
It has been my privilege to chair the Aviation Business Development Task Force. Our
mandate has been to seek out new opportunities for an autonomous Shannon Airport
and to evaluate the feasibility of creating an international aviation centre of excellence in
Shannon.

In the course of this work, it has also been a privilege to discuss Shannon with very many
individuals, companies, and organisations. We received numerous submissions and
suggestions for development opportunities. Many people are passionate about Shannon’s
future potential, and have shared with us their visions of what that future could look like.

Based on these discussions and on our own research, my Task Force colleagues and
I have identified a range of both airline opportunities and aviation-related activities for
which Shannon is well suited. We believe it’s possible to create a sustainable and thriving
Shannon Airport alongside an International Aviation Services Centre, and this report sets
out our findings.

I would like to thank the members of the Task Force, Patrick Edmond, the IAA, Claire
O’Donoghue, the management of Shannon Airport and Shannon Development, KPMG,
McCann Fitzgerald, officials in the DTTAS, DJEI and DoF, the Steering Group, John
Fitzgerald, and the very many stakeholders for all of their ideas, help, hard work, time,
persistence, co-operation and interaction over the last five months.

Rose Hynes
12th November 2012
 Contents

1. Executive Summary 06
2. Terms of Reference 12
3. Background and Context 14
3.1. From the 1940s into the 21st century 14
3.2. Recent developments 14
3.3. Booz report 15
3.4. Task Force methodology and philosophy 15
3.5. Stakeholders 15
4. The Global Aviation Industry 18
4.1. Overview 18
4.2. Key industry developments 18
4.2.1. Aircraft leasing 18
4.2.2. Legacy airlines and low-cost carriers 18
4.2.3. The bilateral system, traffic rights and Open Skies 19
4.2.4. Air cargo 19
4.2.5. New aircraft types and manufacturing techniques 19
4.2.6. Projected airline industry growth and resulting resource needs 20
5. Aviation Business at Shannon 22
5.1. Existing aviation businesses at Shannon 22
5.2. International Airport 23
5.2.1. Existing operations 23
5.2.2. Potential for Airport Operations 23
5.3. Maintenance, Repair and Overhaul (MRO) 27
5.3.1. General 27
5.3.2. Lease transition 27
5.3.3. Parting out 28
5.3.4. Designated Aircraft Parking 28
5.3.5. Continuing Airworthiness 29
5.3.6. Opportunities for Shannon 29
5.4. Pilot training 30
5.4.1. Industry requirements 30
5.4.2. Training syllabus evolution: MPL 30
5.4.3. Shannon opportunity 31
5.5. Education, technical training and consultancy 31
5.5.1. Engineers 31
5.5.2. ATC 31
5.5.3. Other aviation-industry staff 31
5.5.4. Third- and fourth-level education 32
5.6. Aviation software and systems development 33
5.7. Aviation Finance 33
5.8. Corporate and private aviation (business jets) 34
5.9. Regulatory compliance services 35
5.10. Specialist airline operations 35
5.11. Heritage, tourism and networks 36
5.11.1. National Aviation Museum 36
5.11.2. Aviation conference 36

02
6. Employment Potential 38
6.1. Ongoing IASC direct employment 38
7. Characteristics of New Entity 40
7.1. Organisation 40
7.1.1. Merger of SAA and a restructured Shannon Development 40
7.1.2. SD property portfolio 40
7.1.3. Potential organisational structure and resourcing 40
7.2. Interface with state agencies (IDA, Enterprise Ireland, Fáilte Ireland) 40
7.2.1. IDA 40
7.2.2. Enterprise Ireland 41
7.2.3. Proposed operating framework with IDA and Enterprise Ireland 41
8. Key Incentives and Enablers 44
8.1. Key Enablers 44
8.1.1. Hangar development 44
8.1.2. Phased build-out 44
8.1.3. Funding mechanisms 44
8.1.4. Dedicated Aircraft parking areas 44
8.1.5. Office/light industrial space 45
8.1.6. Shannon Development real estate 45
8.1.7. Strategic Infrastructure provisions 46
8.1.8. Commercial rates and Development Contributions 46
8.1.9. Land use planning, and marketing of land bank 46
8.1.10. Access 47
8.1.11. Secondary enablers 47
i. Visas for non-EU nationals 47
ii. Ability for Shannon Chamber to certify Certificates of Origin 48
9. Feasibility Assessment 50
9.1. Risks to delivery 51
10. Recommendations 54
10.1. Recommendations on Separation 54
10.2. Recommendations on Business Development 54
10.3. Other recommendations 56
10.4. All recommendations (in order of occurrence in report) 57
10.5. Next steps 59
11. Conclusion 62
Appendix A Task Force Members 64

Report of the Aviation Business Development Task Force 03

04
 1

Report of the Aviation Business Development Task Force 05

 1 Executive Summary
An independent Shannon Airport, combined with
a restructured Shannon Development, can be
successful and sustainable. It can generate a large
number of jobs and contribute significantly to the
economic development of the Midwest region.
This independent Shannon entity should have no
requirement for exchequer funds.
This report sets out a vision for what that success
looks like and how it can be achieved.
Shannon Airport is a major economic driver for the
region. Today it employs some 230 people directly
and supports a much larger number of indirect jobs,
in addition to 1,600 staff employed in aviation-related
businesses around the airport. The declining trend in
air traffic at Shannon in recent years has given rise to
justifiable concern for the future of the airport and the
surrounding economy.
The Task Force is convinced that an autonomous
Shannon Airport entity can not only develop its
passenger traffic and route network but can
safeguard existing employment and also create high
levels of additional specialist employment in aviation
services, establish Ireland as a worldwide centre of
aviation-industry excellence, and anchor the aircraft
leasing industry already present in this country.
An International Aviation Services Centre (IASC) at
Shannon, as outlined in this report, is conservatively
projected to create and maintain 3,000-3,500
new direct jobs within five years, not including
construction jobs.
The Task Force has been guided by a desire not
merely to deliver a set of proposals or leave behind a
set of recommendations. Accordingly the group has
sought, to the extent possible, to validate, develop,
and advance and build momentum for those
proposals in the course of its work.
The Task Force has been able to obtain specific
commitments from two existing Shannon companies
to expand their employment there in the context
of an International Aviation Services Centre. These
commitments account for almost 1,000 jobs in the
next three to five years and are contingent on the
separation of Shannon Airport from the DAA.
There is a real and substantial opportunity to develop
such a Centre in Shannon, drawing on the area’s
and Ireland’s existing assets to create a globally
recognised aviation cluster combining established
activities with innovative new projects.
06
This new entity, a commercial Semi-State body,
would generate substantial employment, economic
activity and Exchequer returns. It would also
enhance Ireland’s international reputation as a
location for aviation industry expertise, would
underpin the development of traffic at Shannon
Airport, and would reinforce the attractiveness of
Ireland as a location for the aircraft leasing industry.
Background
The State Airports Act 2004 provides for Dublin,
Shannon and Cork Airports to be established
as independent and autonomous airports in the
ownership of the State. In 2011, the Minister for
Transport, Tourism and Sport commissioned a study
on options for the future ownership and operation
of Cork and Shannon Airports. This study was
conducted by Booz & Co and was completed in
December 2011.
One of the main recommendations of the Booz
Report in respect of Shannon was that the airport
could be separated from the DAA and could be
combined with the adjacent Shannon Free Zone
lands to provide a complementary revenue stream.
Drawing on the recommendations of the Booz
Report, the Government made the decision in
principle on May 8, 2012 to separate Shannon
Airport from the Dublin Airport Authority and to form
a new entity combining “a strong, independent
Shannon Airport authority with the extensive property
holdings, expertise and experience of Shannon
Development.” The Aviation Business Development
Task Force was established in June 2012 to
evaluate aviation-related business opportunities
for this new entity, assess the feasibility of creating
an international aviation centre of excellence at
Shannon, and consider options for the formation of
this new entity.
The Task Force strongly concurs with the Booz
Report recommendation to separate Shannon
Airport from the DAA and combine it with the
Shannon Free Zone lands, and sets out in this report
how this can be achieved.
The vision
The Booz report recommends the amalgamation of
Shannon Airport with the adjacent Shannon Free
Zone to enable the autonomous development of an
aviation industrial park.
The Task Force concurs with this recommendation.
It is the firm view of the Task Force that an
independent Shannon Airport, combined with
Shannon Development’s property portfolio and
associated expertise, can be successful.
This approach offers Shannon Airport a sustainable
future as well as safeguarding and enhancing the
airport’s role as an economic driver for the Midwest
region and beyond.
In this report, the Task Force sets out a vision
for what an aviation industry cluster at Shannon
can achieve. This vision has been developed
and validated through extensive stakeholder
consultations and reflects the Task Force’s view of
the potential industry sectors and employment which
can be attracted to Shannon, given appropriate
stakeholder support, incentives, and external
(private-sector) financing.
The Business Plan for the new entity demonstrates
its financial sustainability as required under the
2004 State Airports Act for the separation of
Shannon Airport. It is purposely conservative in its
assumptions, for example assuming no revenue
whatsoever from IASC at this time, in order to
demonstrate that the new entity can be sustainable
even in this adverse case.
The business plan thus serves a different purpose to
this report, and maps out a different trajectory.
Clearly it is expected that IASC will in fact make a
positive contribution to the new entity’s finances,
and this expectation is underpinned by the Task
Force stakeholder consultations, but the preparation
of a detailed master plan reflecting reasoned IASC
revenues and costs will be the task of the incoming
Board and management team of the new entity. This
report sets out the elements that can serve as a
foundation for such a master plan.
What does success look like for Shannon over
a three to five-year timescale?
Within five years, the airport is a self-sustaining, cost-
effective international airport. It welcomes circa two
and a half million passengers per year (compared
with 1.5 million in 2012), and offers a range of
destinations both short-haul and long-haul, bringing
visitors into the region and providing attractive and
convenient travel options for local business and
leisure travellers. The airport attracts new airline
services through its competitive and flexible tariff
structure. It continues to differentiate itself from the
DAA, attracting customers and winning their loyalty
with a more convenient, efficient and enjoyable
experience.
Within five years, the airport is also a strategic
transit hub for passenger and cargo airlines who
benefit from Shannon’s geographical position, US
preclearance, and fifth-freedom rights (the right for
an airline from one country to carry passengers
between two other countries). As an example, the
Russian carrier Transaero has publicly expressed
interest in flying from Moscow via Shannon to the
United States and in carrying Irish and American
passengers between Ireland and the US. Airlines
carrying cargo can benefit from a dedicated cargo
terminal, which also enhances the competitiveness
of Irish exporters in sectors as diverse as
pharmaceuticals and seafood.
Within five years, an International Aviation Services
Centre (IASC), based at Shannon, is a vibrant and
growing cluster of diverse, international, primarily
aviation-related businesses built around the
airfield and its surrounding lands, providing skilled
employment as well as training and education
opportunities. As part of its offer to businesses,
IASC draws on the availability of vacant property
in the Shannon Free Zone, as well as the possible
expansion of the airfield boundary into the Free Zone
lands.
Opportunity for creation of an International
Aviation Services Centre
A new entity combining Shannon Airport and a
restructured Shannon Development will be better
able to address the business opportunities that the
global aviation industry offers.
The industry is growing rapidly:
• About 22,000 commercial aircraft are in service
worldwide, and about 1,350 new aircraft are
delivered each year.
• Over 35% of the worldwide commercial aircraft
fleet is owned by leasing companies, a share
which is projected to grow to over 50% in the
coming decade.
• These aircraft require regular maintenance, as
well as specific modifications as they move from
one airline to another. The aircraft maintenance
market worldwide will be worth an estimated
$50 billion by 2014.
Report of the Aviation Business Development Task Force 07
 • To operate and maintain this growing fleet of
aircraft, half a million new commercial pilots will
have to be trained worldwide in the coming 20
years, as well as 600,000 aircraft maintenance
engineers.
The proposal to develop an international aviation
cluster at Shannon would draw on an existing,
vibrant, broad-based group of aviation companies
already active in the region. Approximately 40
firms already employ 1,600 staff in aviation-related
activities in the area, with a particular focus on
maintenance and on leasing in addition to the
operations of the airport itself. Many new aircraft
now entering service are built from new composite
materials, and this will be a major growth area in the
next decade. Shannon firms are already developing
their capabilities to design and repair these
composite materials.
Shannon has a number of major advantages for the
development of aviation services businesses: an
international airport with a long runway, uncongested
airspace and ample adjacent land. The combined
land banks of Shannon Airport and the Shannon
Free Zone total about 1,150 hectares and together
represent a superb asset for the development of new
aerospace activities.
Combined with the availability of a skilled English-
speaking workforce and Ireland’s strong relationships
with the aircraft leasing community, Shannon is a
very favourable location for the development of an
international aviation industry cluster. Many existing
aviation clusters worldwide lack at least some of
these strengths.
The Task Force is satisfied there is a genuine
opportunity to create a new entity, an internationally
competitive International Aviation Services Centre (IASC)
at Shannon, which would build on Ireland’s strengths
and would serve to anchor the aviation and aircraft
leasing & financing industries already present in Ireland.
Foundations for success
The legislation providing for the separation of
Shannon Airport, the 2004 State Airports Act, is
already in place.
A separate integrated Business Plan has been
prepared, under the provisions of this Act, including
Shannon Airport, Shannon Development, and an
International Aviation Services Centre.
08
This report sets out the vision for the future of
Shannon, which the Task Force believes to be
achievable. The Business Plan provides the
implementation details for the creation of the new
entity and the underlying assumptions.
The assumptions in the Business Plan are
considered to be conservative. The overall feasibility
of the plan has been independently evaluated by
KPMG on behalf of the Department of Transport,
Tourism, and Sport. The Business Plan provides for:
• Positive operating cash flows
• Adequate capital expenditure funding
• No Exchequer funding requirement
• Working capital provision already agreed with
banks
The Dublin Airport Authority and the Shannon Airport
Authority have already completed transition plans to
facilitate separation by the end of 2012.
The Task Force has consulted and has received
input from a wide range of industry and community
stakeholders, over 100 in total, in Ireland and
overseas. There has been wide stakeholder support
for the decision in principle to separate Shannon
Airport from the DAA and for the concept of an
aviation centre of excellence. There is also wide
stakeholder acknowledgement that the status quo
is unsustainable and that without radical change,
Shannon will continue its decline.
Job creation
Over a five-year period it is estimated that the new
International Aviation Services Centre could create
and sustain 3,000-3,500 new direct jobs in Shannon.
This figure does not include construction jobs. Nor
does it include significant additional employment
creation potential from other projects that the Task
Force has identified. These projects seek to apply
“outside the box thinking” to drive innovation in
diverse aspects of the aviation industry and have
the potential to be transformative both in industry
practices and in job creation.
The ability of the new entity to achieve this job
creation potential depends on several factors:
• The availability of appropriate physical
infrastructure
• A central marketing and development staff,
 with appropriate skills, expertise and capability
to effectively promote the Centre in Ireland
and overseas, in co-ordination with other
stakeholders
• Support from other State agencies, including
grant aid in line with the agencies’ existing
guidelines
• A competitive cost base
• An appropriate incentive package
In turn the provision of appropriate infrastructure
is dependent on external (third-party) financing
becoming available, for example via the European
Investment Bank. The Department of Finance has
already had initial discussions with the EIB in this
regard.
The delivery of the estimated jobs potential, and of
the increased passenger throughput at the airport,
will require sustained and focused effort on the part
of the new entity, and the support of all stakeholders.
This is a challenging task but it is achievable.
The Task Force has been able to obtain specific
commitments from two existing Shannon companies
to expand their employment there in the context of
an International Aviation Services Centre. These two
commitments alone account for approximately 1,000
jobs and serve to demonstrate the feasibility of the
overall job creation estimate. These commitments
are contingent on the separation of Shannon Airport
from the DAA.
Competitiveness and next steps
Many of the activities contemplated for the
International Aviation Services Centre are capital-
intensive and employment-intensive, often requiring
specific skills. Competing industry clusters worldwide
may suffer from weaknesses such as a shortage
of skilled labour or of land, a lack of fluency in
English or poor links with key industry sectors such
as lessors. Without exception, though, they enjoy
strong state support and commitment. The global
nature of the competition means that in order to
succeed, such a centre in Shannon must be able
to build on appropriate foundations in terms of
incentives and cost structure. The Task Force has
made a separate submission to the Department of
Finance on possible incentives for the aviation sector
in Ireland, and Shannon would be in a position to
take advantage of any such incentives.
In a highly competitive global market, the new entity
will have to deliver conspicuous value for money,
whether to win new airline business or to attract new
industrial developments. This in turn will require a
competitive cost structure. Shannon Airport’s cost
base is currently higher than its industry peers, in
part because of its reduced traffic levels. Productivity
improvements and flexible work practices can help to
reduce this disadvantage. Unless the new entity can
align its cost base with that of its competitors, it will
be unable to compete and to develop its activities.
Air traffic growth at Shannon Airport and the
acquisition of new business is largely contingent on
separation of the airport from the DAA. It is therefore
essential to eliminate the current uncertainty
surrounding the status of Shannon Airport without
delay, in order to maintain the momentum and
goodwill that exists among stakeholders. It is the
recommendation of the Task Force that the creation
of the new entity proceed on a phased basis, under
which the airport is separated first. A reconstituted
Board and a CEO for the new entity should also be
appointed as early as possible.
The Business Plan assumes that the restructured
Shannon Development will be merged into this new
entity from 1 July 2013, allowing for the transition
of Shannon Development enterprise and tourism
functions to Enterprise Ireland, the IDA and Fáilte
Ireland. As part of the creation of the new entity,
an operating framework will be agreed with these
agencies.
Conclusion
The Task Force is convinced that an independent
Shannon entity can be financially and commercially
successful and recommends the establishment of
this new entity without delay.
The separation of Shannon Airport from the DAA
is the single most important enabler of this future
success. A failure to move forward with separation
will lead inexorably to the further decline of the
airport and the surrounding region. This need not
happen. The opportunity now exists not only to
safeguard the future of Shannon Airport, but also to
create a truly globally significant international aviation
services centre, which will be an economic driver for
the Midwest region and for the country as a whole
and which has the potential to create thousands of
new jobs.
Report of the Aviation Business Development Task Force 09
10
 2

Report of the Aviation Business Development Task Force 11

 2 Terms of Reference

On 8 May 2012, the Government decided in principle to separate Shannon Airport from
the Dublin Airport Authority (DAA) and bring it together with Shannon Development to
form a new entity with a commercial mandate in public ownership. The Government also
decided that the existing ownership of Cork Airport by the Dublin Airport Authority (DAA)
would be maintained with the DAA to be renamed in the near future.

