Knock International Airport: Presentation.

I welcome Mr. Liam Scollan, chief executive of Knock International Airport, and Mr. Robert Grealis, director of finance and operations. I draw their attention to the fact that while members of the joint committee have absolute privilege, this same privilege does not apply to witnesses appearing before the committee. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable. I understand Mr. Scollan intends to make his presentation by means of Powerpoint. Is that agreed? Agreed.

Mr. Liam Scollan

I thank the joint committee for inviting representatives of Knock International Airport to appear before it. We are delighted to have the opportunity and the privilege to make this presentation. We intend to be brief and will be happy to take questions from members following the presentation.

I hope members will be able to see the slides clearly on their monitors. We will briefly go through the background information on the airport, recent growth in passenger numbers and growth in the number of destinations. In particular, we want to focus on the regional economic development potential of the airport and our capital expenditure requirements and, if we may be so bold, to make key recommendations about our requirements.

Many may not realise that, at 2,300 metres, the runway at the airport is the third longest in the country and has the capacity to take long-haul jets, 747s, etc. The airport's 400 acre site offers the potential to secure significant business growth around it. Our turnover is growing. The major achievement in 2004 was the building of our new departures lounge, a picture of which members will see on their monitors, which we achieved thanks to money received under the national development plan, and a new arrivals area, built from own resources. The number of scheduled flights grew from two to eight. We serve 21 charter destinations.

The next slide highlights the fact that in the Border, midlands and western region Knock is the only airport with a runway long enough to take Boeing 747s and 737s and Airbuses. In the south and east there are three airports with that capacity. Kerry Airport also has significant capacity.

Members can see the instrument landing systems categories. For instance, in the south and east there are three airports with a category two or category three landing system,whereas in the BMW region there is one, namely, Knock Airport, with a category one system. The higher the category, the more aircraft that will be able to land in bad weather conditions. This is a key feature of the long-term development plans of an airport.

Since 2002 there has been significant growth at the airport. A new chairman, Mr. Patrick Joseph Kennedy, was elected and a new management team put in place. Apart from me, the team includes Mr. Robert Grealis, director of finance and operations, and Mr. Kevin Heery, director of development. There was significant growth in 2004, with the number of staff increasing from 57 to 116. Knock is the fastest growing airport in the country and last year was awarded the accolade best regional airport by the Air Transport Users Council, a sub-group of The Chambers of Commerce of Ireland. In January we welcomed our three millionth customer.

I want to deal with the issue of growth in passenger numbers. The airport opened in 1986. The figures from 1987 show that during the years there was not significant growth but of late it has begun to realise its potential, which is significant. It is driven by independent market research, a more aggressive approach to marketing and greater management concentration on development of the airport.

The letters "NOC" on the slide represent the aviation abbreviation for Knock. The picture is one of a regional airport making the transition to being an international airport, one used by a wide variety of airlines offering choice to consumers but also offering a sustainable and commercial basis for the future of the airport. This is very important.

There is also growth in the charter business. A number of tour operators now operate from the airport, particularly during the summer months, offering flights to a wide variety of short and long-haul destinations. There are a number of choices whereby one can get a good tan or be frozen if one chooses a break in Lapland in the middle of winter.

The number of passengers grew by 25% in 2003 and 50% in 2004. What will happen now? This year we are looking at a figure of 500,000 passengers, or more, travelling through the airport. Four aspects indicate that passenger numbers can increase: our centrally strategic position in the Border, midlands and western region; our infrastructural capability, particularly the runway length; independent market research; and proven route success by leading airline brands.

I will go through each of these four points in more detail. While the airport is not based near a city, it is within easy driving distance of many significant regional towns, gateways and smaller towns which together are equivalent to a large conurbation. The airport is geographically well located on the axis between east and west, the N5, and the north and south, the N17 and N18. Its strategic location leads us to believe there is potential for further development. The statistics supporting this view include the population of surrounding regions: a population of 2.8 million in the south and east; the Border, midlands and west region and Northern Ireland.

Air traffic passenger numbers passing through the south and east amount to 21.5 million. Passenger numbers passing through Northern Ireland amount to six million while passenger numbers passing through the Border, midlands and west region amount to 700,000. That is a staggering statistic which presents a stark picture of regional imbalance which is neither good for the Border, midlands and west region, nor for Dublin or the south east. A good proportion of the figure of 700,000 figure is accounted for by Dublin domestic flights, in other words, flights from regional airports to Dublin Airport. The number of international air access passengers in the Border, midlands and west region is tiny. These figures alone suggest that there is significant growth potential. I will return to the issue of market research.

