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Economic Impact of the development of Dublin Airport as a Hub Reliance Restricted 07 September 2018 | Final
Ernst & Young Tel: + 353 1 475 0555
Business Advisory Services Fax: + 353 1 475 0599
Harcourt Centre ey.com
Harcourt Street
Dublin 2
Ireland
Reliance Restricted 07 September 2018
Donal Moriarty
Chief Corporate Affairs Officer
Aer Lingus
Hangar 6
Dublin Airport
Dublin
Economic impact of the development of Dublin Airport as a Hub
Dear Donal
In accordance with the terms of the engagement letter with you, we have assisted you in the assessment of the economic impact of the development of Dublin
Airport as a Hub (“The Purpose”). This report sets out our assessment of these risks.
Limitations of Scope
We have not, except to such extent as you requested and we agreed in writing, sought to verify the accuracy of the data, information and explanations provided
by yourselves, and you are solely responsible for this data, information and explanations. We have therefore relied on the information provided by you to be
accurate and complete in all material respects.
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Ernst & Young only accepts responsibility to the addressees of this letter on the basis of the engagement agreement and assumes no responsibility whatsoever in
respect of or arising out of or in connection with the contents of this letter to parties other than yourselves. If other parties choose to rely in any way on the
contents of this letter they do so entirely at their own risk.
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this report, or decisions based on it, to any reader of the report. EY reserve all rights in this report.
We appreciate the opportunity to have provided EY’s services to Aer Lingus.
Should you have any queries or comments regarding this report or if we may be of any further assistance, please do not hesitate to contact me on 01 221 2611.
Yours sincerely
Simon MacAllister
Partner
D Dennis, J Fenton, M Gageby, J Hannigan, S MacAllister, S MacSweeney, B McCarthy, D McSwiney, J Maher, A Meagher, I O’Brien, R O’Connor, F O’Dea, E O’Reilly, C Ryan, P Traynor, A Walsh, R Walsh.
The Irish firm Ernst & Young is a member practice of Ernst & Young Global Limited. It is authorised by the Institute of Chartered Accountants in Ireland to carry on investment business in the Republic of Ireland.Dashboard 1 Executive Summary
2 Context and Rationale
Table of contents 3
4
Economic Impact of the Hub
Qualitative Benefits of the Hub
5 Literature Review
Executive Context and Economic Impact of Qualitative Benefits
Summary Rationale the Hub of the Hub
1 2 3 4
Page 3 Page 8 Page 25 Page 35
Literature Review
5
Page 42
07 September 2018 | Final Economic Impact of the development of Dublin Airport as a Hub Page 1Page 2 07 September 2018 | Final
1 Executive Summary 07 September 2018 | Final Economic Impact of the development of Dublin Airport as a Hub Page 3
Economic impact of the development of Dublin airport as a hub
€18.6bn 33,950
GDP additional jobs
2018 - 2033
in 2033
€6bn
Additional Exchequer
revenue
2018 - 2033
Tourism Aeronautical and Capital Tourism Aeronautical and
€10.4bn non-aeronautical €317m 26,990 non-aeronautical
€7.9bn 6,960
€3.3bn €784m €2.0bn
Payroll Profits Consumption
5m Extra Connectivity Exports to the Cargo traffic Tourism Employment Retail spend
Passengers generated US generated increased by opportunities increased by
in 2033 through increased through ‘stopover’ tourism in aviation greater dwell
increased long through greater increased through the related time of
and short-haul frequencies and widebody aircraft Dublin Gateway employment, connecting traffic
services destinations to operation tourism and at Dublin airport
US cities wider business
activity
Page 4 Economic Impact of the development of Dublin Airport as a Hub 07 September 2018 | Final1 Executive Summary 1 Executive Summary
2 Context and Rationale
33,950 jobs could be created by 2033 by the successful development of a 3
4
Economic Impact of the Hub
Qualitative Benefits of the Hub
hub at Dublin Airport 5 Literature Review
Total additional Irish GDP Additional employment by Average additional Additional Exchequer
2033 employment - Capital revenues
Investment
€18.6bn 33,950 jobs 1,147 jobs €6.0bn
2019 - 2033 2033 2019 - 2023 (annual average) 2019 – 2033
The hub will generate an In 2033, the hub would have During construction, an The Exchequer will benefit