The Minister for Transport, Tourism and Sport and the Minister for Jobs, Enterprise
and Innovation have established a Steering Group to bring forward proposals for the
implementation of that decision. Two Task Forces to assist the Steering Group in its work
have also been established: the Aviation Business Development Task Force and the
Change Management Task Force.

The terms of reference of the Aviation Business 4 To consider issues arising in relation to possible
Development Task Force are as follows: tax incentives, State Aid, competition, and any
other relevant matters.
1 To seek out and evaluate aviation-linked
5 To consult with relevant stakeholders as
business opportunities that could be associated
required.
with the new entity.
6 To set up working groups, if required, for specific
2 To assess the feasibility of creating an
tasks.
international aviation centre of excellence
centred on Shannon Airport. 7 To bring forward proposals addressing all
relevant issues in this regard, including a
3 To explore options and develop proposals for
corporate plan for new businesses, to the
the formation of the new entity of Shannon
Steering Group by 16 November 2012.
Airport and Shannon Development, taking
particular account of the need for the new 8 For the Chair to interact closely with the Steering
entity to collaborate with the IDA and Enterprise Group and with the Chair of the Change
Ireland, using its property portfolio in conjunction Management Task Force, as appropriate, on
with the airport business as a catalyst for the issues which impact on the work of both Task
development of strategic sectoral opportunities Forces (including where relevant the preparation
for the region, specifically within the aviation of combined proposals for the new entity).
sector and, as required, to continue to support
The members of the Aviation Business Development
the property needs of certain IDA/EI clients.
Task Force are listed in Appendix A.

12
 3

Report of the Aviation Business Development Task Force 13

 3 Background and Context
3.1 From the 1940s into the 21st
century
Shannon Airport occupies a unique place in Irish
and world aviation. An airport was first established
in the late 1940s at Rinéanna as a successor to the
Foynes seaplane base for the landplanes that were
emerging as the dominant form of air transport. Until
the widespread entry into service in the late 1950s
of jet airliners such as the Boeing 707, transatlantic
airliners required one or more refuelling stops, of
which Shannon and Gander became the best
established.
Under the visionary guidance of Brendan O’Regan,
Shannon Airport continued to innovate, establishing
the world’s first duty-free shop in 1950. The Shannon
Free Airport Development Company later created a
range of tourist attractions in the region such as the
well-known Bunratty Castle medieval banquets and
Folk Park, as well as the Shannon Free Zone as a
nexus of export industry.
By the 1970s, when the majority of third-country
transatlantic flights were overflying Shannon, Aeroflot
used the airport as a transit stop for flights to the
United States, Canada, and the Caribbean, which
saw Russian crews staying in Shannon and Russian
fuel being supplied by ship to Shannon’s fuel farm.
Shannon’s significance to Aeroflot’s network reduced
Figure 1: Shannon Airport passenger traffic development 2002-2011
PASSENGER NUMBERS 2002-2011
4,000,000
Transit Domestic
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
2002 2003 2004 2005
PASSENGERS
14
after the fall of the Soviet Union, when the airline
was able to re-equip with longer-range Western
aircraft and no longer required a technical stop on its
transatlantic flights.
Shannon Airport had for many years been the
designated Irish gateway for transatlantic services,
such that all transatlantic flights to and from Ireland
had to stop there. The dilution of this mandated
stopover under the 1993 Ireland-US bilateral
agreement, and its elimination under the 2007 EU/
US Open Skies Agreement, allowed airlines to
serve Dublin directly and contributed to an increase
in the range and capacity of Ireland-US services.
At the same time, Shannon saw a reduction in its
transatlantic passenger numbers and the West of
Ireland experienced a fall in the number of North
American tourists visiting the region.
3.2 Recent developments
Faced with a loss of much of its traditional
transatlantic traffic base, Shannon has sought in
recent years to increase its passenger numbers
in various ways including through the introduction
of low-cost services with Ryanair, and has also
established itself, with some success, as a transit
stop for US military flights, especially those en route
to and from the Middle East. The resultant passenger
flows in recent years are illustrated in Figure 1 below.
Transatlantic Europe UK
2006 2007 2008 2009 2010 2011
YEAR
The precipitous drop in passenger traffic in 2010
following Ryanair’s withdrawal demonstrated the
airport’s vulnerability to decisions by individual
carriers in the absence of a broader traffic base.
3.3 Booz report
The State Airports Act of 2004 provided for the
separation of the three State Airports, Dublin, Cork
and Shannon. In 2008 this decision was further
deferred to 2011 by the then Minister for Transport.
In preparation for a final decision on the best way
forward, the Minister of Transport, Tourism and Sport
in 2011 commissioned a report from Booz & Co. to
evaluate the potential for separating both Shannon
and Cork Airports from the DAA and the preferred
structure for such autonomous entities.
The Booz Report was issued in December 2011. The
report analyses the operation of the State Airports
and evaluates alternative models of ownership
and management. Analysing the airport’s potential
profitability based on projected outgoings including
service of the existing debt, the report concludes,
“the viability of the [Shannon Airport] business
cannot be justified through passenger growth only”1.
It also proposes “new sources of revenue should
be explored including exploitation of land banks,
exploration of cargo business potential and improved
leverage and expansion of the US pre-clearance
facilities to include cargo.”
The report further observes that “the airport lacks
sufficient integration with the surrounding industrial
land bank, with current management having no
function in developing alternative ventures within a
mixed aero-industrial complex” and concludes that
unless there is a change in strategic direction, the
airport will continue to require subsidies from the DAA.
The Booz report’s authors further observe that “the
evidence suggests that separation from the existing
DAA structure and organising Cork and Shannon
airports into functioning local airports authorities
with an independent management will improve the
airports’ growth prospects, operating performance
and overall accountability.”
1 Booz & Co., “Options for the Future Ownership and Operation of
Cork and Shannon Airports”, prepared for Department of Transport,
Tourism and Sport, Dublin, December 2011
The Booz report ultimately concludes that full
separation from the DAA would offer the greatest
opportunities for developing additional business
opportunities, which would be further enhanced if the
Government were to better integrate the airport with
the surrounding industrial developments, in particular
the Shannon Free Zone. Such a move would obviate
the requirement for ongoing financial support.
3.4 Task Force methodology and
philosophy
The Aviation Business Development Task Force has
been guided by a desire not merely to deliver a set of
proposals or leave behind a set of recommendations.
The Task Force has taken the view that simply
documenting ideas and making recommendations
is insufficient and that there is an urgent need to do
as much as possible in the course of its work to turn
ideas into value.
Accordingly the Task Force has sought, to the extent
possible, to validate, develop, and progress and add
momentum to those proposals in the course of its
work.
The group has done so by:
• Engaging with relevant key decision makers
(CEO/COO level)
• Identifying enablers and potential roadblocks
• Highlighting issues and addressing and clearing
obstacles en route where possible to build
momentum
The Task Force has taken the view that the
development of a successful new entity at
Shannon is a relay, not a sprint; its goal, as part of
its execution of its terms of reference, is to make
concrete progress with identified opportunities, even
where the finish line is inevitably well beyond the
horizon of the Task Force.
3.5 Stakeholders
The Task Force and its members have consulted
with over one hundred stakeholders, in Ireland and
abroad, as part of the process of preparing this
report.
Report of the Aviation Business Development Task Force 15
16
 4

Report of the Aviation Business Development Task Force 17

 4 The Global Aviation Industry
4.1 Overview
Over the last 40 years, during which the main
world economies have grown three to four-fold,
the number of air passengers has risen tenfold and
cargo volumes have grown by a factor of 14, despite
repeated shocks from recessions, terrorism and
disease.
The unit cost of air transport has more than
halved over this period, through improvements in
technology, business processes and asset utilisation.
Airlines are forecast to carry approximately 2.8 billion
passengers in 2012 with consistent growth of 4-5%
per year forecast for at least the next five years.
This sustained growth brings both challenges and
opportunities for all sectors of the aviation industry.
The airline industry is one in which indigenous
Irish businesses have developed significant global
positions. Ireland is one of the largest worldwide
centres for aircraft leasing and registration. Ryanair
is not only one of the world’s largest airlines in terms
of passenger numbers, but an industry innovator in
terms of operational practices.
Airlines worldwide currently operate a total of
about 22,000 aircraft, while it is estimated2 that an
average of 1,350 aircraft (100 seats and over) will be
delivered each year between now and 2030.
At the same time as these new aircraft are being
delivered, an average of 485 aircraft per year will
be retired worldwide3. The majority of these will be
parted out, in other words dismantled, in order that
their components can be reused. Roughly 110
aircraft per year will be converted from passenger
to freighter service, a specialist activity with
considerable potential.
This large net increase in the worldwide aircraft fleet
over the next 20 years, combined with retirement
of many of today’s pilots and aircraft engineers, will
create a huge and as yet unsolved need for newly
trained and skilled employees. It is forecast4 that
almost half a million pilots alone will be needed
worldwide over the next two decades, and existing
training infrastructure is entirely inadequate to meet
this need. In addition to pilots, there is a need for
trained engineers and other specialist staff. The
availability of trained staff, and ultimately of the
2 Airbus Global Market Forecast, 2011-2030
3 ibid.
18
capability to train them, will be one of the principal
limiting factors to the growth of the aviation industry
in the coming decades.
4.2 Key industry developments
4.2.1 Aircraft leasing
The commercial aircraft leasing market is a huge
and growing part of the aviation industry. It has been
estimated that in 2010, aircraft lessors had over
7,500 aircraft on lease, almost 36% of the world
fleet5. This share is projected to climb to 50% or
more within ten years.
The leasing business is already well established in
Ireland thanks in large part to the attractiveness
to leasing companies of the IFSC-inspired fiscal
and business environment. Former employees of
GPA Group plc, an early Irish aircraft lessor, have
since progressed as both founders and managers
of a range of aircraft leasing companies, and in
conjunction with the IFSC have contributed to
the dominant position that Ireland has historically
enjoyed in this sector. Over 30 commercial aircraft
lessors currently have a presence in Ireland.
However, the mobile nature of the assets involved,
the move towards fiscal harmonisation within the
EU, and the entry of new industry players, many of
them Asian, means that the continuation of Ireland’s
dominant position cannot be taken for granted.
Indeed, aggressive competition both from Asian
countries and from other EU member states such
as Malta place Ireland’s continuing pre-eminence
in this sector at risk unless concerted steps to
remain competitive are taken. These steps involve
both preserving the competitiveness that attracted
leasing companies to Ireland in the first place, and
developing additional support capabilities, which will
serve to anchor their activities more firmly in Ireland.
The area of lease transition, described in more detail
in Section 5.3.2 below, has been identified as a key
“anchor” service for lessors and one that Shannon is
particularly well equipped to provide.
4.2.2 Legacy airlines and low-cost carriers
The airline business is central to modern economic
life. The airlines that have most successfully delivered
shareholder value in recent decades have for the
most part been Low Cost Carriers (LCCs). They
4 Boeing Commercial Airplanes, Current Market Outlook 2012-2031
5 Boeing/Airclaims data cited by Centre for Asia Pacific Aviation, 17
July 2012
have simplified their fleets, business processes and
customer offerings in order to achieve radically lower
cost bases than their “legacy” contemporaries. Their
lower cost bases have allowed them to offer much
lower average fares, stimulating additional traffic and
reinforcing their competitive position.
Southwest Airlines in the United States is frequently
cited as a pioneer of low-cost airline service.
Ryanair was founded in Ireland in 1985 and after
an unsuccessful foray into full-service operations
it initially remodelled itself on Southwest. However,
Ryanair has subsequently extended its aggressively
low-cost model far beyond Southwest’s business
ethos. Ryanair has in turn served as the prototype for
a large range of LCCs all over the world.
Although LCCs continue to grow rapidly, the point-
to-point (non-connecting) services offered by typical
low-cost carriers are not suitable for all passenger
needs. Network carriers offer passengers the ability
to book connecting flights through hub airports, and
this hub connectivity is also important.
4.2.3 The bilateral system, traffic rights and
Open Skies
International air service is regulated by the Chicago
Convention of 1944. This created the International
Civil Aviation Organisation (ICAO) and established the
system of “traffic rights” which airlines must obtain
in order to operate international scheduled service.
Although restrictions on international flights within
Europe and between Europe and the USA have
been liberalised in recent decades, under “Open
Skies” agreements, much international air traffic is
still regulated by bilateral Air Services Agreements
between countries. Such bilateral agreements may
be highly restrictive, to the extent that they can
specify how many carriers from each side may fly
between the countries, how many times they may
fly per week, and whether their fares have to be
approved by government authorities.
A fundamental part of the bilateral traffic rights
system is the existence of “Freedoms of the Air”, or
permission to operate particular types of service.
The first four “freedoms” are standard in all bilateral
agreements and relate to the right for an airline
of Country A to overfly Country B, land there for
technical (refuelling) purposes, or land to pick up
6 CSO statistics cited in “All-Ireland Airfreight Study”, Irish Exporters
Association, Dublin, September 2012
or drop off passengers there. The “fifth freedom”
rights allow an airline from Country A to transport
passengers between Country B and Country C,
i.e. outside the airline’s own country. Fifth-freedom
rights are of particular relevance for Shannon,
and Irish bilateral agreements have on occasion
accorded more liberal fifth-freedom rights in respect
of Shannon than of Dublin. It was under fifth-freedom
rights, for example, that Aeroflot was entitled to
carry passengers between Shannon and Cuba in the
1970s and 1980s.
4.2.4 Air cargo
Air cargo has developed greatly in recent years, as
an increasingly globalised world demands faster
shipments of consumer and industrial goods from
distant countries. The performance of the sector
is strongly correlated with global and regional
GDP growth and the recent recession has seen
considerable retrenchment among air cargo
operators. The steady increase in fuel prices in
recent years has pushed mainstream operators away
from older, less fuel-efficient aircraft towards more
modern freighters with lower operating costs.
In 2010, approximately 60,000 tonnes of exports
left Ireland via air cargo, and the same weight of
imports arrived by air cargo, for a total air cargo
tonnage of about 120,000 tonnes.6 (This figure is
likely to understate exports quite considerably, since
much airfreight leaves Ireland by truck en route to UK
airports and is thus not recorded as “air freight” in
Irish statistics.) Dublin Airport accounts for over 90%
of current Irish air freight, but there is an opportunity
for Shannon to develop its offer in this respect,
capitalising on its long runway and freedom from
congestion and curfews to serve, in particular, the
export needs of the pharmaceutical and medical-
device industry.
4.2.5 New aircraft types and manufacturing
techniques
The aircraft that make up the majority of airline fleets
today are of surprisingly old design. The Boeing
737, of which circa 9,000 have been built and which
will likely remain in production at least to 2025, first
entered service in 1968 based on manufacturing
technology, materials and design elements from the
Boeing 707, which first flew in 1957. The Airbus
A320 entered service in 1988 as a more modern
Report of the Aviation Business Development Task Force 19
 clean-sheet design, but its construction is still based
on traditional aerospace materials such as aluminium
alloys.