The aerial picture on the monitor is about nine months old. This means it is dated in terms of Knock Airport where there is something happening every month. The car park has been extended. The runway is to the left of the picture, while the access road into the airport is to the right. There is an apron where larger aircraft are located. During the summer we expect four aircraft to arrive at the airport within the same half hour slot. This is difficult to control in a small airport. As a result, as the joint committee can see, there is pressure on the apron and car park, although the airport is expanding significantly and there will be significant investment.

Members of the joint committee are very welcome to visit the airport to see it for themselves. This is a picture of the departures lounge which was supported with moneys under the national development plan and which holds approximately 400 passengers. Last year we built a new arrivals hall at a cost of €1.7 million and which includes a baggage conveyor.

As regards market potential, we do not take our position in the region for granted. We have examined independent market research carried out on our behalf by Lansdowne Market Research. The middle column in the slide provides a likely total of passengers. Very often market research tells us things we like to hear which may be a little beyond the scope of achievement. If one looks at the Stansted route, when Ryanair was operating two aircraft, it would have been achieving those figures. The number of passengers on the London-Gatwick route, being operated by Ryanair and easyJet, will exceed that number during the year. The numbers of passengers on the Birmingham route have exceeded those set out. Therefore, the totals are achievable and have been achieved at Knock Airport.

Recently a report was produced by Mr. Frederick Sorensen and Mr. Alan Dukes for a group of organisations regarding the potential for US flights. I was delighted the report referred to the potential of Knock Airport. Those are the figures behind the research we have conducted. They show the top three destinations. We have the runway capacity to cater for those flights. There is, therefore, significant potential in terms of flights from the United States.

We are looking seriously at Europe. Tourism Ireland has been working closely with us. I am pleased at the amount being invested by tourism organisations — Ireland West, North-West Tourism, Tourism Ireland and Fáilte Ireland — in promoting Ireland in the countries concerned. They are working closely with Knock and other airports to develop routes from Europe to the west. This is a vital development.

I want to cover the regional economic benefits of Knock Airport. One of the points we will be making relates to the need for Government investment but it is important for us to come to the joint committee with facts and figures about the economic benefits. Returning to the American slide, it is a live issue for us. One member of our group, Mr. Kevin Geary, who otherwise would have been here today is in the United States working hard on the American potential. I would have been in the United States but felt it was more important to make this presentation. I am delighted to have the opportunity to do so.

The American potential is very strong and Goodbody Economic Consultants undertook research for us in that regard. However, in advance of this, several European reports had showed there was a consensus that airports had a significant impact on regional development, acting as magnets for companies.

Closer to home, the Western Development Commission has produced a report entitled, Enterprise and Employment in the Western Region, which points to the potential and strategic importance of Knock Airport, as well as the strategic importance of Shannon Airport to economic development in the south of the region. Having spoken to the Border, Midlands and Western Regional Assembly, I am delighted that it also appreciates the strategic importance of Knock Airport in terms of investment in the region.

As regards local businesses in the region, the managing director of Baxter, a typical multinational company, and the managing director of a more indigenous company, CMS Peripherals, have independently referred to the importance of the airport. The comment by CMS Peripherals appeared in one of the western newspapers. A major €140 million investment in Lough Key Forest Park by a Canadian investment company will make it a flagship tourism development in the region. The company has stated publicly that Knock Airport is crucial to its plans to invest in Lough Key Forest Park. There has, therefore, been independent recognition of the airport by various companies.

Closer to home, one can assess the significance of the airport locally. We estimate that by 2007 it will account for more than 120 jobs. Currently, there are 115 jobs but this is a conservative figure. Car hire companies account for 17 jobs while the business park employs 57. A hotel, for which planning permission has been granted by Mayo County Council, will open in 2006, creating 140 jobs. The Government's welcome announcement of the relocation of the Department of Community, Rural and Gaeltacht Affairs in 2006-07 will attract 176 jobs. There will be a total of 528 jobs adjacent to the airport.

Last year Goodbody Economic Consultants published a report on tourism impact, not because we wanted to ignore the business element but because there was not enough hard evidence for economists to glean. Last year €37 million was generated through tourists passing through the airport. There were 500,000 tourism bed nights in the region and 580 jobs supported directly by the airport and indirectly by the tourism spend. Considering we were in the black hole in Connacht, as it was known, these are significant figures because the provision of jobs is a sensitive issue and small numbers of jobs have an enormous impact on the environment.

