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"The Crucial Role of Airports and Airlinks in Driving Economic Growth" Kevin Toland

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Agenda
Developments in daa
Dublin Airport 75 years & key gateway
Dublin Airport = 4.4% GVA Irish economy
Growing market to China of 65,000 pax
“Real World” Economics of long haul scheduled services. What does a Chinese carrier need to operate to Dublin ?

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"The Crucial Role of Airports and Airlinks in Driving Economic Growth" Kevin Toland

  1. 1. Asia Matters Ireland China Business Summit 8 July 2015 Radisson Blu Royal Hotel, Dublin ‘The Role of Twin Cities in Driving Business Partnerships’
  2. 2. 8 July 2015 Radisson Blu Royal Hotel, Dublin The Crucial Role of Airports and Airlinks in Driving Economic Growth Kevin Toland Chief Executive, Dublin Airport Authority
  3. 3. Ireland-China Business Summit The role of airports in driving economic links 8th July 2015
  4. 4. Agenda • Developments in daa • Dublin Airport 75 years & key gateway • Dublin Airport = 4.4% GVA Irish economy • Growing market to China of 65,000 pax • “Real World” Economics of long haul scheduled services. What does a Chinese carrier need to operate to Dublin ?
  5. 5. daa Overview
  6. 6. daaOverview • Owner/operator Dublin & Cork airports • Commercial mandate • No State funding • Pivotal strategic/economic position • 23.9m passengers in 2014 • 90% of ROI air traffic, 71% island of Ireland • Substantial overseas operations • ARI retail - India, Middle East, Cyprus, N America • Airport investments – Europe • daa International
  7. 7. FinancialPerformance2014 • Turnover €564m -13% • Operating costs €282m +13% • EBITDA €182m +13% • Profit after tax pre-exceptional €40m +€12m • Profit after tax post exceptional €19m -€19m • €600m net debt • €3.3x EBITDA
  8. 8. QualityAtACompetitive Price • Major investment in improved facilities • Dublin Airport now ranked in top 5 in Europe for customer service • Dublin’s airport charge 25% lower than its peers • Strategy to keep charges flat in medium term • Cork Airport – named world’s best regional airport for service in 2013 • No increase in airport charges in 10 years
  9. 9. StrongGrowthAtDublinAirport • 21.7m passengers in 2014 + 8% • Continental Europe 11m + 5% • Britain 7.8m + 8% • Transatlantic 2.1m +14% • Middle East 0.6m +19% • DUB-London 4.1m +4% • 53 airlines; 179 routes • 24 new services launched
  10. 10. DublinAirportPassengerTraffic–RecoveringFast 15.9m 17.1m 18.5m 21.2m 23.3m 23.5m 20.5m 18.4m 18.7m 19.1m 20.2m 21.7m 10,000 12,000 14,000 16,000 18,000 20,000 22,000 24,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Passengers(000’s) Dublin Airport Historical Traffic 15% growth from Jan-Jun 2015 (+1.5m passengers) versus 2014
  11. 11. CorkAirport • Key gateway to South of Ireland/Munster • Start of the Wild Atlantic Way • 50 routes, 2.1million passengers 2014 • Connections to LRH, CDG & AMS • State’s second largest airport • No increase in charges in 10 years • 1.2 million people within 90-minute drive • Challenging local marketplace • World’s best regional airport for customer service 2013 – ACI study • Short-listed for ACI Airport of the Year 2015
  12. 12. ConnectingIrelandtotheWorldfor75Years • Four years passenger growth 2010-2014 • Airport reach extends across whole island • Almost 18 times the population of Dublin used the airport in 2014 • First flight - 19th January 1940 • 21.7m passengers in 2014 • 179 destinations, 53 airlines • Dublin – London is busiest International route in Europe • 328 return flights per week direct to North America • US Pre Clearance
  13. 13. TheEconomicImportanceofDublinAirport  Island nation  Very high propensity to travel – 4 times EU average  International hub for aviation leasing  One of world’s most open economies  Ireland a leading location for FDI • 6 of Top 10 on Forbes list of The World’s Most Innovative Companies are herd • 2nd largest exporter of MedTech products in Europe • Fastest-growing economy in the Euro zone
  14. 14. DublinAirport’sEconomic Impact DIRECT At airport and airport related businesses Jobs: 15,700 GDP: €1.3bn INDIRECT Supplying and supporting businesses Jobs: 9,600 GDP: €0.7bn INDUCED Employees spending in the economy Jobs: 12,000 GDP: €0.8bn CATALYTIC Air service facilitating: tourism, trade, investment, productivity Jobs: 60,100 GDP: €4.2bn TOTAL Jobs: 97,400 GDP: €6.9bn