More recently, Airbus and Boeing have been

developing newer-generation aircraft that make
more extensive use of structures built with
composite materials (e.g. fibre-reinforced plastic).
These materials are much lighter than metal alloys,
so the new generation of airliners such as the
Boeing 787 and Airbus A350 will have much better
performance (fuel consumption and range) than
their predecessors. However, composite materials
require entirely different processes and equipment
for manufacturing and repair. These specialist skills
are not yet widely available and will be in increasing
demand over the coming years.

4.2.6 Projected airline industry growth and

resulting resource needs
The impending shortage of qualified flight crew and
engineers has already been noted. The average
annual airline demand worldwide for the next 20
years is estimated at 22,500 new pilots and 28,000
new mechanics, both to replace those retiring and
to cope with growth in the global airline fleet7. This
represents 448,000 new pilots over twenty years,
and more than half a million new maintenance
engineers. Europe alone will need 97,000 pilots
and 70,000 mechanics; Asia Pacific will need over
180,000.

Existing training infrastructure is not able to cope

with this increased demand. A solution will require
not merely new training facilities but also new
methods of training. Training providers will not only
have to develop these facilities and methods but also
win approval from their regulatory authorities.

7 Boeing Commercial Airplanes, Current Market Outlook 2012-2031

20
 5

Report of the Aviation Business Development Task Force 21

 5 Aviation Business at Shannon

One of the Booz report recommendations was the amalgamation of Shannon Airport with
the adjacent Shannon Free Zone to enable the autonomous development of an aviation
industrial park. The Task Force concurs with this recommendation.

The International Aviation Services Centre (IASC) would be a vibrant and growing cluster
of diverse, international, primarily aviation-related businesses built around the airfield and
its surrounding lands, providing skilled employment as well as training and education
opportunities.

Shannon’s current status is uncertain and the existing uncertainty needs to be eliminated.
In order to enable the development of air traffic and new aviation business without delay,
the Task Force recommends a phased approach to the creation of the new Shannon
entity, with the airport separation followed later by the merger of a restructured Shannon
Development into the new Shannon entity.

5.1 Existing aviation businesses at
Shannon
The proposal to develop an international aviation
cluster at Shannon would not start from a zero base,
but could draw on an existing, vibrant, broad-based
group of aviation companies already active in the
region. Roughly 40 firms already employ 1600 staff in
aviation-related activities in the area, with a particular
focus on maintenance and on leasing alongside the
operations of the airport itself.
Much of this activity is located in the Shannon Free
Zone, whose development began in 1959. While the
companies in the SFZ cover many industry sectors,
aviation and aviation-related services represent one
of the largest single sectors.
Aircraft and engine maintenance represents one
principal activity of the existing Shannon aerospace
cluster. Significant maintenance providers in
Shannon today include Shannon Aerospace,
Transaero Engineering, and Eirtech, who already
account for approximately half of Shannon’s
aviation employment. Along with Lufthansa Technik
Turbine Support, which employs over 200 staff on
specialised engine maintenance, these companies
represent the existing “anchor tenants” for any
expansion.
Shannon enjoys unique strengths which are lacking
in many existing aviation clusters worldwide, most
notably its strong linkage with the aircraft leasing
industry and its ability to build on existing capabilities
to offer services of particular interest to aircraft
lessors. Several large aircraft lessors, most notably
GECAS, the world’s largest, have international bases
in Shannon, and the integration of the lessors into
the local aviation community has been an essential
driver of Shannon’s current activity.
Other Shannon-based firms are active in diverse
aspects of aviation such as corporate and private
aviation support, aviation training, and logistics and
freight forwarding, all of which are identified growth
areas for a future international cluster. There are
currently three principal strands of activity: airport
operations, aircraft and engine maintenance, and
aviation equipment leasing and financial services.
Combined with Shannon’s other core assets, namely
its long runway and its extensive land bank, these
advantages form a solid basis on which additional
aviation business opportunities can be developed to
create an international aviation centre of excellence.
Recommendation 1
Announce separation without delay and formally
separate Shannon Airport from DAA by 31
December 2012.
Recommendation 2
Adopt a phased process to enable the resolution
of Shannon Development restructuring issues,
with airport separation occurring by year-end
2012 followed by the merger with a restructured
Shannon Development on 1 July 2013.