If we extrapolate from the Goodbody economic analysis, between 2004 and 2009 Knock International Airport, from its own expenditure and tourism revenue, will have returned €30 million to the Government in tax and PRSI and 2.8 million tourism bed nights. If the business park takes off, which it should following the relocation of the Department of Community, Rural and Gaeltacht Affairs and other initiatives, the number of jobs created, in addition to the impact on inward investment, will be significant. Knock Airport is one of the few major infrastructural investments that can bring the economies of scale needed to create that dramatic impact across the board.

I refer to the airport's capital expenditure requirements. The table outlines the overall investment. The investment required is modest in the context of international airports in Ireland. Between 2000 and 2003 the national development plan had a significant impact on the development of infrastructure, for which we were grateful. However, the investment in 2004 was our own. We were also grateful for the recent announcement of support by the Minister for Transport. A sum of €3.2 million will be allocated to the airport for the next three or four years. However, the investment is made under the regional airports measure of the NDP which is tied to safety and security investment only, not the expansionary requirement of airports. Not only does our airport have increasing safety and security requirements, we have expansionary investment requirements, to which there is special budgetary provision to respond on the part of the Government. There is a need to help the airport to advance its growth. Lack of investment is an impediment to achieving the potential we claim we have. There is also the time factor. The market is buoyant, which makes it a good time to attract passengers but we cannot wait too long for that investment.

We are grateful for the opportunity to make a presentation to the joint committee. The first of our recommendations is that Knock International Airport should be recognised as a key economic driver in the region. Second, a special budgetary provision should be considered which would allow an investment of €15 million. There is nothing unusual about this. Airports throughout Europe with passenger numbers similar to those at Knock Airport cannot afford to make the significant investment in infrastructure needed. Therefore, government investment in regional airports would be normal and consistent with European policy on investment in airports as economic drivers.

Third, CAT II status is significant. This would represent an investment in the BMW region. Knock Airport will present the most viable option in putting CAT II or CAT III instrument landing systems in place in the region and the opportunity should be grasped.

Fourth, the airport should not be looked on as an entity in itself. It is intimately connected with road project and other investments, particularly the western road and rail corridors, the N5 and coach services. It is not based in a city. Therefore, the development of coach links to regional cities is critical to us. This needs public support because there is not sufficient traffic for the private sector to get involved. Encouragement of the private sector or Bus Éireann would be welcome.

Fifth, negotiations are under way on EU-US transport agreements. Knock Airport has significant potential. The Sorensen and Dukes report recommended a public service obligation subsidy for US flights. If that is being considered, the airport deserves the same opportunity as others.

I thank the Chairman and committee members for their invitation.

How much does the development charge yield per annum? How much of it will be available for reinvestment or repayment of moneys that might be borrowed to improve facilities? What would be the major benefit of the introduction of an open skies policy for Knock Airport?

Mr. Scollan

Last year the €1.7 million we invested more or less equated with what we had collected in departure fees. It was reinvested in the airport. The departure fee also helps cover our overheads. People see the €10 fee on departing passengers as an extra charge. However, if one examines the tax payable on one's ticket to the United Kingdom, it is less than that charged by comparable airports in Ireland. It is linked to our need to make a significant capital investment in the airport.

The open skies policy offers enormous potential for Knock Airport. Our research highlights that New York, Boston and Chicago have enormous potential. The numbers are there to support a commercial 747 service to the airport, for which we will be in the market through the open skies policy. It would have a significant impact. The Ellis Island records highlight the level of immigration from Connacht, County Donegal and County Longford, the scale of which was massive dating back from the Famine. There is also significant interest in the Irish diaspora among those who have historical links with the west. Some 40% of American visitors to Ireland come to the north-west or the west, in particular. Direct air access offers a potential for more flights into Ireland.

I welcome Mr. Scollan. Those of us who live and work in the west are delighted with the progress of Knock Airport and to hear it is on the upward curve. It is the driving force for regional development. I have three or four questions to pose. How did the airport achieve an increase in activity of 20% and 25% in the past two years, particularly as it seemed to have stalled for a number of previous years? Why did this not happen four to six years ago, when activity at many of the regional airports seemed to be taking off?