  15. 15. DublinAirport= AMajorEmployer Onsite Total: 15,700 Direct Jobs
  16. 16. DublinAirportisIreland’sAirport  Ireland has a population of 6.2m  Dublin Airport is within a 3-hour drive of 90% of island population = 5.6m people  82% of air passengers in the Republic of Ireland in 2014 used Dublin Airport
  17. 17. LongHaulRoutesfromDublinin1996–LimitedNetwork
  18. 18. LongHaul2015–SignificantExpansioninNorthAmerica
  19. 19. OurLong-haulExpansionPlans
  20. 20. Dublin’sUSP–UnrivalledCombinationofMarketOpportunities 168 flights per week from US/Canada can connect to 787 flights per week to UK and 1016 flights per week to Europe Capability for flights from China and other parts of Asia to access the same UK and European network
  21. 21. Dublin=14thBestConnectedEuroAirport
  22. 22. China Market potential
  23. 23. GrowingDemandfromIrelandtoChina Source: Airport IS 2009 - 2014. Information based on indirect two-way traffic from Whole Island Airports. 23,836 20,638 19,827 20,920 22,625 20,658 15,301 18,115 13,927 18,992 20,237 24,270 8,785 8,568 10,483 12,940 16,324 19,898 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 2009 2010 2011 2012 2013 2014 Passengers Beijing, CN Shanghai, CN Rest China 2014 65,000 passengers travelled between China and Ireland
  24. 24. Ireland-BeijingTrafficFlows 2009–2014* Dublinaccountsfor85%ofdemandtoBeijing 20 18 17 18 20 18 4 3 3 3 3 3 0 5 10 15 20 25 30 2009 2010 2011 2012 2013 2014 Passengers(,000) Dublin Rest Ireland Source: IATA Airport IS 2009-2014, * Ireland includes Northern Ireland
  25. 25. Airline Economics
  26. 26. Whatdoairlineslookforinanewroute? Direct services to China have to commercially sustainable – Chinese airlines are financially well structured and astute. There are no charity cases…..
  27. 27. • Typical Total Operating Costs = c€200,000 per round trip between Dublin and Beijing • c€41.6m annual costs for a 4/week operation • Typical 250 seat A330 aircraft requires revenues of €1600 per return trip to simply cover production cost of each seat • Challenge for Ireland – show a carrier where there is €45m of annual revenue (passengers and cargo) to underpin a business case Fuel 46% Airport 3% Handling 4% Maintenance 8% Navigation 3% Aircraft 16% Crew + Trng 9% Catering 6% Sales 2% Other 3% Cost Breakdown Fuel Airport Handling Maintenance Navigation Aircraft Crew + Trng Catering Sales Other Typical Long Haul Scheduled Carrier Operating Economics
  28. 28. AreWeStartingtoLoseTheRace? • Booming China-US market has seen significant direct service expansion in 2015, including secondary cities such as Seattle and San Jose • Competition in Europe for Chinese service is intense. Smaller cities such as Budapest, Vienna and Minsk have seen service expansion this year, and Birmingham has secured a programme of inbound charter flights from Beijing • Competition is focussed, well-s structured and adequately funded
  29. 29. DirectServicestoChina–NextSteps? StrongIrelandIncmessage,basedoneconomicsratherthansentiment,needstobe consistently presentedtoChinesestakeholderstosupportapotentialnewroute Strengthen Market Demand •Business traffic – work with key stakeholders in Ireland and China to accurately identify key market sectors and operating companies •Leisure Traffic – ongoing sustained investment in “smart” tourism marketing required in core Chinese source markets. Competition from other countries is intense •Freight traffic – need Irish stakeholders to focus and project what freight potential could be with a direct flight eg live seafood Key Enablers •Visas for leisure market – BIV is a huge step forward but Chinese market is now benchmarking against 10 year multiple entry visas now offered by USA •Visa for investors – need to make access to Ireland easy for potential Chinese investors Key Relationships •Government to Government relationships have never been stronger. Three senior Chinese delegations to Ireland in last three years •Continue to build airline relationships. Both air China and Hainan Airlines have sent senior delegations to Dublin in the last 12 months •Dublin Airport “Twin Sister” relationship with Beijing Airport important in ensuring Dublin exposure at senior decision- making levels in China
  30. 30. www.dublinairport.com Thank you !

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