22
 Recommendation 3
Establish the new entity and recruit a CEO.
Recommendation 4
Reconstitute the Shannon Airport Authority board
without delay.
5.2 International Airport
5.2.1 Existing operations
Shannon’s current passenger level of 1.5 million
passengers (2012) is not sustainable. The terminal
has a design capacity of 4.5 million passengers, so
there is considerable scope to increase passenger
numbers within the existing terminal infrastructure.
5.2.1.1 Preclearance
Shannon’s US Customs and Border Preclearance
(CBP) facility for passengers en route to the United
States is a strong selling point, especially for transit
traffic (see below), as Shannon and Dublin are
currently the only locations outside the Americas
to benefit from this facility. However, the proposal
to provide US CBP facilities in Abu Dhabi, along
with the proposed US legislation allowing foreign
governments to pay the costs of CBP services,
suggests that more overseas CBP facilities may
appear in the coming years, potentially diluting
Ireland’s current advantage in this respect.
5.2.1.2 Military operations
Shannon continues to serve as a transit stop for
United States military flights, in particular those
operated by US commercial airlines carrying
troops to and from the Middle East. The reduction
of US troop numbers in Iraq and Afghanistan
has led to a corresponding reduction in these
movements. It is however anticipated that the
United States will continue to have a certain
ongoing requirement to transfer troops to and
from permanent bases in the Middle East. A
refuelling stop is necessary en route, and Shannon
competes with other European airports such as
Leipzig for this business. The Shannon Airport
commercial team has been lobbying for the
extension of US CBP to US military passengers
returning to the United States, to provide a
stronger differentiator for Shannon as a transit
point relative to other European airports.
5.2.1.3 Designated diversion airfield
Shannon is unique among the state airports in
being open 24 hours per day, 365 days per year,
as befits its status as a common diversion airport
for aircraft encountering technical or medical
emergencies over the Atlantic. This status also
dictates the maintenance of an around-the-clock
airport rescue and firefighting service. These
opening hours impose an additional cost burden.
Actual diversions are relatively infrequent and do
not materially defray the costs of round-the-clock
operation. However, the US military transit flights
do make use of the extended opening hours.
Recommendation 5
Shannon Airport management should keep under
review from an overall cost benefit perspective
the specific costs and revenues associated with
24/7/365 operation, over and above operation in
normal commercial hours.
5.2.2 Potential for Airport Operations
Shannon has considerable potential to develop its air
traffic, in terms of both short-haul scheduled services
and also long-haul and transit operations.
The airport has historically been constrained in terms
of the incentive deals it can offer by the fact that the
DAA adopts a uniform structure across all three State
airports in the DAA Group. As an autonomous entity,
Shannon Airport will have the ability to structure
incentive deals for new service which correspond
better to the airport’s particular characteristics and
market.
Airports are under increasing pressure from airlines
to offer highly competitive commercial terms. Airlines
are increasingly influenced by airport charges in their
new route decisions, and for Shannon Airport to
attract significant additional traffic, it will have to be
able to offer a highly competitive charging structure to
airlines. This in turn underlines the importance for the
airport of being competitive in terms of its cost base.
A newly autonomous Shannon Airport should seek to
differentiate itself from the DAA rather than following
DAA processes and business practices by default.
In order to maximise passenger numbers, Shannon
needs not only to develop its route network but
also to ensure that it offers an attractive customer
experience to its passengers in comparison with its
Report of the Aviation Business Development Task Force 23
 competing airports, which are principally the DAA
airports at Dublin and Cork. Similarly, Shannon
Airport should evaluate the business processes that
it inherits from the DAA to establish whether they are
all appropriate and optimised for an autonomous
airport entity.
Recommendation 6
Shannon Airport should evaluate ways to
differentiate itself positively from competing
airports in the eyes of its passengers and potential
passengers.
Recommendation 7
Shannon Airport should evaluate its business
processes and practices for their appropriateness
and where needed should develop new processes
tailored to its new requirements with a focus on
productivity and competitiveness.
One of the significant changes in airport commercial
operations in recent decades has been the increase
in “non-aeronautical” revenues. This is the revenue
generated from retail sales in the airport terminal
(including duty-free where applicable), from car
parking, and from food and beverage concessions.
Shannon was a pioneer in this area, having
established the world’s first duty-free shop, and
this know-how subsequently formed the basis for a
successful international consultancy and management
business in the form of Aer Rianta International.
More recently, commercial pressures on airports,
especially but not exclusively driven by the aggressive
commercial practices of low-cost carriers, have
compelled airport management to place much
more emphasis on commercial revenue generation.
This is an area where Shannon can refine and
develop its current offer in order to generate more
revenue per passenger. In this context, additional
passengers, even if they contribute little in terms
of aeronautical charges, are a valuable source of
extra commercial revenue: all airports are having to
focus on maximising their non-aeronautical revenue
generation capability. With low-cost carriers leading
the way, airlines are far more demanding in seeking
lower airport costs, and this imposes considerable
cost-control and commercial-revenue pressures on
airports, particularly those airports which do not serve
a large urban catchment area and which have to rely
on attractive aeronautical charges to attract carriers.
24
Low-cost airlines have been particularly strict in
limiting passengers’ hand baggage to a single bag,
often insisting that any purchases made in airport
shops must fit within this one bag. This “one bag
rule” has in many cases restricted airports’ ability
to grow their commercial revenue, as passengers
seek to avoid excess baggage charges. It will be
important for Shannon to seek a relaxation of this
rule from its airline customers to enable it to offer
competitive aeronautical charges.
Recommendation 8
Shannon should keep its commercial revenue
strategy and commercial unit revenues under
review with a view to learning from best practice
and considerably enhancing commercial revenue
and overall profit per passenger.
The Task Force notes that the Business Plan
projects 2.3 million passengers within five years
and 2.5 million passengers by 2021. It is the view
of the Task Force that these targets are entirely
achievable, potentially even earlier than provided for
in the business plan. In conjunction with continuing
cost control and an improvement in commercial
revenue per passenger, attainment of the business
plan passenger targets would bring the airport’s
operation to sustainability. The Task Force notes that
the achievement of this level of increased passenger
traffic will require the airport to be able to offer a
competitive charging structure to airlines.
Recommendation 9
Shannon should seek to attract additional short-
haul traffic and revenue through appropriate
incentive deals.
A number of discussions are ongoing with carriers, which
if successful have the potential to increase passenger
numbers appreciably and to enlarge the range of
destinations served from Shannon. Clarity regarding the
future of Shannon Airport is required by all of the airlines
and in the vast majority of cases, the completion of these
discussions is contingent on separation.
The transatlantic market was the original raison d’être
of Shannon Airport and remains a core element of
its operation. Shannon’s attractiveness to carriers
serving the North American market is underscored
by the recent announcement by United Airlines of a
Chicago-Shannon service in Summer 2013.
Aer Lingus has chosen to concentrate the majority
of its transatlantic operations on Dublin, to the
detriment of Shannon. However, from 2016-2017,
the arrival in the marketplace of new smaller aircraft
types capable of flying transatlantic routes (such
as the A320NEO and A321NEO), in which Aer
Lingus has expressed an interest, may open up
further opportunities for more frequent service from
Shannon.
In the meantime, there exist further opportunities to
develop long-haul traffic at Shannon. US carriers
are now beginning to receive deliveries of the
much-delayed Boeing 787, freeing up other aircraft
to develop new routes. Although overall capacity
growth on the North Atlantic is modest, carriers are
continuing to add new seasonal and year-round
routes. Airline planners will be encouraged in this
respect by Shannon’s enhanced profile and by the
demonstrable evidence of a commitment to reverse
its traffic decline and rebuild its passenger numbers.
Recommendation 10
Shannon should continue to develop its long-
haul terminal traffic, chiefly in the North American
market.
Historically, Shannon benefitted greatly from its role
as a transit stop for Aeroflot flights between Moscow
and the Americas. Aeroflot also had the ability to
carry Irish passengers between Ireland and Cuba,
thanks to fifth-freedom rights, i.e. the rights for an
airline of one country to carry passengers between
two other countries.
Ireland is currently a signatory to bilateral air services
agreements with a range of non-EU countries. In
many cases these agreements provide for the award
of fifth-freedom rights to overseas carriers in respect
of services through points in Ireland. However, this
generally requires the agreement of both parties to
the bilateral agreement.
Subject to the approval of the Irish authorities,
therefore, certain non-EU carriers could use
Shannon as a transit and commercial stopover point
where this is permitted under the relevant bilateral
agreement.
Combined with Shannon’s US Preclearance facilities,
this forms an attractive selling point for a range
of Russian, Middle Eastern, Asian and African
carriers wishing to serve North America and pick
up additional revenue. Transaero management has
already been quoted in the media as expressing
interest in this opportunity. Discussions are currently
ongoing with several other carriers, both passenger
and cargo, who have expressed specific interest
in exploring the potential for fifth-freedom service
through Shannon, and several other airlines have
been identified for discussions on this prospect.
There are several attractive aspects to the use of
Shannon as a fifth-freedom transit point en route to
the United States. Airlines from Africa, the Middle
East and South Asia may lack aircraft able to reach
North America non-stop and may therefore have to
stop for refuelling en route. The use of Shannon not
only permits their passengers to clear United States
customs and immigration but also gives the airlines
the opportunity of generating additional passenger
and cargo revenue by serving unmet demand for
direct services between Ireland and points in the
United States.
It is the view of the Task Force that such services
have the potential to complement rather than
compete with the existing and potential operations of
US and Irish carriers.
Recommendation 11
Shannon should draw on the Department of
Transport, Tourism and Sport’s willingness
to negotiate new Irish bilateral Air Services
Agreements, and to include fifth-freedom rights, in
order to develop additional long-haul airline service
opportunities.
Recommendation 12
Shannon should aggressively market existing fifth-
freedom opportunities for long-haul transit traffic.
Shannon Airport is a major gateway for inbound
tourists to the West of Ireland, and it is vital that the
airport can maintain and preserve this role. This
is linked not only to the availability of appropriate
air services (discussed above) but also to the
attractiveness of the tourism offer in the region.
The tourism industry has been identified by the
Government as a critical driver of economic recovery.
Tourism is especially important to the outlook for
economic growth and employment in the West
of Ireland. Tourism is a labour-intensive industry,
providing more than one out of each ten jobs
Report of the Aviation Business Development Task Force 25
 in Ireland. These jobs are spread across a wide
geographical area, with seven out of each ten jobs in
tourism located outside of Dublin.
A revitalised Shannon Airport is of critical importance
to the tourism sector not just in the Mid-West
region but along the entire Western Seaboard.
Although the overall number of visitors to Ireland
from overseas rose 8% in 2011 from a year earlier,
the West of Ireland has underperformed. Under
the business plan for Shannon Airport, passenger
numbers will increase from 1.5 million in 2012 to
2.3 million within five years, including a substantial
gain in overseas visitors. With spending by domestic
tourists likely to remain constrained by pressures on
disposable income at home, this anticipated increase
in overseas visitor numbers is crucial for recovery in
the tourism industry and the broader economy in the
West of Ireland.
The nature of tourism itself is changing: factors
such as changing demographics, the advent of
low-cost airline travel, and the growth of the internet
and social media mean that the characteristics,
behaviours and expectations of tourists are
evolving8. Critical to this recovery, therefore, will
be improved competitiveness by tourism-related
businesses brought about by innovation (that is, the
development of new products and services). This will
enable a better overall offering for tourists to boost
demand, and will reduce costs.
An independent Shannon Airport will provide a boost
to the tourism industry. At the same time, passenger
numbers at Shannon Airport will benefit from a
recovery in demand for tourism products in the West
of Ireland.
5.2.2.1 Cargo
The majority of cargo that arrives or leaves Ireland
by air today does so via Dublin Airport. Due to
the current inadequacy of Irish air cargo facilities
and air cargo routes a large proportion of Irish-
originating “air cargo” is in fact transported by
truck across the Irish Sea to a UK airport and
transported as air freight from there. This lack of
appropriate air cargo infrastructure represents
something of a hindrance to Irish export
competitiveness. In particular, the lack of adequate
temperature-controlled (“cold-chain”) facilities
8 Deegan, J.:“Benchmarking Innovation in Irish Tourism,” Fáilte
Ireland thematic grant project, 2012
9 “All-Ireland Airfreight Study”, Irish Exporters Association, Dublin,
September 2012
26
is an impediment to the time-efficient export
of many high-value pharmaceuticals. A recent
study9 asserts, “at present cold chain facilities in
Ireland are very limited and interviewees indicate
that substantial business will be lost as a result.”
Conversely, the provision of appropriate cargo
infrastructure would allow the further development
of export markets, for example for fresh foodstuffs
such as seafood which are increasingly sought-
after in regions such as East Asia: “freight
forwarders are becoming very bullish about the
prospects for Irish fish exports, some saying that,
with proper organisation, the sector could easily
support a weekly freighter service.”10
Especially in the context of pharmaceutical
exports, United States Food and Drug
Administration (FDA) approval is seen as a
significant positive element, which can improve
the competitiveness of a cargo facility and of the
pharmaceutical industry in Ireland.11
Notwithstanding the image of air cargo as being
the preserve of dedicated freighter aircraft, it is
important to note that the majority of international
air cargo still travels in the holds of passenger
aircraft. Cargo is a major contributor to airline
revenue, in particular on long-haul operations
(since the wide-body aircraft used for most long-
haul flying have proportionally more cargo space
available). The availability of appropriate airport
cargo facilities can therefore assist an airport in
attracting new long-haul passenger services, by
improving the route revenue potential from the
airline’s viewpoint.
It is the view of the Task Force that Shannon
cannot at this time realistically aspire to being
a pan-European cargo hub such as Cologne,
Leipzig or Liège, but can successfully serve a more
focused role. The airport’s road freight catchment
is far less than continental European hubs but it
can credibly aspire to providing cargo services for
much of Ireland and improving the competitiveness
of major Irish export sectors.
The Business Plan has made provision for
capital expenditure on the necessary enabling
infrastructure for a cargo terminal.
10 ibid.
11 ibid.
 Recommendation 13
Update and validate business case for
constructing a modern cargo terminal with
cold-chain capability at Shannon, preferably in
partnership with a specialist company.
Recommendation 14
A focused and targeted marketing campaign to
key cargo carriers should be undertaken by the
new entity.
5.3 Maintenance, Repair and
Overhaul (MRO)
5.3.1 General
The global aircraft MRO (Maintenance Repair and
Overhaul) market is forecast to grow from roughly
$41.5 billion in 2010 to about $50.8 billion in 2014,
a CAGR of 5.2%12. Geographically, North America
and Europe will remain the largest MRO markets,
representing over 57% of the total market in 2014
(down from 62% in 2011).
Although developing-country MRO facilities are
growing rapidly and offer a labour-cost advantage
over European and North American operators, they
have still not reached equivalent levels of quality and
consistency. Further, while labour plays a significant
role in “basic” airframe heavy maintenance costs, it
is a less dominant component in specialist engine
or component maintenance activity. Additionally, as
noted below, there is a trend for MRO organisations
to align themselves with the major aircraft and
engine manufacturers, also known as OEMs (Original
Equipment Manufacturers). These factors mean
that developed-country MROs can continue to be
competitive against low-labour-cost economies, as
long as they target their efforts appropriately.
Over the past five to ten years, commercial aviation
OEMs (predominantly engine and component
manufacturers) have worked to strengthen their
position in the aftermarket. Boeing’s “GoldCare”
offering is an example of a manufacturer seeking
to “lock in” the MRO activity for its aircraft. Given
OEMs’ growing strength, many MROs are more
closely aligning themselves with OEMs, not only
12 “MRO Industry Landscape 2011”, Oliver Wyman survey
to grow revenues but also to ensure their future
presence in the aftermarket, and this could be a
logical step for a Shannon-based MRO.
Over time, this alignment and consolidation is likely
to lead to fewer bigger OEMs.
The primary concerns for aircraft operators choosing
a maintenance facility are downtime, quality and
cost. Reputation and cost-effectiveness are key
in the MRO business and a dependable, flexible
operator will ultimately win business in preference
to a maintenance facility whose quality or reliability
levels are inferior. Airlines and other aircraft owners
are increasingly seeking to consolidate their supply
chains and to work with smaller numbers of service
providers.
The above factors influence aircraft operators’ choice
of MRO facilities, but what factors have previously
influenced the MRO providers in their choice of
location for their facilities? They typically consider
market access, proximity to major customers, and
availability of appropriate staff, but the primary driver
is however the need for a favourable cost base.
MRO providers compete for business on other
factors as well as price, so competitive input costs
are a necessary but not sufficient precondition for
market success.
5.3.2 Lease transition
An average narrow-body airliner changes operator
four times during its life. The work that is needed
to refurbish an aircraft, to verify its repair and
documentation status, and to complete any
outstanding repairs needed, can take anything
from one to two months. A number of large MRO
organisations offer a dedicated service to facilitate
the transition of an aircraft between operators, along
with all necessary records verification, and technical
checks and modifications. However, lessors
expect high levels of flexibility and adaptability from
the companies carrying out lease transitions, and
not all providers are able to provide the requisite
flexibility. Especially for non-routine maintenance
activities such as lease transition, the ability of the
maintenance provider to adapt to any unforeseen
difficulties and to return the aircraft to its operator
on the contracted day is paramount. Given the
variety of tasks associated with a lease transition,
Report of the Aviation Business Development Task Force 27
 from airframe and engine maintenance to technical
records checking, cabin reconfiguration and exterior
painting, the availability of a “one-stop shop” service,
ideally associated with parking facilities for aircraft
storage, is particularly attractive to a lessor. This “one
stop shop” can be provided by a single provider or
by a group of co-operating providers in the same
location, an example of how the cluster effect
envisaged for Shannon can concretely improve the
competitiveness of Shannon-based companies.
Given the trend for OEMs to exercise more control
over the full life of their aircraft, the opportunity for
OEM-approved transition management facilities is a
significant one. Small and medium airlines typically
lack the know-how to manage an aircraft transition
effectively.
Discussion with key lessors and MRO providers
allowed the Task Force to gain an appreciation of
the factors influencing a choice of lease transition
location. The actual transition process can at
times be relatively complex and has the potential to
throw up unforeseen complications, which must be
rectified with little or no impact on the committed
aircraft redelivery date, imposing a very high burden
of flexibility on the maintenance provider. As noted
above, from the point of view of the lessors who are
contracting for these services, reliability and cost are
critical.
5.3.3 Parting out
Currently approximately 450 commercial aircraft are
“parted out” or recycled (dismantled for reusable
spare parts) worldwide each year13, a number which
is likely to rise as older types are withdrawn from
service due to sustained high fuel prices.
Aircraft recycling is an environmentally friendly, and
increasingly lucrative, business. Approximately 80%
of an Airbus A320 can be reused in the marketplace,
due to the ongoing popularity of the aircraft along
with its modern design. The longevity of the A320
family suggests a profitable ongoing business
opportunity for parting out older aircraft of this type.
The sector’s trade body, the Aircraft Fleet Recycling
Association, is targeting 90% recyclability of Airbus
A320s by 2016.
More cost-effective parting-out can raise the residual
value of older aircraft (as their sale value for parting
13 Boeing presentation at 2010 annual meeting of Aircraft Fleet
Recycling Association
28
out will grow), thus contributing to taking older
aircraft (usually available at relatively low lease rates)
out of the worldwide fleet. This will be of benefit to
airlines and lessors alike.
The need to carefully document the provenance
of aircraft spare parts, as well as the requirement
to comply with increasingly strict waste disposal
regulations, makes the business a specialist one,
but with strong growth and employment prospects.
Parting out companies are becoming more
sophisticated due to tighter regulations but most
such firms are still relatively small in scale. There is an
opportunity to build a larger-scale facility, potentially
in partnership with a major fleet owner (such as a
lessor) or one or more major OEMs, all of whom are
becoming increasingly involved in this area. Through
stakeholder discussions, the Task Force has been
able to confirm the market opportunities that exist in
this sector.
5.3.4 Designated Aircraft Parking
Aircraft lessors periodically have occasion to
repossess their aircraft, typically due to airline
default. Additionally, the routine management of a
lease portfolio may necessitate parking aircraft from
time to time, whether for a shorter or longer period.
In such cases, which are effectively unplanned lease
transitions, the aircraft need to be stored, typically for
weeks or months, until a new lessee can be found
for them. During this time transition checks and
sometimes remedial work must be carried out and
ultimately the aircraft must be adapted to the new
operator’s requirements and painted in their livery.
The presence of reasonably priced dedicated
long-term aircraft parking is a key determinant of
where the lessor will locate the aircraft during this
time. Flying the aircraft elsewhere for maintenance
is costly, so, all else being equal, lessors will have a
preference to carry out maintenance and transition
work wherever the aircraft is parked. The provision of
ample dedicated aircraft parking space at attractive
rates is therefore an effective means of attracting
additional maintenance and transition activity. This
has been verified through discussions with major
aircraft lessors.
5.3.5 Continuing Airworthiness
The term “Continuing Airworthiness” refers to the
maintenance of all technical records and approvals
necessary for the ongoing operation of an aircraft.
The level of regulation to which the aviation
industry is subject, and which is to a large extent
responsible for the industry’s excellent safety record,
nonetheless imposes a heavy burden of technical
documentation. There is an emerging opportunity
for airlines to outsource the management of their
technical documentation to a third-party provider
with the appropriate regulatory approval to operate
as a Continuing Airworthiness Management
Operator or CAMO. Such providers are typically
MRO organisations who can draw on their in-house
technical skills to offer a cost-effective solution for
third-party clients. Provision of CAMO services
therefore represents a logical and potentially lucrative
extension of activity for MRO providers.
5.3.6 Opportunities for Shannon
While the labour cost component of routine
maintenance is relatively high, successful Irish
MRO providers have demonstrated that Ireland can
compete effectively in this space through flexible
working arrangements and strict control of input
costs. Ireland enjoys an even stronger comparative
advantage in high-value, non-routine and bespoke
work requiring a high degree of flexibility and
dependability. In discussions with lessors the Task
Force has confirmed that the lessors are strongly
attracted by the prospect of a dependable and
competitive “one-stop shop” service for lease
transitions.
The Task Force has formed the view that the
immediate obstacle preventing many Irish-based
firms from establishing or expanding operations
at Shannon is the non-availability of appropriate
infrastructure. This infrastructure includes not only
hangars and aircraft parking areas but also teardown
pads (special parking areas for aircraft being
dismantled). Maintenance providers often do not
wish to own their facilities, preferring instead to enter
into long leases.
The facilitation of private-sector infrastructure
investment is therefore a key enabler to the
development of the MRO sector in Shannon, and
this is addressed in more detail in Section 8. It is
particularly important that any investment incentives
be structured to provide cost-effective rental levels
for the tenants.
It is envisaged that the construction of hangar
infrastructure would not take place on a speculative
basis but only when firm tenant interest has been
identified.
Five sub-segments are identified which should be
targeted as a priority within MRO activities. These
have been validated through discussions with
relevant stakeholders.
1. Airline-linked or supplier-linked MRO facilities
(e.g. Transaero Engineering)
The existence of a link with a supplier, OEM or
major airline customer provides a stability that a fully
independent MRO cannot easily achieve. Transaero
Engineering benefits from the support of its parent
airline: when there is spare capacity in the Shannon
facility, Transaero aircraft are sent to Shannon for
maintenance rather than to an alternative external
facility.
2. Specialised non-routine MRO activity, for
example lease transitions
While all MRO providers have to adapt to their
customers’ requirements, non-routine maintenance
work in particular requires a high degree of
adaptability and flexibility on the part of the
maintenance provider. Lease transitions, when an
aircraft returns from one airline lessee and has to be
prepared to enter service with another, are a case
in point. Timescales are frequently tight: the lessor
wants to minimise downtime and have the aircraft
in operation and earning revenue as quickly as
possible. At the same time, the work scope may not
be fully known in advance: remedial work may be
needed on the aircraft if the previous lessee has not
maintained it appropriately, while the cabin is likely
to have to be refitted in any case, potentially with
complex new seats and/or in-flight entertainment
equipment. While an MRO facility is unlikely to focus
on lease transition work alone, an ability to offer
all the necessary components of lease transition
activity (airframe and component maintenance,
cabin reconfiguration, and aircraft painting) in one
location, with dependable completion dates, is a very
attractive offer to lessors and one that cannot be
easily replicated in many locations.
3. MRO facility specialised in less common
aircraft types
The growth in new developing-country maintenance
facilities has understandably focused on relatively
new aircraft types with extensive order books.
Report of the Aviation Business Development Task Force 29
 Older aircraft represent a legacy market and
frequently require more intensive maintenance than
their modern equivalents. Some older types may
have many years of economic life ahead but be
constrained by a shortage of approved maintenance
facilities.
4. Continued Airworthiness Management
Organisations
As noted above, the coming years are likely to
see considerable outsourcing activity as airlines
seek to focus on their core business and contract
out the management of their aircraft technical
documentation to specialist suppliers. Especially
in conjunction with technological changes (e.g.
digitisation of technical records) there is likely to
be a considerable first-mover advantage for firms
successfully establishing themselves in this emerging
market.
The Task Force has confirmed this opportunity
through discussions with companies involved in the
sector.
5. Corporate and private aircraft MRO and
completion centre
The business aircraft sector is a fast growing sector.
In the context of Ireland’s business-friendly corporate
taxation environment and favourable reputation,
a focus on business aircraft MRO and completion
services is likely to bear fruit, provided that Ireland
can effectively position itself as a specifically
business-aircraft-friendly jurisdiction (see also
Section 5.8 below).
Recommendation 15
Continue to target high-added value MRO and
MRO-related activities: lease transition, CAMO/
technical document support.
Recommendation 16
Develop plan to roll out hangars and other
infrastructure rapidly in response to specific tenant
demand.
Recommendation 17
Develop plan for dedicated parking, and explore
potential for entering into “preferred supplier”
contracts with lessors and airlines for parking.
30
Recommendation 18
Work to attract a design or completion centre for a
non-European aircraft manufacturer targeting the
European market.
5.4 Pilot training
5.4.1 Industry requirements
As noted in section 4.2.6 above, the industry will
need large numbers of trained flight crew and
maintenance engineers over the next 20 years, but
there is as yet no credible path in place to produce
the required number of qualified staff.
The creation of a training infrastructure that can
meet this demand in time is a huge challenge for
the industry. The addition of large numbers of new
aircraft to the worldwide fleet will require more
efficient training and delivery methods, including
web-based learning, paperless curricula, and
strategically located training facilities. Training will
also have to be tailored to the new technologies
available on new generation aircraft such as the 787
and A350.
Few airlines still invest in ab initio training. The way
forward for cost-effective pilot training is likely to be
the new Multi-Crew Pilot Licence (MPL) syllabus, but
no schools have yet been built “from the ground up”
around this radical and time-saving curriculum. This
is a potential opportunity for Shannon.
Similarly, the huge demand for maintenance
personnel will create a need for innovative training
methods that are both relevant and more efficient
than the current approaches.
5.4.2 Training syllabus evolution: MPL
The Multi-crew pilot license (MPL) was developed to
enhance training quality and improve safety in civil
aviation. The MPL syllabus, published in 2006, is a
radically new approach, which focuses on the end
goal of training a safe, competent airline pilot for a
career on a multi-crew flight deck.
Whereas conventional pilot training programmes rely
extensively on hours spent flying light aircraft (and
thus require good weather), the MPL makes much
more extensive use of modern simulators and is thus
far less weather-dependent.
The overall MPL training process requires a much
tighter co-operation between the training provider
and the airline, since a significant part of the pilot’s
training will be within the airline. This means that
training providers’ relationships with airlines will
increasingly drive their business.
Despite the advantages of MPL training, it has
been slow to become established, in large part
through inertia and lack of investment by existing
training providers who are wedded to the status
quo. An opportunity therefore exists to create the
first purpose-built MPL training school and capture
significant market share through partnerships with
like-minded airlines.
5.4.3 Shannon opportunity
Training providers contacted by the Task Force
perceive Shannon as an attractive training location
compared to Dublin: both the airfield itself and
the surrounding airspace are uncongested and
thus more easily able to accommodate training
activity. One established international pilot training
organisation evaluating Ireland for a new facility
stated that if they were to select Shannon, they
would base both a ground school and a number
of aircraft there, whereas if Dublin were the chosen
location, only the ground school would be feasible
and the aircraft would be based in another country.
The same organisation indicated that the greatest
obstacle was the absence of hangar facilities in which
they could store and maintain their training aircraft.
Recommendation 16 above concerning the financing
of MRO hangars therefore also applies here.
Ab initio training where new entrants to the industry
are trained as pilots from zero, whether under a
conventional syllabus or following the MPL route
described in Section 5.4.2 above, may take place in
blocks lasting weeks or months. It therefore opens
additional opportunities for related economic activity
(e.g. accommodation provision) and is also less
sensitive to the relative lack of direct and frequent
flight connections.
Recurrent and type-conversion training (where
currently employed airline pilots are being introduced
to a new aircraft type or are having periodic
refresher courses), as well as requiring more highly
sophisticated simulators, is much shorter in duration
and therefore relies more on the availability of
frequent air connections allowing for the scheduling
of trainees’ arrivals and departures with minimal
downtime.
Recommendation 19
Market Shannon as a location for pilot training
organisations focussing on innovative (e.g. MPL)
and niche approaches to training delivery (efforts
are already underway.
5.5 Education, technical training and
consultancy
5.5.1 Engineers
Forecasts cited earlier14 point to a worldwide need
for over 600,000 new aircraft maintenance engineers
and technicians over the next 20 years. While
the latter part of the training of a licensed aircraft
engineer has to take place on the “factory floor” of an
MRO facility, there is an opportunity to provide initial
technical training in a specialist training facility.
Additionally, an increasing number of technical staff
will have to be trained in new aircraft technologies
such as the maintenance and repair of composite
components, a particular focus for several Shannon
organisations.
Apprenticeships form an integral part of the training
process for many aviation-related trades, and FÁS/
SOLAS is already involved with Shannon-based
companies operating apprenticeship schemes. It is
anticipated that these schemes will expand over time.
5.5.2 ATC
Other fields of aviation also have a requirement for
cost-effectively trained staff. Air Traffic Control is a
case in point: the increasing emphasis on raising
air safety standards worldwide will in turn increase
the requirement for air traffic controllers trained to
high and internationally-recognised standards. The
IAA is already exploring partnerships with third-
level institutions with a view to offering ATC training
programmes accredited at European level.
5.5.3 Other aviation-industry staff
There are substantial and diverse opportunities to
provide training for a range of other aviation industry
14 Boeing Commercial Airplanes, Commercial Market Outlook
2012-2031
Report of the Aviation Business Development Task Force 31
 staff, especially those from developing countries Recommendation 22
and from countries without a strong aviation history.
Target additional industrial placements for local
These can range from English-language courses to
universities with key aerospace companies and
specialist courses such as cabin crew training or the
OEMs worldwide.
training of airport firefighters. A range of Irish SMEs
that provide such training to the aviation industry are
already grouped under the College Ireland brand,
Recommendation 23
under the aegis of the Irish Aviation Authority. The
College Ireland members are currently evaluating Specific academic and training courses focusing
the optimal structure for their organisation and the on composites should be developed by UL, LIT
potential for College Ireland or a successor thereto to and other institutions.
provide a co-ordination and marketing service for Irish
providers of aviation training, with its headquarters in
Shannon, is under active consideration. Recommendation 24
Explore potential for further dedicated aviation/
5.5.4 Third- and fourth-level education
tourism academic research infrastructure
Linkages with third-level educational institutions supported by European funding.
are a fundamental enabler of IASC’s success, both
to provide the Centre with a research resource on
Shannon College of Hotel Management has
which its member companies can draw, and to
been part of Shannon Airport since 1951. It is a
ensure a pipeline of future talent that will fuel the
Recognised College of the National University of
expansion of the Centre. A number of links already
Ireland (NUI) and has strong educational links with
exist between Shannon-based companies and
National University of Ireland Galway (NUI Galway)
third-level institutes in the region, principally the
since 1991. In 2004 it was deemed to be a non-core
University of Limerick. Both UL and Limerick Institute
activity of DAA. In 2008 a submission was made to
of Technology (LIT) already have agreements with a
the Higher Education Authority (HEA) recommending
range of aerospace organisations facilitating work
the amalgamation of Shannon College with NUI
placements for their students, and it is the view
Galway, while retaining its location at Shannon
of the Task Force that such placements provide a
Airport. In 2011 HEA requested submissions
powerful and low-cost way to build links between
from all third-level institutions, outlining their future
industry and the academy.
position within the national higher education
The Task Force has identified potential funding system. Amalgamation of Shannon College of
sources for Shannon infrastructure, including EIB Hotel Management with NUI Galway was again
funding. The Task Force notes that the scope of the recommended in this submission.
EIB scheme under consideration also encompasses
This amalgamation is seen as the best fit for the
academic research infrastructure and suggests that
future of Shannon College, positioning it as part
the potential for a dedicated academic aviation/
of a major university whilst retaining the College in
tourism research facility at Shannon be evaluated.
Shannon. It would free Shannon Airport from the
administrative burden of running the College and
Recommendation 20
turn it into a positive contributor to Shannon Airport
Pursue complementary opportunities for technical finances.
and ATC training as well as for other aviation-
industry education provision. Recommendation 25
The Department of Education should implement
the amalgamation of Shannon College of Hotel
Recommendation 21
Management with NUI Galway as soon as
Explore the possibility for College Ireland or a possible.
successor body, to be based in Shannon, to
provide co-ordination and marketing support for
the activities of Irish aviation training SMEs.