The committee had a meeting with Mr. Alan Dukes and Mr. Frederik Sorensen recently. They indicated that opportunities exist under the open skies policy. Their figures seemed to suggest a possible reduction from 600,000 to 400,000 in passenger numbers at Shannon Airport. Would this not have a consequential effect on Knock Airport? I have serious doubts about whether this policy will work to our advantage. I notice, however, that the delegation is up-beat about it. What is the rationale behind the policy, particularly if Shannon Airport is going to be as badly affected as appears will be the case? Mr. Dukes and Mr. Sorensen made the case that internal EU business might compensate for this and might surpass it. Knock Airport is in a more peripheral situation. Will the open skies policy be an advantage or will it be necessary to fight to hold everything for Knock Airport?

There has been discussion about the business park in Knock Airport for many years. It seems the delegation regards decentralisation as a catalyst for other developments. If the money was available in the morning, how would the delegation spend it for the benefit of the airport?

I also welcome Mr. Scollan and thank him for his presentation. I congratulate him on his achievements to date in Knock Airport. He spoke about the need to upgrade the airport to category two or three. Like Deputy Connaughton, I would also like to hear greater detail about what this would mean for Knock Airport in terms of capacity. Does Mr. Scollan mean the bulk of the €15 million will be spent on upgrading? I have the same concerns when there is a significant existing unused capacity at Shannon Airport, which is unfortunately likely to increase in light of the open skies policy.

In terms of the Government deciding how to spend scarce resources, has a business case been prepared for this investment which it is hoped will be made? If so, is this case available to the committee for consideration?

On the question of access, the map shows the reasonably good location of the airport in respect of the catchment counties around it. Sometimes people from the west think that those of us in Dublin are trying to grab everything. I wish to assure the delegation that we are just as interested in balanced regional development, if only for selfish reasons, because of the enormous pressures currently being exerted on the east coast. We would certainly like to see more balance in the development taking place nationally.

I live quite close to Dublin Airport. It strikes me as absolutely extraordinary to see coaches coming from Galway to Dublin Airport. This is a crazy way to run any service. What do the members of the delegation regard as the main obstacles to the development of Knock Airport in respect of access? Is it roads infrastructure or the absence of frequent bus or coach services to the airport? What steps have been taken to encourage private operators to develop new private coach services to the airport? The submission suggests that Bus Éireann could provide such a service. The Minister expects Bus Éireann to perform commercially and like private operators, it will not provide a service unless there is money to be made. Has any research been undertaken to assess the demand for such a service? Has the question of access been examined as a means of generating additional business?

On the question of recent growth and additional business, has the delegation any breakdown of figures? Is the principal growth seen on UK or domestic or charter routes? A comment was made about the PSO and transatlantic services which I did not follow and I ask Mr. Scollan to explain it. I ask the delegation to forward information to the committee on the PSO.

Mr. Scollan

I will answer those questions in the order they were asked. I will answer the questions on growth, the reasons for it in recent years and a breakdown of the growth. The growth in recent years amounted to 25% in 2003 and 50% in 2004 and looks like being 37% this year, although our passenger growth for January and February is 101% above that for the same period last year. The first reason for this is that people are flying more often because they have more spare cash. The second reason is that people in the region predominantly want to travel through Knock Airport. Lansdowne Market Research carried out a survey almost three years ago which showed that 75% of people in Connacht, Longford and south Donegal would prefer to use Knock Airport if given the option, particularly if flights to their desired destinations were available. There is a market for the use of Knock Airport, which is regarded as easy and accessible. I do not wish to make any anti-Dublin points but Knock Airport is regarded as much easier to access than Dublin Airport.

At the beginning of our tenure, the new management visited airlines and airports particularly in the UK on an aggressive marketing campaign. Those in the private sector were quick to see the potential of Knock Airport. For example, easyJet, Ryanair and MyTravelLite are commercial operations and could see the massive potential of Knock Airport. Airlines are aware that Knock is the only major airport located in that part of the country. The figures relating to growth speak for themselves in that regard. The majority of that growth comes from UK traffic. The other area growing dramatically is that of the sun-bound charters. Of the 373,000 passengers who travelled last year, approximately 60,000 were people going on sun holidays, 18,000 were on the PSO Dublin route and the remainder would, by and large, have been UK traffic.