32
5.6 Aviation software and systems
development
Airline operations are based on processes and
systems established in an era of rudimentary
telecommunications and data processing technology.
As such, they offer many opportunities for innovation.
A wide range of product and service suppliers
facilitates the frontline operations of the aviation
industry. These suppliers include recruitment and
crew-leasing services that enable airlines to meet
their resourcing needs more flexibly. They also
encompass specialist software and IT solution
providers who offer specialist packages and tools.
These tools may improve operational efficiency (e.g.
aircraft scheduling, maintenance planning, technical
records tracking, punctuality data collation and
trend monitoring, Electronic Flight Bags). They may
enhance airline commercial profitability (revenue
management software, mobile-commerce platforms),
or they may enable airlines to offer a better customer
experience (in-flight entertainment hardware and
software).
Although typically much smaller than the airlines
and OEMs to whom they supply their wares, these
companies contribute greatly to the vitality of the
industry. Their need for specialist staff and support
resources means that they will be open to locating in a
relevant industry cluster; indeed, it will be essential to
provide appropriate “incubation space” to allow future
generations of aviation-industry suppliers to create
their businesses. Software firms may also benefit
from the proximity of the headquarters of LERO, the
national software engineering centre, in Limerick.
While many aviation-support firms may base the
majority of their staff at their head offices, crew-
leasing firms are an exception. Such companies
provide flight crew to airlines worldwide, typically
taking care of recruitment and payroll and offering a
flexible resourcing solution to fast-growing carriers
which may not be able to source sufficient qualified
flight crew locally. In this way, pilots employed on
Irish contracts and paying taxes and PRSI in Ireland
might be flying for airlines all over the world.
The crew leasing market has considerable scope to
develop as the share of air traffic outside the most
highly developed markets of Europe and North
America continues to grow. Some countries continue
to impose nationality restrictions on pilots flying for
the country’s airlines; Russia is one such example.
Liberalisation of these restrictions will have the effect
of growing the market for pilots and for crew leasing
services of the sort that Shannon can logically attract.
Recommendation 26
Pursue software development for the aviation
industry as a key sector.
5.7 Aviation Finance
Many other facets of the aviation industry are also
open to innovation; even the basis of the highly
profitable and growing leasing industry, the operating
lease, has not changed fundamentally in thirty
years. Shannon-based entrepreneurs in this sector
are currently developing and validating innovative
products that could improve the efficiency not only of
the leasing market but also of airlines themselves.
United States airlines have the ability to finance
their aircraft using a type of aviation-backed bond
known as an Enhanced Equipment Trust Certificate
(“EETC”) for which an established market exists.
EETCs are an aviation-specific form of asset-backed
security (secured on the aircraft) that is of interest to
institutional investors, in particular because of the
security which investors have over the aircraft.
In the case of the United States, this security
was provided by full adoption (the “Alternative A”
adoption) of the Cape Town Treaty, which sits above
local insolvency laws. The full adoption of the treaty
allows US borrowers to benefit from a significant
discount (known as the “Cape Town Discount”)
in their financing costs. Since it is becoming
increasingly difficult and expensive to obtain
financing, the option for airlines to raise debt in the
capital markets is becoming increasingly attractive.
The EETC market has to date focused on the United
States but there is a significant opportunity for Ireland
to leverage its existing aviation finance knowledge
both to open new and cheaper funding sources for
Irish airlines and to raise the country’s profile as a
centre for aviation finance. The ongoing growth in the
number of countries that have fully adopted Cape
Town represents an increasing scope for issuing
EETCs secured on aircraft operating there, and thus
an increasing market for Irish aviation finance.
In addition to the full adoption of the Cape Town
treaty, there is strong potential to make Ireland in
general, and Shannon in particular, an attractive
Report of the Aviation Business Development Task Force 33
 location for EETC issuance. An example of a
targeted incentive for such activity would be
exemption from withholding tax on payments made
under an EETC, which could be limited to IASC
companies in a similar way to what was in place for
IFSC certified companies.
Recommendation 27
Support innovative projects and research in
aviation finance in collaboration with local
companies and educational institutions.
Recommendation 28
Ireland should move to full (equivalent to
“Alternative A”) adoption of the Cape Town Treaty
without delay.
Recommendation 29
Examine the potential for specific incentives to
attract international business to issue EETCs in
Ireland, for example through a targeted exemption
from withholding tax.
5.8 Corporate and private aviation
(business jets)
Business aircraft represent a steadily growing market:
Bombardier, for example, forecasts 10,000 business
jet deliveries worldwide, worth $260 billion, in the
period from 2011 to 2020, and 14,000 deliveries
worth $366 billion in the period from 2021 to 2030.
While these aircraft have in the past been registered
in the country in which their owner or operator is
based or domiciled, there has been a recent trend
towards specialised corporate and private aircraft
registries. The Isle of Man established the “M” register
in 2007, targeted at business aircraft, and has already
registered well in excess of 500 aircraft. Guernsey is
currently planning a similar business aircraft registry,
while Malta has been aggressively positioning itself
as a favourable jurisdiction for aircraft leasing, with
particular focus on the registry and administration
of corporate and private aircraft. Although Ireland
has developed a very strong position in commercial
aircraft leasing, the worldwide corporate aircraft
market is at risk of bypassing the country entirely.
In each case, the attraction for the registration
34
jurisdiction in question is not merely the revenue from
the registry fees but the spin-off benefits from linking
the aircraft of high-net-worth individuals with the
location. This encompasses the legal and compliance
work involved, maintenance and crewing services,
and also the likelihood that the owner will take a
greater interest in the location overall. Malta offers a
modest number of aircraft MRO providers and hopes
to gain some business for these and other aircraft
support activities from locally registered aircraft; the
Isle of Man and Guernsey have virtually no such
supporting industries. Ireland, on the other hand,
stands to benefit considerably from potential spinoff
business, both through existing support activities and
through the corporate-aviation support businesses
that could reasonably be developed in Shannon.
The factors that influence the competitiveness of
commercial aircraft MRO facilities apply also to
business aircraft maintenance providers, with the
added specificity that corporate aircraft are typically
maintained by specialist companies focusing only on
the corporate aviation market. There is relatively little
overlap between MRO providers to the commercial
and biz-jet markets. The nature of the work
undertaken by corporate aircraft maintenance facilities
is also very different. Commercial aircraft are delivered
by the manufacturer fully equipped with the buyer’s
choice of seats and cabin equipment, whereas it is
common practice for corporate aircraft to be delivered
unfurnished (in a so-called “green” configuration)
to a dedicated completion centre which will be
responsible for fitting out the interior in accordance
with the buyer’s specification. The completion of a
large-cabin corporate jet can take a year or more and
can cost in excess of $30 million. There is currently a
shortage of facilities able to undertake this high-value
but demanding work. It is worth noting that a number
of the existing corporate aircraft maintenance and
completion centres are in relatively high-cost locations
such as Switzerland, in comparison with which Ireland
is likely to have a relatively favourable cost base.
As with commercial aircraft, maintenance
organisations specialising in business jets tend
to forge close relationships with the aircraft
manufacturers, and there is certainly scope to
explore not just with existing corporate aircraft
maintenance providers but also directly with the
principal corporate aircraft manufacturers their
interest in developing or supporting new Shannon-
based facilities.
Shannon already attracts an average of about 10
corporate-aircraft arrivals or departures each day.
Approximately 95% of the business jets using
Shannon are making fuel stops before or after
Atlantic crossings, although relatively few of the
US-bound aircraft are making use of the CBP facility
at Shannon. There is clear scope to target a much
higher level of corporate aircraft activity, building on
existing corporate aircraft facilities at Shannon and
potentially enhancing them with additional dedicated
terminal or hangar infrastructure for corporate and
private aircraft.
Recommendation 30
Evaluate the feasibility of establishing an Irish
corporate aircraft registry and the business case
for doing so.
Recommendation 31
Promote Shannon’s potential for corporate/private
aircraft MRO and completion facilities to this
sector.
Recommendation 32
Explore the feasibility of enhancing Shannon’s
corporate and private aircraft facilities, including
the construction of dedicated terminal or hangar
facilities with private investment.
5.9 Regulatory compliance services
As a highly regulated and safety-conscious industry,
aviation has a particularly strong need for training
and expertise. This is particularly the case in
developing countries which may not have a strong
history of effective aviation regulation and oversight.
Many countries’ regulatory oversight of their national
airlines’ and airports’ safety is lacking, typically
through a lack of experience or a failure to recognise
the importance of such oversight.
International audit and inspection programmes have
successfully focused many countries’ attention on
the need to reform their governance procedures if
their carriers are to gain access to European or US
markets. However, the expertise to bring a country’s
airworthiness authority up to appropriate international
standards is difficult to find outside the senior staff of
existing well-established authorities.
There exists therefore the potential for a
commercial consultancy with a worldwide remit to
be established, for example by the Irish Aviation
Authority, focusing on assisting other nations’
airworthiness authorities to build and maintain their
own oversight and governance capabilities.
In many cases such intervention would be on the
basis of a purely commercial contract. In other cases
it could be provided as part of an Irish bilateral aid
package of the sort managed by Irish Aid, located in
Limerick.
It is not suggested that a commercial regulatory
consultancy would necessarily limit itself to putting
appropriate third-country oversight structures in
place. Countries developing their aviation industry
are likely to face a wide range of requirements,
from airspace design to personnel licensing. A
consultancy able to draw on the expertise of
a knowledgeable and commercially focused
airworthiness authority such as the IAA would
be strongly positioned to assist in meeting these
requirements. It is suggested that the pragmatic
and effective airworthiness authority culture which
has developed in Ireland could form the basis for
a successful international consulting organisation,
linking Ireland with many emerging nations, for their
benefit as well as for that of this country.
Recommendation 33
Explore the feasibility of establishing a Shannon-
based commercial consultancy arm of the Irish
Aviation Authority, providing regulatory compliance
assistance and other consulting services to
international clients.
5.10 Specialist airline operations
Alongside conventional scheduled and charter
airlines a number of specialised types of aircraft
operators exist. These include, among others:
• ACMI (Aircraft, Crew, Maintenance and
Insurance) providers, who specialise in providing
aircraft, often at short notice, for conventional
carriers who are in need of additional capacity
• Specialised “outsize cargo” operators who fly
large cargo aircraft capable of carrying larger or
heavier loads than conventional freighters
• Special-mission operators such as operators of
firefighting and oil spill dispersal aircraft
Report of the Aviation Business Development Task Force 35
 • Charitable organisations such as ORBIS, which
operates an aircraft converted into a flying eye
hospital carrying out eye surgery in developing
countries
The Task Force notes that an aviation cluster at
Shannon, combining a range of maintenance services,
regular cargo and passenger service, training facilities
and relatively low-cost fuel and parking, could be
attractive to operators such as the above.
The Task Force also notes that the Department of
Foreign Affairs has commissioned a study into the
feasibility of a humanitarian supply hub at Shannon
and the report of the study is awaited.
Recommendation 34
Market Shannon as a potential base to specialist
operators, on the basis of preferential landing and
property charges for based operators.
5.11 Heritage, tourism and networks
The Task Force’s reflections on the components
of an aviation centre of excellence have also led it
to consider the importance of Ireland’s intangible
aviation heritage as well as its concrete heritage in
the form of businesses and skilled professionals.
5.11.1 National Aviation Museum
Ireland boasts a long and proud aviation tradition,
from pioneering early flights through the development
of commercial air services, first with the precursor of
Aer Lingus in 1936 and subsequently by seaplanes at
Foynes and then long-range “landplanes” for which
Shannon was a strategic location. Recent years have
seen operating leasing, largely pioneered in Shannon,
develop worldwide as the asset ownership structure
underlying and enabling much of the airline industry.
Ryanair has grown from a small Irish regional airline
to one of the world’s largest and most innovative,
spawning a host of imitators across the world.
Despite this history, Ireland does not have a national
aviation museum. The Task Force believes that there
is a clear opportunity to create such a museum,
drawing together Shannon’s iconic status within Irish
aviation history, and the availability of ample land and
buildings at the airport. A National Aviation Museum
at Shannon would provide a magnet for both Irish
and overseas visitors, would generate additional
traffic to and through the airport, and would fit Clare
County Council’s goal of creating a major international
tourist attraction in the county. The museum would
36
seek to provide a national resource encompassing all
aspects of Irish aviation history, complementing rather
than supplanting any existing collections.
A suitable site for such a museum has been
identified on Shannon Airport property. Initial
soundings undertaken with the local authority have
met with an enthusiastic reception, and a number of
potential leads for philanthropic support have also
been identified. The Task Force recommends that a
small working group now be established under the
aegis of the new Shannon entity to formulate plans
for a National Aviation Museum.
Recommendation 35
Establish a small working group to evaluate and
progress plans for a National Aviation Museum at
Shannon.
5.11.2 Aviation conference
As noted above, Ireland has trained many aviation
professionals who have subsequently emigrated,
bringing their skills and their passion for aviation to
other countries and often helping to establish or lead
aviation ventures there.
Drawing on Shannon’s planned international centre
of excellence for aviation, and in the context of
The Gathering in 2013, it is suggested that an
aviation conference in the Shannon Region could be
organised in Summer 2013, with a specific focus on
the Irish aviation diaspora worldwide.
The goal of the event would be to bring Irish aviation-
industry “alumni” back to the country to reconnect
with their peers as part of an ongoing networking
process, to share expertise from Irish airline CEOs
and entrepreneurs, and as a key priority to provide
a “shop window” on the emerging Shannon
International Aviation Services Centre.
This event could build on or be separate from the
existing Shannon Business Aviation Convention.
The Task Force has already received indications of
interest from major aviation firms interested in being
associated with or sponsoring such an event, and it
is suggested that international airlines with Irish CEOs
might be well disposed to providing discounts on
flight ticket prices for attendees to travel to the event.
Recommendation 36
Establish a small working group to plan and
organise a 2013 Shannon aviation conference
targeting the Irish aviation-industry diaspora.
 6

Report of the Aviation Business Development Task Force 37

 6 Employment Potential

The strategic value of Shannon derives not from its history but from its long runway, its
location, its land bank and to a secondary degree the fifth-freedom service opportunities
encapsulated in Irish bilateral air service agreements, which combine to offer considerable
potential for employment creation and economic development.

As already noted, the foundation of an aviation-industry cluster already exists at

Shannon, with approximately 1,600 staff employed by 40 aviation-related companies.
The continuing development of aviation-related businesses within the Shannon region will
provide benefits to these companies in terms of proximity to suppliers and customers,
ability to share infrastructure, and ease of co-operation. These benefits will translate
in turn into lower costs, increased competitiveness and increased employment. This
concentration of expertise will also enable Ireland to raise its worldwide profile as a
location for aviation services and to market its offerings more effectively.

There exist strong opportunities to develop Shannon’s presence and activity in a number
of aviation industry sectors, including maintenance, training, aviation support activities and
aviation finance among others.

The Task Force believes there is a genuine opportunity to create an internationally competitive
Aviation Services Centre at Shannon, which would build on Ireland’s strengths and would
serve to anchor the aviation and aviation-finance industry already present in Ireland.

The Task Force has formed an assessment of the five-year direct employment potential
resulting from the new Shannon entity. This has been done on a sector-by-sector basis,
combining known and existing firms in each sector with identified opportunities and
taking an informed view of the likely range of employment which could be generated
by each. Discussions with companies covered their expansion plans, business areas
for which expansion was targeted, timescales, and, where possible, numbers of jobs;
whether Shannon could potentially be of interest for expansion; and the key enablers and
impediments to expansion in Shannon. A number of the industry discussions have been
on a confidential basis, precluding the inclusion of company names to job numbers.

6.1 Ongoing IASC direct
employment
The incremental employment generated and
sustained by the new entity over a five-year timescale
is estimated at 3,000-3,500 jobs.
The employment estimates do not include significant
additional employment creation potential from
a number of other aviation-related projects that
the Task Force has identified. These projects are
currently in early development phases and seek to
apply “outside the box thinking” to drive disruptive
innovation in diverse aspects of the aviation industry.
It is the view of the Task Force that if their early
potential is confirmed they will have the ability to
transform particular aviation industry sectors and to
deliver large numbers of specialist jobs.
The Task Force has been able to obtain specific
commitments from two existing Shannon companies
to expand their employment there in the context
of an International Aviation Services Centre. These
two commitments alone account for approximately
1,000 jobs.

38
 7

Report of the Aviation Business Development Task Force 39

 7 Characteristics of New Entity

A detailed Business Plan has been prepared to meet the requirements of the State
Airports Act 2004 and to provide a basis for obtaining Ministerial consent to separation.
The Business Plan provides for a continuation of State ownership throughout the period
of the plan. The plan has been independently validated by KPMG on behalf of the
Department of Transport, Tourism and Sport.

Both the Dublin Airport Authority and Shannon Airport have also completed transition
plans for separation by year-end 2012.

7.1 Organisation
The new entity is envisaged to combine Shannon
Airport with a restructured Shannon Development.
The incorporation into the new entity of the
Shannon Development property portfolio
(which is unencumbered by bank debt) is a key
recommendation of the Booz report and the Task
Force concurs that this is an essential step. The
property portfolio, in particular those lands and
properties located adjacent to Shannon Airport, have
the potential to provide development space for the
International Aviation Services Centre, ranging from
incubation and office space in the short term through
to major airside expansion in the medium and long
term.
The property portfolio is described in detail in the
Business Plan.
7.1.1 Merger of SAA and a restructured
Shannon Development
The business plan assumes that the activities
currently carried on by Shannon Development will
be restructured such that the activities principally
related to property ownership and management
will be merged into the new entity together with the
activities of Shannon Airport.
(both landside and airside) in the medium and long
term.
7.1.3 Potential organisational structure and
resourcing
A number of options were considered for the
structure of the new entity. In the end the preferred
structure was a simple one in which the functions
of airport operations and property management
reported to a small top-level corporate management
team.
7.2 Interface with state agencies
(IDA, Enterprise Ireland, Fáilte
Ireland)
The new entity will work very closely with Enterprise
Ireland and the IDA to develop the planned Shannon
aviation cluster, and it will rely on these agencies’
expertise, commitment and support (including grant
aid to enterprises) as an essential enabler of the
success of the project.
The Task Force has invited the IDA and Enterprise
Ireland to outline for this report the activities they
plan in support of the new Shannon entity, and the
agencies’ input is presented in the following two
sections.

7.1.2 SD property portfolio It is anticipated that the functions of Shannon

Heritage will also be merged into the new entity. The
The property portfolio owned by Shannon
new entity will therefore also work with Fáilte Ireland
Development comprises the properties and lands
to define an optimal operating framework.
situated in the Shannon Free Zone and surrounding
business parks (considered “core” to IASC activities), 7.2.1 IDA
and properties and lands in the wider Midwest
IDA Ireland welcomes the new Shannon entity
region. The current occupancy levels are relatively
initiative and looks forward to collaborating for
low and the rental income from the Shannon
the winning of new job creating investments for
properties is correspondingly modest, but the
the region, in particular in relation to the aviation/
property portfolio, which is unencumbered by bank
aerospace sector. We believe that this positive
debt, gives the new entity considerable scope to
project for Shannon will rejuvenate the Shannon
facilitate the development of aviation businesses

40
brand internationally and we will work to enhance
this through direct engagement with target clients.
IDA Ireland will market Shannon for foreign direct
investment as the aviation industry centre for Ireland
with particular emphasis on:
• Parts Manufacture
• MRO
• Aviation Services
• Aviation Financial Services
• Pilot Training
• Other engineering and technical activities
IDA Ireland sees Shannon and the aviation
engineering cluster in Shannon as the prime location
in terms of infrastructure; airport, runway, industrial
park, existing companies, training institutes and
depth of experience within the industry along with
its proximity to Limerick city and its university are
key selling points to winning new investment for the
region.
IDA Ireland will work closely with the new entity to
create a brand within the aviation sector which will
attract new job creating investments to Shannon.
Through our network of offices internationally, when
meeting with aviation related target companies,
Shannon will be central to the Ireland message.
The increased focus on Shannon through the
creation of the new entity and the plans for
investment and incentives will allow IDA Ireland to
highlight Shannon as a premier European location for
aviation related activities. This will be a key priority of
the teams working on engineering related activities
and financial services.
In relation to existing companies IDA will engage at
corporate and local management levels to focus
on winning additional business from FDI clients (55)
based in Shannon.
7.2.2 Enterprise Ireland
The Government has decided to separate Shannon
Airport from the Dublin Airport Authority and to
merge certain activities of Shannon Development
with Shannon Airport to form a new entity. A
consequence of this merger is that the current
responsibility for the development of indigenous
industry around Shannon Airport will transfer from
Shannon Development to Enterprise Ireland. As part
of this process there is a desire to develop a world
class Aviation Industry cluster at Shannon.
Enterprise Ireland fully supports the objective to
build an Aviation Industry cluster of enterprises
at Shannon and believes that the advantages of
Shannon as a location can be strengthened to create
the environment to deliver significant employment
growth. The focus on Shannon as an Aviation
Industry location and the commitment of a large
number of private and public sector interests to this
project will contribute to our objective to develop an
indigenous aviation industry cluster of enterprises at
Shannon.
The route Enterprise Ireland will take to contribute
to the development of an aviation industry cluster at
Shannon will be the development of a group of High
Potential Start Up enterprises. Enterprise Ireland
will design and deliver a series of promotional and
support programmes specifically targeting potential
entrepreneurs to locate new start up businesses at
Shannon in the Aviation Industry sector.
Enterprise Ireland will work closely with the new
Shannon entity to build an environment that will
encourage and support entrepreneurship in the
Aviation sector at Shannon.
Recommendation 37
Encourage start-ups and SMEs through provision
of incubation space and/or high-potential start-up
programmes such as those offered by Enterprise
Ireland.
7.2.3 Proposed operating framework with IDA
and Enterprise Ireland
The following is the Task Force’s proposal
for an operating framework guiding the new
entity’s activities and interfaces with the state
development agencies. While the focus is clearly
on the development of aviation-related activity, it
is important that the agencies also work together
to provide ongoing support and development
assistance to non-aviation-related companies within
the Shannon Free Zone.
i Delivery on the new entity’s job creation
objectives will require close inter-agency
cooperation.
ii It is anticipated that the jobs will derive from a
combination of sources including companies
already established at Shannon, indigenous
Irish businesses choosing Shannon as a base
for development of existing or new activities,
indigenous and international start ups and
Report of the Aviation Business Development Task Force 41
 early stage businesses, internationally mobile and inward missions designed to build
investments and proactive project building awareness of the Shannon offer, stimulate site
and linkage activity designed to exploit the visits to Shannon and generate investment
undoubted leverage created by Ireland’s opportunities to which suitable incentives
significant clout in key areas. In all instances packages might be directed by IDA. It is
the task of promoting the infrastructure, anticipated that such campaigns and related
skills, cost, tax and financial incentives which activity levels will be agreed in advance
make Shannon an attractive location will fall annually. The precise roles to be adopted by
to Shannon-based IASC personnel with the respective agency personnel will be defined in
proactive support and co-operation of IDA, EI, that context.
Fáilte Ireland and other agency personnel.
viii For emerging international companies in the
iii IASC personnel will develop image-building aviation and related areas it is proposed that
campaigns and related promotional materials IASC personnel will work with IDA to identify
as warranted for each of the local, indigenous suitable targets for relocation to the Shannon
Irish, and internationally mobile investment region and develop appropriate direct
markets that are a focus of the Shannon targeting and or seminar activity to promote
initiative. These campaigns will be discussed Shannon and its attractions. This will include
with requisite agencies and their proactive both US and European companies.
support will be solicited in implementing the
campaigns.
iv For businesses already based at Shannon,
IASC will typically be the landlord and will have
a close working relationship with them. As
part of the ongoing relationship, investment
generation, investor facilitation and after care
services will be provided by IASC personnel
working closely with other agency personnel
where relevant to secure the approval of
optimal incentives packages to facilitate
investments.
v For existing indigenous businesses in the
aviation and related sectors to whom Shannon
and its advantages are a potential attraction,
IASC personnel will seek to build awareness
of the Shannon offer through a combination
of research, direct targeting, seminars and
events, and project building/linkage activity.
IASC will work closely with Enterprise Ireland
in this respect.
vi For indigenous start-ups IASC will work with
Enterprise Ireland to develop a bespoke
programme to be delivered in the Shannon
area designed to provide a catalyst to new
enterprise formation. This will it is anticipated
be funded by EI as part of its general
enterprise promotion activities.
vii For internationally mobile investment it is
proposed that IASC personnel will work with
IDA to develop a campaign of promotional
activity, direct targeting, investment seminars

42
 8

Report of the Aviation Business Development Task Force 43

 8 Key Incentives and Enablers

While there is considerable goodwill towards Shannon in the Irish aviation and business
community, mere goodwill will not suffice to deliver new business, least of all from the
international aviation industry on whose participation the ultimate success of the new
IASC entity depends. A set of incentives is required to support the aviation sector
in Ireland, which would ideally apply to Irish and overseas businesses setting up or
expanding operations, as well as investors funding infrastructure development. Shannon
would be in a position to benefit from any such incentives.

A list of potential nationally applicable incentives has been developed, covering

investment, employment, and enterprise development, and a submission has been made
to the Department of Finance for consideration.