Deputy Connaughton asked about Shannon Airport, the Sorensen and Dukes report and the downbeat feeling he had about the US. I return again to our figures. People were downbeat about the prospects for development at Knock. A stark example was that we had no Gatwick flight until Ryanair and easyJet started such a service at the end of January. In February, which is the shortest month in the year, 10,500 people travelled on the route through Knock Airport. We went from nil to 10,500 people, which is a massive number. People tend to look at Knock and cannot believe the numbers of people who go there.

On the transatlantic issues, we have nothing to lose from an open skies policy because we have no traffic from the US. We certainly cannot get worse as regards the US.

It can only improve.

Mr. Scollan

We can only go up. In addition, independent research indicates that more than 100,000 people want to fly to New York from Knock. The figures are stacking up for us, which is why we are spending this week in New York and will spend more time there drumming up such business. We do not say we will become a US hub for Ireland. We feel we can get a modest amount of growth from the US.

On the issue of the business park, it used to be said there were more announcements of 2,000 jobs at Knock than there were launches at Cape Canaveral. At this stage I was keen to refer to approximately 580 real practical jobs at Knock. We hope to increase that number. We will not put figures to it because many other dependencies exist. IDA Ireland wants to work closely with us and is very supportive of our efforts there.

Tax designation for a business park at Knock would be of great assistance, perhaps in conjunction with other similar designations across the Border, midlands and western region as this would give a strategic regional approach to the matter. However, that is another story. While potential for a business park exists, our focus at present is to increase the passenger business and also the freight business. While again we do not seek to be a freight hub, we feel we can develop the freight business modestly, which in turn can help stimulate the business park.

Deputy Shortall asked about category II instrumentation landing systems. I will ask Mr. Grealis to explain categories II and III. We have done considerable research on this matter. We are in the middle of technical appraisals, as it is a complex area. However, we are finding it would be an impediment to long-haul scheduled traffic and is an impediment to traffic to Heathrow and the larger busier city destinations.

Mr. Robert Grealis

I will speak about category I, II, III instrumentation landing systems. I hope the answer to this question will also answer Deputy Connaughton's question about where we want to spend the approximately €16 million in investment outlined in the presentation. Instrumentation landing systems cover a combination of technology, human resources and infrastructure at an airport to help guide an airplane to land. The category of systems required depends on how reliant the airplanes are on those systems and how close they can come to the ground before they need in particular the visibility to see the runway. Category I systems require that the pilot can see the runway from a height of 200 feet above it. Category II systems require that the pilot can see the runway from a height of 100 feet above it. Category III effectively allows the pilot to land blind, including in dense fog at zero altitude.

Regarding the need for category II systems at Knock Airport, we currently have a diversion rate of 1.4%. Based on our projected passenger numbers, this would mean tens of thousands of passengers annually being diverted to other airports. The bigger impact of not having the correct category instrumentation systems relates to airlines serving major hub airports such as, for example, Heathrow, those in east-coast US cities and major European hub centres like Frankfurt or Madrid, which are so valuable to the airlines that they need certainty about their ability to land and take off. The unwritten commercial reality is, therefore, that airlines require category II landing systems at airports of origin and destination.

In terms of the overall investment at the airport, of the €16 million projected for the next three years, the category II system and the other airfield developments account for approximately €7.5 million. Of the latter, category II would be the biggest single element. In addition to the airfield developments, we also need to increase the apron size. As members have seen from the photographs, it can fit two aircraft comfortably and anything after that begins to get cramped. The passenger projections, showing growth from 374,000 in 2004 to 1 million in 2009, require us to incrementally increase the size of the apron. We plan to make an investment of approximately €2.8 million in the apron development in 2005 and 2006.

The third major area of investment is in the terminal development, which will cost approximately €5.6 million. The terminal will expand in line with the passenger growth. With projections showing passenger growth from 374,000 now to 1 million in 2009, by 2007 we will need the infrastructure to support the passengers in 2009. Those are the three major areas of investment and the background to the case for category II systems.

Mr. Scollan

On the question of location, access and infrastructure around the airport, obviously the airport is critical. I mentioned the north to south road corridor, which will be very significant, and the N5 east to west corridor, which goes from Newport and Westport to Dublin. It is also critical for the airport. If we look to the future with vision, a connection between the western rail corridor and the airport would be a very good long-term transport option. The more European passengers come to the west, the more critical public transport will become as they expect public transport to be available rather than seeing it occasionally.