8.1 Key Enablers construction and perhaps proceed to outline

As has been noted already, the single most important
enabler for the success of the new entity is the
separation of Shannon Airport from the DAA.
Recommendation 38
Adopt a phased process to enable the resolution
of Shannon Development restructuring issues,
with airport separation occurring by year-end
2012 followed by the merger with a restructured
Shannon Development on 1 July 2013.
There are a number of other key building blocks
in the development of the International Aviation
Services Centre, which are set out below.
8.1.1 Hangar development
Shannon Airport’s extensive land holding (about
850 hectares in SAA ownership plus a further 250
hectares in the adjacent Shannon Free Zone) gives a
potential for aviation-related industrial development
which is lacking in the majority of airports. While sites
for half a dozen large aircraft maintenance hangars
have already been identified, further expansion of
airside facilities would be possible either by building
to the north of the main runway (necessitating
some extension of local services) or by extending
the airside boundary to encompass some parts
of the current Shannon Free Zone which could be
redeveloped.
8.1.2. Phased build-out
As noted above, it is not proposed to construct
hangars on a purely speculative basis. A more
prudent approach is to identify the sites for hangar
planning permission for the hangars, as long as the
latter does indeed deliver appreciable time savings
over later individual applications even when possible
configuration changes are taken into account.
Construction of each hangar would then only begin
when the tenant for that hangar had been identified
and had committed to a lease.
8.1.3 Funding mechanisms
The consistent feedback from industry interviews
was that many MRO providers and related
businesses may not wish to own their own facilities,
preferring instead to maintain the flexibility that
comes with a long lease on a rented building. While
significant interest from maintenance providers
has been identified, it is clear that the availability of
appropriate infrastructure for rental will be essential if
this interest is to be converted into something more
concrete. A funding application and business plan
will be prepared and submitted to the European
Investment Bank in respect of the proposed
infrastructure. An initial approach to the EIB in
this regard has been made by the Department of
Finance.
8.1.4 Dedicated Aircraft parking areas
A number of aircraft maintenance providers, as well
as aircraft lessors, have highlighted the advantages
of ample dedicated long-term aircraft parking areas
being made available. These are typically used
for the storage of aircraft for a period of weeks or
months, perhaps when they are repossessed by
a lessor from an airline that has run into financial
difficulty, or when they return from one lessee
before the next has been identified. The presence of
sufficient reasonably priced aircraft parking is likely to

44
serve as a catalyst for other economic activity at the
airport.
8.1.5 Office/light industrial space
Aviation software and systems development
companies, along with specialist suppliers and
subcontractors to the aviation industry, are typically
much smaller than the airlines, OEMs and MRO
organisations who are their clients. Provision of
office and light industrial space for these companies,
including in particular incubation space for start-
ups and SMEs, will be an essential part of IASC’s
activity, in terms not only of seeding future expansion
but also of establishing Shannon as a credible and
diverse aviation cluster.
8.1.6 Shannon Development real estate
As noted above, the integration of the Shannon
Development property portfolio into the new
entity (to be achieved through the merger with the
restructured Shannon Development) is an important
foundation for its sustainability. The property portfolio
not only provides rental income but also gives the
new entity room for expansion and development.
Shannon is extremely fortunate to have this land
area adjacent to the airport available for expansion;
many aviation clusters internationally are heavily
constrained in their expansion by a lack of space.
The Shannon Free Zone (SFZ) represents a
significant opportunity for the new entity to develop
activity and revenue, provided that an effective
means is developed to redevelop the site and
potentially to extend the airfield boundary to
encompass part of the existing SFZ within the
“airside” zone so as to enable other airside activities.
The Shannon Development lands can be divided
into two categories: those located in Shannon, in
particular in the SFZ, and those located elsewhere in
the Midwest. Of particular immediate relevance for
the new entity and for the development of Shannon
are the SFZ lands. A certain proportion of the
industrial buildings on these lands are legacy light
industrial facilities in a relatively poor state of upkeep
and which were already earmarked for demolition
and redevelopment in the existing Shannon
Development master plan. As part of the proposed
merger of a restructured Shannon Development
into the new entity, a due diligence exercise is being
undertaken.
The new entity’s property management activities for
the Shannon lands and properties will be directly
linked to its overall objective, the development of
economic activity and in particular the development
of an international aviation centre at Shannon.
Property assets may be used as a promotional
tool for this development, and the overall focus will
be on creating the circumstances that will deliver
maximum return to the new entity and the national
exchequer. This will involve maximising the efficiency
and effectiveness of the property management and
development functions of IASC. The same principles
should apply to other elements of the property
portfolio located elsewhere in the Midwest.
Recommendation 39
Evaluate scope to increase airside land area by
extending airfield boundary into existing SFZ land.
Recommendation 40
The new entity should seek to evaluate and
segregate its property portfolio into those assets
which it sees as central to achievement of its
broad objectives and those which are not.
Recommendation 41
While the new entity may seek to maximise the
returns from its Shannon property portfolio taking
into account market opportunities, it should
generally make decisions related to its property
assets which are consistent with the achievement
of its objectives in the broadest sense.
Recommendation 42
Decisions on the letting, sale or disposition of the
Shannon property portfolio assets should have
regard to the wider economic impact and should
take into account not just the net rents or the net
sales proceeds but also the wider benefit which
would accrue to the new entity and the Exchequer.
Recommendation 43
he new entity should as far as possible seek
to manage the non-Shannon properties on an
ongoing basis or dispose of non-Shannon property
assets, taking into account its assessment of the
market and seeking to achieve the highest net
present value for those properties at the time of
sale.
Report of the Aviation Business Development Task Force 45
 Recommendation 44
Upon the creation of the new entity and prior to the
merger with a restructured Shannon Development,
Shannon Development should provide a covenant
to the new entity in respect of SD assets relating
to the pre-merger period. In addition, during this
period the new entity should be able to make
recommendations to the board of SD to enter into
particular property related transactions consistent
with the objectives of the new entity.
8.1.7 Strategic Infrastructure provisions
The Planning & Development (Strategic
Infrastructure) Act 2006 introduced the provision that
an application for permission for any development
specified in the “Seventh Schedule” shall, following
a screening process, be made to An Bord Pleanála
rather than to a planning authority if certain
conditions are met which mean that the development
would be of strategic or economic importance.
An airport that comes within the “Seventh Schedule”
is defined as
“An airport (with not less than 2 million instances of
passenger use per annum) or any runway, taxiway,
pier, car park, terminal or other facility or installation
related to it (whether as regards passenger traffic or
cargo traffic).”
In the case of Shannon Airport the annual passenger
levels are now at approximately 1.4 million. As
such, Clare County Council has indicated to the
Department of Environment, Community & Local
Government (DoECLG) and to the Task Force that
it considers Shannon Airport to be outside of the
criteria set out under the legislation. However,
An Bord Pleanála has previously determined that
Shannon Airport falls within the “Seventh Schedule”
as it has an operational capacity of more than 2
million passengers. This is confirmed in a recent
decision of An Bord Pleanála15.
The Task Force concurs with the view of Clare County
Council and would recommend that the DoECLG
and An Bord Pleanála revisit this matter in order to
streamline the planning process at the airport and
adjacent lands. This would be a short-term enabling
measure until the airport’s annual passenger numbers
once more exceeded two million.
15 Ref. No. 03.PC0144 of July 2012
46
Recommendation 45
DoECLG and Bord Pleanála to review
determination that Shannon Airport falls within
Seventh Schedule of Planning and Development
(Strategic Infrastructure) Act 2006.
8.1.8 Commercial rates and Development
Contributions
It is recommended that consideration be given to a
commercial rates incentive scheme for new aviation
related enterprises around the airport. In the past,
this arrangement has been successfully implemented
by Government through the Urban Renewal Scheme
and a similar model, with the necessary legislation,
could be introduced for the airport and surrounding
lands. The scheme could provide for a ten year
arrangement whereby full rates were payable in the
10th year having increased by increments of 1/10
during the previous nine years.
In tandem with the above it is recommended
that Clare County Council review its General
Development Contribution Scheme with a view
to specifically facilitating new aviation related
enterprises at the airport and its land bank. The area
could be designated as a special zone within which
reduced contributions would be applicable.
8.1.9 Land use planning, and marketing of land
bank
Large parts of the airport lands are not currently
in use and are capable of being developed in the
short to medium term for airport related projects.
These lands have been zoned for airport use in
the Shannon Town & Environs LAP 2012-2018.
Potential future use of these lands has been
examined as part of the Shannon Airport Master plan
recently prepared by the DAA. It is recommended
that the Airport authorities and Clare County Council
identify as soon as practicable the precise lands
that are available and that these be marketed
without delay. The Task Force notes that it is an
objective of the Clare County Development plan for
the Council, in collaboration with other agencies,
to prepare a High Level Strategic Plan, to identify
key priority projects and developments capable of
being accommodated at the Shannon Airport lands,
Shannon Free Zone and Westpark. If necessary
the airport authorities should consider applying for
planning permission in order to minimise the time
needed to deliver completed infrastructure following
a tenant commitment.
Recommendation 46
Shannon Airport Authority should work with Clare
County Council to identify and agree specific
areas of airport land bank for specific categories of
development, and should evaluate the feasibility of
applying for planning permission.
The embankment walls that surround Shannon
Airport were constructed in the early days of
the airport to protect the site from the adjoining
estuarine waters. The embankments now provide
protection for areas beyond the airport. In this
regard the ongoing Shannon Catchment Flood Risk
Assessment Management Study (CFRAMS) has
identified Shannon Airport as an area for further
assessment. The OPW is charged with working
in partnership with the local authorities to deliver
CFRAMS.
Recommendation 47
That consideration be given to the OPW being
designated as the party responsible for any works
or for implementing any recommendations which
arise out of the Shannon CFRAMS study.
8.1.10 Access
The development of the national road network in
recent years has greatly contributed to the ease
of road access to Shannon Airport and to the
enlargement of its catchment area. Road access
to Shannon Airport is generally very good, with the
exception of the last kilometre of the N19.
At present the N19 gradually transitions from a dual
carriageway to a single carriageway as vehicles
approach the airport curtilage from the Drumgeely
roundabout. This is not only detrimental to the
image of Shannon as an international airport but is
inadequate both for the functioning of the airport and
for emergency management purposes.
The current arrangement also places constraints on
harnessing the potential from the non-operational
lands in the airport land bank.
It is therefore recommended that the N19 dual
carriageway be extended into the airport. The lands
required are in public ownership. It is clear therefore
that a road corridor exists that would allow this to be
progressed by the NRA.
The Shannon Town & Environs Local Area Plan
2012-2018 contains an objective to support this.
In the medium to long term the Shannon LAP also
has an objective for the continuation of the existing
Aerospace Road to serve future airport-related
development lands. Lands required to facilitate
extension of the road are in local authority or airport
ownership.
Recommendation 48
Clare County Council to evaluate the feasibility
of putting in place a programme of rates relief
and reviewing possible alleviation of development
contributions as an incentive mechanism for new
enterprises.
Recommendation 49
Explore potential for extension of N19 dual
carriageway road into airport.
8.1.11 Secondary enablers
The Task Force has noted a number of other
inhibitors to the efficient development of business
and tourism activity in Shannon and more widely.
These are noted below.
i. Visas for non-EU nationals
Companies have remarked repeatedly on the
difficulty of obtaining visas for non-EU citizens,
whether management or staff travelling to Ireland
for business purposes or tourists wishing to visit
Ireland.
In the context of Shannon Airport’s endeavours
to attract transit traffic, e.g. non-EU long-haul
carriers stopping off in Shannon en route to the
United States, it would be particularly valuable to
be able to indicate to the airlines concerned that
their passengers would have the ability to stop off
in Ireland en route without onerous visa formalities,
and the potential additional passenger revenue
could be decisive in an airline’s route evaluation.
Multinational and internationally active firms in
Shannon already face Shannon’s relative lack of
connectivity compared to locations in Continental
Europe, and Ireland’s non-membership of the
Schengen zone. To assist these firms to compete
in an international marketplace, it is essential
Report of the Aviation Business Development Task Force 47
 that these factors are not further exacerbated by
difficulty and delay in obtaining visas.

Recommendation 50
Review and simplify visa process for non-EU
visitors, with particular reference to business visas
and to main prospective non-EU inbound tourist
markets.

ii. Ability for Shannon Chamber to certify

Certificates of Origin
It is standard practice that companies involved
in the export of manufactured goods must
prepare Certificates of Origin, which are
certified by the local Chamber of Commerce.
Although a substantial proportion of the goods
exported from the region originate in Shannon,
Shannon Chamber is not authorised to certify
these certificates, leading to delays and
additional expense for Shannon companies. It
is recommended that Shannon Chamber be
given this authority, in common with many other
Chambers.

Recommendation 51
Revenue to authorise Shannon Chamber to certify
Certificates of Origin.

48
 9

Report of the Aviation Business Development Task Force 49

 9 Feasibility Assessment

The separation of Shannon Airport from the Dublin Airport Authority is supported by
a wide range of stakeholders from across the region, who are keen to see the airport
develop its activities and regain a position as an economic driver for the Midwest and
beyond.

The strategic value of Shannon derives not from its history but from its runway, its
location, its land and property portfolio, and to a secondary degree the fifth-freedom
service opportunities encapsulated in Irish bilateral air service agreements.

The Task Force believes that the aviation business opportunities that have been identified
are sufficiently diverse and substantial to constitute the core of an International Aviation
Services Centre (IASC). In light of the commitments which have already been obtained
from potential “anchor tenants”, it is the view of the Task Force that such a Centre can
be feasible, and can apply and develop Shannon’s and Ireland’s aviation capability in an
international context.

In evaluating the feasibility of Shannon Airport as a standalone entity, the Booz report
expressed concerns about its sustainability given the costs of servicing its historic debt
in addition to operational and capital expenditures and other liabilities. The Task Force
concurs with this concern and recognises the importance of fulfilling all the statutory
conditions for separation under the 2004 State Airports Act, including demonstrating the
sustainability of the new entity.

The new entity has already put in place adequate working capital facilities, and transition
plans for both the Shannon Airport Authority and the DAA have been completed.

The existence of an appropriate range of incentives will play an important part in attracting
international business to IASC, and the Task Force has made a submission to the
Department of Finance.

The Business Plan for the new entity sets out the assumptions under which Shannon can
be viable and makes provision for necessary expenditures. Within the Business Plan, no
IASC revenue or external IASC funding is assumed; this will be elaborated in detail in a
subsequent master plan.

50
 Recommendation 52
Urgently complete transition plan for Shannon
Development.
9.1 Risks to delivery
Ireland and Shannon benefit from a range of current
and potential strengths, which give rise to a genuine
opportunity to create a world-class aviation centre
of excellence. However the competition is global in
nature and it will be necessary to equip the Centre
with the appropriate tools to be able to succeed
in this competitive marketplace. A failure to do
so would limit the centre’s ability to develop its
reputation, activities, employment or Exchequer
benefit. Conversely if a truly competitive basis can be
established for the proposed Centre, there is every
reason to be optimistic for the future.
The principal delivery risks are enumerated below:
Delay in separation leading to loss of momentum
and goodwill
The announcement of the airport’s impending
separation has generated considerable goodwill and
enthusiasm for a new beginning. Failure to capitalise
on this in a timely manner would impair the ability
of airport management to win further air services,
and of Shannon Development and other agencies to
attract businesses to locate in the region.
Failure to establish Shannon as an attractive
business location
The vision for the new International Aviation Services
Centre is of a cost-effective and globally competitive
location for aviation-related businesses to develop
their activities. To make this vision a reality will require
a dedicated and effective marketing effort in parallel
with the existing industrial development agencies but
will also require an appropriate package of incentive
measures, as discussed in Section 8 above. Failure
to put both these elements in place will mean that
Shannon and IASC fail to live up to their full potential.
Failure to put appropriate infrastructure in place
The provision of infrastructure such as hangars,
specialised terminals and parking areas is essential
to attract business in many of the aviation industry
sectors discussed here. This provision is in turn
dependent on the ability to attract external funding
and to complete both planning approvals and
construction without delay.
Failure to achieve sustainable cost base
The new IASC entity will be formed from a merger
of Shannon Airport and a restructured Shannon
Development. In a highly competitive marketplace,
the new entity will have to deliver conspicuous value
for money, whether to be able to attract new airline
business or to win new industrial developments. This
in turn will require a manageable opening balance
sheet and a nimble, commercially focused and
lean organisation, with a cost base on a par with
Shannon’s and IASC’s peers and competitors. We
note that Shannon Airport’s costs are currently higher
than industry peers. Failure to move progressively to
reduce this disadvantage will impair the new entity’s
ability to compete successfully. In particular, an
inability to offer competitive charges to airlines will
result in Shannon being unable to meet its passenger
growth targets, or in the worst case, to the airport
being unable even to maintain its existing passenger
numbers.
Report of the Aviation Business Development Task Force 51
52
 10

Report of the Aviation Business Development Task Force 53

 10 Recommendations
We believe there is scope to deliver on the vision outlined above, creating a new entity
built on the foundations of SAA and SD which can form the nexus for a vibrant and
globally competitive international aviation services cluster in Ireland.

The complete list of the recommendations made in the course of this report is presented
below, grouped into three broad headings: Separation, Business Development and Other.
The recommendations are also restated for completeness in the order in which they occur
in the report.

A mechanism for the implementation of these recommendations will need to be

established. This will be a task for the Board of the new entity.