I was asked what we have done to encourage private operators. We carried out research on the potential for operations. While a commercially robust case for coach transport may not yet exist, it is a case of chicken and egg. Airlines and passengers are demanding such services. For airports with up to 500,000 or 700,000 passengers, many of these issues are not as commercially viable as they are beyond those sorts of figures. In 2003 we bought our own bus and developed a service. However, as we run an airport and not a coach service, we want to get the private sector involved. While we asked for tenders from the private sector and found two interested parties, neither was willing to pursue the matter because the economics did not stack up.

Bus Éireann currently runs a shuttle service from the airport to Charlestown, which is about a 15-minute drive away and connects into 35 of its different national routes. With respect to Bus Éireann, we do not believe that service is working effectively. A person who gets on a bus at Knock Airport wants to be brought to his or her destination such as Westport, Galway, Longford, Sligo or Athlone. There is a need for intervention in that regard. The board of Knock Airport is in the business of running an airport, not a bus service. However, the airport needs such a service. There is a gap that needs to be filled to encourage that to happen.

I was also asked about related infrastructure. If the water scheme that serves Knock village were to be extended to Charlestown, it would serve the airport and be consistent with its development.

A member of the joint committee mentioned the business case and referred to the investment at Shannon Airport. The Government has also invested in Knock Airport where some €20 million has been invested during the years. Most of the money was allocated while it was being built but it has also received further grants. While the overall expenditure may be modest when compared to the investment at Shannon and Cork Airports, we should acknowledge that investment needs are being met and that development is taking place. The amount needed to construct a large runway with substantial capacity is quite modest when one considers the impact it would have. When one is making the business case, one should consider the return on investment from tourism alone, for example, in receipts of income tax and PRSI. If the Government invests €15 million, it will recoup that investment in the first two or three years. There is an overwhelming case for such investment.

I do not deny that this country benefits from a significant resource at Shannon Airport. The board of Knock Airport is not anti-Shannon or Cork Airports but it is keen to remind the joint committee that the southern and eastern region is well served for airports. Some 21 million passengers pass through that region's airports each year, whereas just 700,000 pass through the airports in the BMW region. Approximately 75% of the people of the region are in favour of an improved service. If we are to support balanced regional development in the west, Knock Airport gives us the best opportunity to do so. There is an overwhelming regional imperative to develop it.

I do not suggest that money should not be invested in the regional airports at Sligo, Galway and Donegal. Those airports are not as large as Knock which is an international airport that can handle larger aircraft. A special case can be made for it because its runway is longer than that of Cork Airport. Several business cases can be made for its improvement.

I hope I have covered most of the questions asked.

Senator Paddy Burke has had to leave but might be back.

I thank the Chairman for allowing me to speak, even though I am not a member of the joint committee. I welcome Mr. Scollan and Mr. Grealis. I do not wish to ask any questions because I amau fait with what is happening at the airport.

Mr. Scollan suggested that members of the joint committee should visit Knock Airport at some stage. The Chairman should take this idea on board and spend half a day at the airport. Such a visit would be worthwhile for the members of the committee not from the western region. It would be useful for them to see at first hand what has been done and what needs to be done. Mr. Scollan will explain such matters to members of the committee if they visit the airport.

The most important section of Mr. Scollan's presentation was the sixth one, which dealt with the absence of an appropriate funding mechanism. When the joint committee meets officials from the Department, I hope it will emphasise that the lack of such a mechanism is a major obstacle to the development of Knock Airport. I will stress to the Government that a system of funding must be put in place if the airport is to thrive.

I intended to propose at the end of the meeting that the joint committee should send a copy of Mr. Scollan's submission to the Department and the Minister with a request for feedback on the reasons the requirements of Knock Airport cannot be met. While we know the reasons the improvements should be made, we would like to hear why others think they cannot be made in order that we can fight this case. The case for the proposal, which is important to everybody in this room and the development of the airport, has long since been accepted. The airport needs to be upgraded to satisfy an existing market and realise its potential.

I hope the Chairman agrees that the joint committee should visit the airport.

It would be delighted to experience the hospitality shown to visitors to County Mayo.

I thank the Chairman for giving me the opportunity to speak. I knew the delegation's presentation would be excellent. I pay tribute to Mr. Scollan and Mr. Grealis and the rest of the team at Knock Airport. I accept that the new board started from a low base but it has made phenomenal progress since it was put in place. I echo Deputy Carty's comments by pointing out that there is a great need for investment in the airport. What would a failure to secure investment mean to the airport? I think I know the answer to that question but would like Mr. Scollan to spell it out. A worthwhile and necessary investment programme is being pursued and the graph is moving upwards from a low base.