10.1 Recommendations on Separation

1 Announce separation without delay and formally separate Shannon Airport from DAA by 31 December
2012.
2 Adopt a phased process to enable the resolution of Shannon Development restructuring issues, with
airport separation occurring by year-end 2012 followed by the merger with a restructured Shannon
Development on 1 July 2013.
3 Establish the new entity and recruit a CEO.
4 Reconstitute the Shannon Airport Authority board without delay.

10.2 Recommendations on Business Development

5 Shannon Airport management should keep under review from an overall cost benefit perspective the
specific costs and revenues associated with 24/7/365 operation, over and above operation in normal
commercial hours.
6 Shannon Airport should evaluate ways to differentiate itself positively from competing airports in the
eyes of its passengers and potential passengers.
7 Shannon Airport should evaluate its business processes and practices for their appropriateness
and where needed should develop new processes tailored to its new requirements with a focus on
productivity and competitiveness.
8 Shannon should keep its commercial revenue strategy and commercial unit revenues under review
with a view to learning from best practice and considerably enhancing commercial revenue and overall
profit per passenger.
9 Shannon should seek to attract additional short-haul traffic and revenue through appropriate incentive
deals.
10 Shannon should continue to develop its long-haul terminal traffic, chiefly in the North American
market.
11 Shannon should draw on the Department of Transport, Tourism and Sport’s willingness to negotiate
new Irish bilateral Air Services Agreements, and to include fifth-freedom rights, in order to develop
additional long-haul airline service opportunities.
12 Shannon should aggressively market existing fifth-freedom opportunities for long-haul transit traffic.

13 Update and validate business case for constructing a modern cargo terminal with cold-chain
capability at Shannon, preferably in partnership with a specialist company.

54
14 A focused and targeted marketing campaign to key cargo carriers should be undertaken by the new
entity.
15 Continue to target high-added value MRO and MRO-related activities: lease transition, CAMO/
technical document support.
16 Develop plan to roll out hangars and other infrastructure rapidly in response to market demand.
17 Develop plan for dedicated parking, and explore potential for entering into “preferred supplier”
contracts with lessors and airlines for parking.
18 Work to attract a design or completion centre for a non-European aircraft manufacturer targeting the
European market.
19 Market Shannon as a location for pilot training organisations.
20 Pursue complementary opportunities for technical and ATC training as well as for other aviation-
industry education provision.
21 Explore the possibility for College Ireland or a successor body, to be based in Shannon, to provide co-
ordination and marketing support for the activities of Irish aviation training SMEs.
22 Target additional industrial placements for local universities with key aerospace companies and OEMs
worldwide.
26 Pursue software development for the aviation industry as a key sector.
27 Support innovative projects and research in aviation finance in collaboration with local companies and
educational institutions.
29 Examine the potential for specific incentives to attract international business to issue EETCs in Ireland,
for example through a targeted exemption from withholding tax.
30 Evaluate the feasibility of establishing an Irish corporate aircraft registry and the business case for
doing so.

31 Promote Shannon’s potential for corporate/private aircraft MRO and completion facilities to this sector.
32 Explore the feasibility of enhancing Shannon’s corporate and private aircraft facilities, including the
construction of dedicated terminal or hangar facilities with private investment.
33 Explore the feasibility of establishing a Shannon-based commercial consultancy arm of the Irish
Aviation Authority, providing regulatory compliance assistance and other consulting services to
international clients.
34 Market Shannon as a potential base to specialist operators, on the basis of preferential landing and
property charges for based operators.

37 Encourage start-ups and SMEs through provision of incubation space and/or high-potential start-up
programmes such as those offered by Enterprise Ireland.

38 Facilitate maximum feasible incentive package to underpin success of IASC in internationally

competitive arena.

39 Evaluate scope to increase airside land area by extending airfield boundary into existing SFZ land.

40 The new entity should seek to evaluate and segregate its property portfolio into those assets which it
sees as central to achievement of its broad objectives and those which are not.
41 While the new entity may seek to maximise the returns from its Shannon property portfolio taking into
account market opportunities, it should generally make decisions related to its property assets which
are consistent with the achievement of its objectives in the broadest sense.

Report of the Aviation Business Development Task Force 55

 42 Decisions on the letting, sale or disposition of the Shannon property portfolio assets should have
regard to the wider economic impact and should take into account not just the net rents or the net
sales proceeds but also the wider benefit which would accrue to the new entity and the Exchequer.
43 The new entity should as far as possible seek to manage the non-Shannon properties on an ongoing
basis or dispose of non-Shannon property assets, taking into account its assessment of the market
and seeking to achieve the highest net present value for those properties at the time of sale.
48 Clare County Council to evaluate the feasibility of putting in place a programme of rates relief and
reviewing possible alleviation of development contributions as an incentive mechanism for new
enterprises.

10.3 Other recommendations

23 Specific academic and training courses focusing on composites should be developed by UL, LIT and
other institutions.
24 Explore potential for further dedicated aviation/tourism academic research infrastructure supported by
European funding.
25 The Department of Education should implement the amalgamation of Shannon College of Hotel
Management with NUI Galway as soon as possible.
28 Ireland should move to full (equivalent to “Alternative A”) adoption of the Cape Town Treaty without
delay.

35 Establish a small working group to evaluate and progress plans for a National Aviation Museum at
Shannon.

36 Establish a small working group to plan and organise a 2013 Shannon aviation conference targeting
the Irish aviation-industry diaspora.

45 DoECLG and Bord Pleanála to review determination that Shannon Airport falls within Seventh
Schedule of Planning and Development (Strategic Infrastructure) Act 2006.
46 Shannon Airport Authority should work with Clare County Council to identify and agree specific areas
of airport land bank for specific categories of development, and should evaluate the feasibility of
applying for planning permission.
47 That consideration be given to the OPW being designated as the party responsible for any works or
for implementing any recommendations which arise out of the Shannon CFRAMS study.

49 Explore potential for extension of N19 dual carriageway road into airport.

50 Review and simplify visa process for non-EU visitors, with particular reference to business visas and to
main prospective non-EU inbound tourist markets.
51 Revenue to authorise Shannon Chamber to certify Certificates of Origin.

56
10.4 All recommendations (in order of occurrence in report)
1 Announce separation without delay and formally separate Shannon Airport from DAA by 31 December
2012.
2 Adopt a phased process to enable the resolution of Shannon Development restructuring issues, with
airport separation occurring by year-end 2012 followed by the merger with a restructured Shannon
Development on 1 July 2013.
3 Establish the new entity and recruit a CEO.
4 Reconstitute the Shannon Airport Authority board without delay.
5 Shannon Airport management should keep under review from an overall cost benefit perspective the
specific costs and revenues associated with 24/7/365 operation, over and above operation in normal
commercial hours.
6 Shannon Airport should evaluate ways to differentiate itself positively from competing airports in the
eyes of its passengers and potential passengers.
7 Shannon Airport should evaluate its business processes and practices for their appropriateness
and where needed should develop new processes tailored to its new requirements with a focus on
productivity and competitiveness.
8 Shannon should keep its commercial revenue strategy and commercial unit revenues under review
with a view to learning from best practice and considerably enhancing commercial revenue and overall
profit per passenger.
9 Shannon should seek to attract additional short-haul traffic and revenue through appropriate incentive
deals.
10 Shannon should continue to develop its long-haul terminal traffic, chiefly in the North American
market.
11 Shannon should draw on the Department of Transport, Tourism and Sport’s willingness to negotiate
new Irish bilateral Air Services Agreements, and to include fifth-freedom rights, in order to develop
additional long-haul airline service opportunities.

12 Shannon should aggressively market existing fifth-freedom opportunities for long-haul transit traffic.

13 Update and validate business case for constructing a modern cargo terminal with cold-chain
capability at Shannon, preferably in partnership with a specialist company.

14 A focused and targeted marketing campaign to key cargo carriers should be undertaken by the new
entity.
15 Continue to target high-added value MRO and MRO-related activities: lease transition, CAMO/
technical document support

16 Develop plan to roll out hangars and other infrastructure rapidly in response to specific tenant
demand.

17 Develop plan for dedicated parking, and explore potential for entering into “preferred supplier”
contracts with lessors and airlines for parking.

18 Work to attract a design or completion centre for a non-European aircraft manufacturer targeting the
European market.

19 Market Shannon as a location for pilot training organisations focussing on innovative (e.g. MPL) and
niche approaches to training delivery (efforts are already underway)

Report of the Aviation Business Development Task Force 57

 20 Pursue complementary opportunities for technical and ATC training as well as for other aviation-
industry education provision.
21 Explore the possibility for College Ireland or a successor body, to be based in Shannon, to provide co-
ordination and marketing support for the activities of Irish aviation training SMEs.
22 Target additional industrial placements for local universities with key aerospace companies and OEMs
worldwide.
23 Specific academic and training courses focusing on composites should be developed by UL, LIT and
other institutions.
24 Explore potential for further dedicated aviation/tourism academic research infrastructure supported by
European funding.
25 The Department of Education should implement the amalgamation of Shannon College of Hotel
Management with NUI Galway as soon as possible.
26 Pursue software development for the aviation industry as a key sector.
27 Support innovative projects and research in aviation finance in collaboration with local companies and
educational institutions.
28 Ireland should move to full (equivalent to “Alternative A”) adoption of the Cape Town Treaty without
delay.
29 Examine the potential for specific incentives to attract international business to issue EETCs in Ireland,
for example through a targeted exemption from withholding tax.

30 Evaluate the feasibility of establishing an Irish corporate aircraft registry and the business case for
doing so.
31 Promote Shannon’s potential for corporate/private aircraft MRO and completion facilities to this sector.

32 Explore the feasibility of enhancing Shannon’s corporate and private aircraft facilities, including the
construction of dedicated terminal or hangar facilities with private investment.
33 Explore the feasibility of establishing a Shannon-based commercial consultancy arm of the Irish
Aviation Authority, providing regulatory compliance assistance and other consulting services to
international clients.
34 Market Shannon as a potential base to specialist operators, on the basis of preferential landing and
property charges for based operators.

35 Establish a small working group to evaluate and progress plans for a National Aviation Museum at
Shannon.
36 Establish a small working group to plan and organise a 2013 Shannon aviation conference targeting
the Irish aviation-industry diaspora.

37 Encourage start-ups and SMEs through provision of incubation space and/or high-potential start-up
programmes such as those offered by Enterprise Ireland.

38 Facilitate maximum feasible incentive package to underpin success of IASC in internationally

competitive arena.
39 Evaluate scope to increase airside land area by extending airfield boundary into existing SFZ land.
40 The new entity should seek to evaluate and segregate its property portfolio into those assets which it
sees as central to achievement of its broad objectives and those which are not.
41 While the new entity may seek to maximise the returns from its Shannon property portfolio taking into
account market opportunities, it should generally make decisions related to its property assets which
are consistent with the achievement of its objectives in the broadest sense.

58
 42 Decisions on the letting, sale or disposition of the Shannon property portfolio assets should have
regard to the wider economic impact and should take into account not just the net rents or the net
sales proceeds but also the wider benefit which would accrue to the new entity and the Exchequer.

43 The new entity should as far as possible seek to manage the non-Shannon properties on an ongoing
basis or dispose of non-Shannon property assets, taking into account its assessment of the market
and seeking to achieve the highest net present value for those properties at the time of sale.
44 Upon the creation of the new entity and prior to the merger with a restructured Shannon
Development, Shannon Development should provide a covenant to the new entity in respect of SD
assets relating to the pre-merger period. In addition, during this period the new entity should be able
to make recommendations to the board of SD to enter into particular property related transactions
consistent with the objectives of the new entity.

45 DoECLG and Bord Pleanála to review determination that Shannon Airport falls within Seventh
Schedule of Planning and Development (Strategic Infrastructure) Act 2006.
46 Shannon Airport Authority should work with Clare County Council to identify and agree specific areas
of airport land bank for specific categories of development, and should evaluate the feasibility of
applying for planning permission.
47 That consideration be given to the OPW being designated as the party responsible for any works or
for implementing any recommendations which arise out of the Shannon CFRAMS study.
48 Clare County Council to evaluate the feasibility of putting in place a programme of rates relief and
reviewing possible alleviation of development contributions as an incentive mechanism for new
enterprises.
49 Explore potential for extension of N19 dual carriageway road into airport.

50 Review and simplify visa process for non-EU visitors, with particular reference to business visas and to
main prospective non-EU inbound tourist markets.

51 Revenue to authorise Shannon Chamber to certify Certificates of Origin.

52 Urgently complete transition plan for Shannon Development.

10.5 Next steps

The current state of uncertainty, in which the decision in principle to separate Shannon has been
announced but the date for that separation is not yet known, is untenable. Momentum and goodwill will
be lost if separation does not proceed quickly, and the ability of the airport to grow its passenger traffic
and to win new business is contingent on the commercial freedom associated with separation.

The suggested next steps are as follows:

1 Reconstitute Shannon Airport Authority Board

2 Appoint CEO of new entity

3 Finalise incentives

4 Agree operating framework with other agencies (IDA, EI, Fáilte Ireland)

5 Government decision November 2012

6 Launch IASC as soon as possible.

Report of the Aviation Business Development Task Force 59

60
 11

Report of the Aviation Business Development Task Force 61

 11 Conclusion

Shannon Airport is a major economic driver for the Midwest Region, and an International
Aviation Services Centre would transform Shannon into an economic driver not merely
for the region but for the country. The Task Force is convinced that a real and substantial
opportunity exists to develop an aviation centre of excellence in Shannon, drawing on
Shannon’s and Ireland’s existing assets to create a globally-recognised aviation cluster
combining established activities with innovative new projects. Such a Centre would
generate substantial employment, economic activity and Exchequer returns, would
enhance Ireland’s international reputation as a location for aviation industry expertise,
would underpin the development of traffic at Shannon Airport, and would reinforce the
attractiveness of Ireland as a location for the aircraft leasing industry.

The foundations for such a centre already exist at Shannon: a range of established
aviation services firms already employ about 1,600 people in the area. Shannon also
enjoys a range of advantages which competing aviation clusters worldwide may lack:
ample land, an uncongested airport and airspace, availability of English-speaking skilled
labour, a stable political environment, and strong relationships with the aircraft leasing
industry. Ultimately, the success of such a Centre will depend not only on these assets
and on sound and visionary management but also on an attractive incentive programme
capable of convincing aviation-related businesses from all over the world to set up
operations in Shannon.

It is the conviction of the Task Force that an independent Shannon entity can be financially
and commercially successful.

The separation of Shannon Airport from the DAA is the single most important enabler
of this future success. A failure to move forward with separation will lead inexorably to
the further decline of the airport and the surrounding region. This need not happen. The
opportunity now exists not only to safeguard the future of Shannon Airport, but also to
create a truly globally significant international aviation services centre, which will be an
economic driver for the Midwest region and for the country as a whole and which has the
potential to create thousands of new jobs.

62
 Appendix

Report of the Aviation Business Development Task Force 63

 Appendix A
Task Force Members

Rose Hynes (Chairman) Chairman, Bord Gáis Éireann

John Fearon Assistant Secretary, Department of Transport, Tourism and Sport

Dermot Curran Assistant Secretary, Department of Jobs, Enterprise and Innovation

Derek Moran Department of Finance

Partner, KPMG, previously chaired Inter-Departmental Mortgage Arrears

Declan Keane
Group

Eamonn Brennan Chief Executive, Irish Aviation Authority

Aviation consultant with SMBC Aviation Capital, and former CFO, GPA Group
Ed Hansom
Plc
CFO One51, member of the Board of the Irish Aviation Authority and former
Pat Dalton
member of the Board of the Cork Airport Authority

Michael Tiernan Businessman in the Mid-West Region

Lecturer in Economics, NUI Galway, member of the Board of the Central

Dr Alan Ahearne
Bank of Ireland, and former adviser Department of Finance

John McMahon Forum 21

David O’Flynn Chairman & Chief Executive, Tolisons Group

Brian McLoghlin Legal and Aviation consultant, former Group Company Secretary GPA

Dr Vincent Cunnane CEO, Shannon Development

Mary Considine Director, Shannon Airport

Tommy Fanning Manager, Engineering Division, IDA

Neil O’Sullivan Manager, Engineering Markets Department, Enterprise Ireland

The Chairman and the Task Force wish to acknowledge the significant contributions to
their work made by:

Paddy Campbell Department of Transport, Tourism and Sport

Stephen Curran Department of Jobs, Enterprise and Innovation

Mary Dunning Department of Transport, Tourism and Sport

Brenda McVeigh Department of Finance

64