The number of passengers who pass through Knock Airport each year pales into insignificance when one considers that 21 million pass through the airports in the southern and eastern region. Some 40% of transatlantic visitors to this country visit the west, 12% of whom visit the north west. What does the arrival of so many visitors mean in Dublin and Cork? We know it leads to congestion in Dublin and I am sure the same happens in Cork. Is there any rationale behind this? Does it make sense? It does not make sense to me that many tourists have to fly into Dublin to get to the west, even though a magnificent international airport, Knock, has the third longest runway in the country.

The Deputy is probably not aware that a former Deputy, Mr. Alan Dukes, and Mr. Frederik Sorensen who have produced a report on the matter attended a meeting of the joint committee some weeks ago. They made it clear that tourists had to go through Dublin, Shannon or Cork Airport because an open skies policy had not been put in place. It is not a deliberate policy on the part of the Government. To be fair to Mr. Scollan, he is chomping at the bit to get into the open market when the open skies policy is implemented.

There has been a certain level of investment in the regional airports but, as Mr. Scollan said, Knock is an international airport by virtue of the size of its runway, etc., and has the potential to expand. I would like him to outline in more detail the exact level of investment made in the other airports.

We are here to discuss Knock rather than other airports, which are not relevant. I would not ask Mr. Scollan to comment on the level of investment in other airports. He said he did not begrudge them their share of the cake. He is trying to maximise Knock Airport's share.

I do not begrudge the other airports the funds they have received because every airport needs investment. All members of the joint committee agree that improvements at Knock Airport could act as a catalyst for the development of the BMW region. The €50 million should be allocated. I hope the Government will support the proposal.

I am glad to be allowed to speak as I am not a member of the joint committee and I am pleased tMr. Scollan is present. I congratulate the members of the former board of Knock Airport, including the former chairman, Mr. Cathal Duffy, who did his best in difficult times. I congratulate the new chairman, Mr. Joe Kennedy, on his appointment. The best thing he has done so far is to bring in Mr. Scollan and the rest of his team. Knock Airport has been placed on a professional footing for the first time and is now competing with other airports. A professional team has been put in place. The airport's chief executive, Mr. Scollan, its accountant and marketing manager are fighting on its behalf.

Knock Airport is the most important element of the infrastructure of the west. I am glad the Chairman asked about the proposals the joint committee will make as I had intended to ask whether it would recommend that the Government provide a special grant in order that the airport could proceed to stages 2 and 3. Such moneys are needed to ensure the airport can develop as it needs to do. Infrastructure needs to be put in place to allow larger aeroplanes to land at the airport, for example. I was glad the Chairman raised the matter.

Mr. Scollan

We can but try.

To be fair, it must be acknowledged that efforts are being made.

Is there a negative attitude about the open skies policy? Mr. Scollan says he is delighted and contends Knock Airport will be able to compete. Will public service obligation grants be affected by such a policy? What will be its negative effect if the Government or the European Union decides the Shannon stopover and other arrangements must be discontinued?

Are Enterprise Ireland and the IDA promoting Knock Airport to the extent they should to attract companies to establish operations in the industrial park about which we have spoken for many years? Market research has shown that people want to use the airport. It is not disrespectful to other airports to say it is easy to get in and out of the facility. It is wonderful to land at the airport as one does not have the problems one experiences at Dublin Airport where one must travel another hour to get to the roundabout outside the airport and find one's way to the city using poor signage. It is impossible. Given that half the country is overdeveloped and the other is underdeveloped, it makes sense for the Government to provide grant aid for Knock Airport to ensure regional development.

I have always supported Knock Airport as being the most important piece of infrastructure to bring tourists to the west. While travelling to and from their constituencies Oireachtas Members see the volume of freight moved by road from Dublin to the west. It is a national scandal that the roads are being dominated by this traffic when we have such a fine airport at Knock. If the Government implemented a policy and the airport provided a reasonably priced service, major companies could be encouraged to move their products by air. Iarnród Éireann did not deliver shipments on time and was subject to disputes but that would not be the case with Knock Airport. I would like to see such services being developed.

The American market is wide open. I compliment the airport on providing services for thousands of passengers who have travelled from County Mayo to South Africa and other tourist destinations in the sun. I have no doubt that if the airport is marketed under the open skies policy, its representatives will do an even better job. I am very pleased with the work being done as it is important for the west that the airport succeeds. If anything happened to it at this stage, it would represent a significant set-back for the west.

I thank the Chairman for allowing me to contribute. I welcome Mr. Scollan and Mr. Grealis whom I thank for the work they have done at Knock Airport, to which people in the west feel a great sense of loyalty. I run the Roscommon supporters club, members of which flew to London from Knock Airport last year. Some 200 will do so again this year.

There is no need to invite the Chairman.

We will take the boat to Carrick-on-Shannon. While prices may be a little higher than travelling to Dublin Airport, Knock Airport is more convenient for people in the west. It has a unique departure tax which is paid by every passenger, 99.9% of whom are happy to pay it to subsidise the facility from their own pockets. I have never seen such generosity shown to any other airport or business. Knock is more than just an airport to the people of the west.

I am chairman of Lough Key Forest Park action group which fought to secure the significant €150 million tourism project by the Canadian operator of the Humber Valley resort in Newfoundland. We were successful because the forest park is a 40 minute drive from Knock Airport. The Government must be made aware of the role of the airport in attracting this significant development project. With tax and other incentives, an airport makes a significant difference in whether an area will be developed properly.

Category II status is of great importance to Knock Airport but funding is required. While it is certain the airport will be stymied, I do not know if there will be a crisis. If it reaches the one million passenger level, which I hope it will — 1.4% of passengers are turned away due to fog and other weather conditions — its future success may be undermined. If weather conditions worsen from one year to the next, its viability may be affected. For this reason, I will support the Chairman in the questions he intends to put to the Department.

It turns out that members do not have many questions.

Mr. Scollan

Leitrim people are well able to answer them.

Deputy Cowley asked about the negative impact of a failure to obtain Government support. Growth would occur at a much slower pace, given the lower impetus, and there would be a question mark over whether we would attract flights from the USA. We would not be sure if we could schedule flights to Munich or other large cities in Europe. New business development would be hampered.

Mr. Grealis spoke about passenger discomfort. While 1.4% appears to be a small figure, as a proportion of 500,000 passengers, it is significant. It would be a great many if one was referring to a figure of one million passengers. It would also mean the cancellation of flights every week. Cancellations create great passenger discomfort and cause annoyance, which would be very bad for the west. It would not be positive if a person's first experience of the west was having his or her flight rerouted. Airlines would see their profits undermined and their schedules compromised through diversions. A failure to invest in the flight apron will almost certainly result in delays and congestion at Knock Airport. As an airport which relies on ease of access, we do not want the word "delay" to become associated with Knock.

Deputy Ring raised a number of points and asked if there was a negative aspect to the open skies policy. If one was not positive, one might cite as negative the probable entry of low cost carriers into the transatlantic market. While the generation of large passenger numbers would be positive, people might fly to Dublin Airport and use it as a hub to travel further into Europe without staying in Ireland. If an open skies policy is to be introduced, the tourism product in the west and north west must be structured in such a way that it responds to new consumer demands in the USA. There has been a dramatic change whereby consumers in the USA are now very price conscious.

As a division has been called in the Dáil, we must try to finish. It would be helpful if Mr. Scollan could conclude within three minutes.

Mr. Scollan

We must create a more cost-effective and responsive tourism product if we are to adopt an open skies policy. If we fail to do so, we will not be able to compete for American business.

Deputy Ring mentioned the IDA. Whenever we have approached it, it has been more than willing to help us develop new routes. As the business park develops and we create a masterplan for it, there will be a need for the IDA and Enterprise Ireland to promote and market it aggressively but we have not yet reached that stage.

There is great potential at Knock Airport to exploit freight services. Whereas companies using road transport must ensure their products leave the west by lunchtime, they could wait until 5 p.m. or 6 p.m. if a freight service was operating commercially from Knock Airport. Category II, which was raised by Senator Feighan, is vital. The airport would not necessarily be in crisis without it but it would lose its business development potential and would not realise the market demand we discussed.

I thank Mr. Scollan and Mr. Grealis for a fine presentation. They are fortunate to benefit from the time slots of three other groups which did not appear today as scheduled. We will forward the submission directly to the Minister for Transport for comment and endeavour to ascertain what can be done to advance the issue.

Mr. Scollan

I thank members of the committee and other Members who took the trouble to attend the meeting.

The joint committee adjourned at 4 p.m. until 2.30 p.m. on Wednesday, 23 March 2005.