incremental €18.6bn of GDP accounted for an additional average of 1,147 jobs would be from increases in a variety of
from the following sources: 33,950 jobs in the Irish created taxes including VAT, excise,
economy, across the following corporation tax and payroll
► Tourism (2021-2033):
areas: taxes, from the following areas:
€10.4bn
► Tourism (2033): 26,990 jobs ► Tourism sector (2021-
► Aeronautical and non-
2033): €4.0bn
aeronautical (2021-2033): ► Aeronautical and non-
€7.9bn aeronautical (2033): 6,960 ► Aeronautical and non-
jobs aeronautical expenditure
► Capital (2019-2023): €317m
(2021-2033): €1.9bn
► Capital Investment (2019-
2023): €129m
07 September 2018 | Final Economic Impact of the development of Dublin Airport as a Hub Page 51 Executive Summary 1 Executive Summary
2 Context and Rationale
Dublin airport has an opportunity to develop significant traffic growth if it can 3
4
Economic Impact of the Hub
Qualitative Benefits of the Hub
develop itself as a hub airport 5 Literature Review
Hub airports have been shown to have significant benefits: As Dublin Airport strengthens its position as a Hub so too will the associated
qualitative benefits for FDI and indigenous firms. FDI has played a significant role in
► Reduced airline costs per passenger through economies of traffic density allows
advancing Ireland’s economic development over the past number of decades and
airlines to offer competitive fares, boosting demand for airlines
evidence shows that there strong links between increased connectivity and
► Competitive fares, increased route frequencies and direct access to a wider harnessing inward and outward investment.
selection of routes that would otherwise be feasible, offer benefits to all
Airport hubs are shown to act as a facilitator for development and expansion.
customers
Schiphol Airport in Amsterdam, for example, has successfully developed an airport
► Airports benefit from hub and spoke models through higher retail revenue and business park of more than 1,000 firms across a wide range of sectors. There are
freight opportunities created by the increased flow of passengers currently 37 FDI-backed firms within 5km of Dublin airport – some way off the level
of development in Amsterdam but an indication of the importance certain
Dublin airport has a number of advantages which would support it’s development as
firms/sectors put on access to transatlantic connectivity.
a hub:
The Government recognises the growth occurring at Dublin Airport and the benefits
1. Strong network carriers already operating at the airport
for the wider economy and has outlined, through its policy document, the National
2. A large route network (short and long haul) which support the aggregation and Aviation Policy, how it intends to develop Dublin Airport as a hub in Europe, utilising
connection of passengers its natural advantage and dealing with capacity issues at the airport.
3. A geographic advantage to service the Transatlantic market As passenger numbers grow, Dublin Airport’s capacity has become strained.
Numerous pinch points across the airport have been identified, including the
Dublin Airport has recorded significant growth over the past number of years with
runway, contact stands, immigration facilities and security.
particularly strong growth in the Transatlantic market. Aer Lingus has delivered a
significant element of this growth however growth has also come from existing Our analysis and identified economic benefits are based on a defined level of
carriers, but importantly, also from new carriers such as Air Transat, WestJet and investment in infrastructure and passenger growth. Any investment in excess of
Norwegian. these assumptions would drive additional growth and economic benefits which are
not included in our analysis.
Extra routes both short and long haul have contributed to Dublin Airport facilitating
1.6 million connecting passengers in 2018, with one third of all seats on
Transatlantic routes occupied by connecting passengers. Another contributing
factor has been Ireland’s status as the only country in Europe to have US pre-
clearance. This service is particularly attractive to customers who wish to continue
on a connecting flight once they arrive in the US and allows airlines to use domestic
terminals.
Page 6 Economic Impact of the development of Dublin Airport as a Hub 07 September 2018 | Final1 Executive Summary 1 Executive Summary
2 Context and Rationale
3 Economic Impact of the Hub
4 Qualitative Benefits of the Hub
5 Literature Review
This report assesses the economic impact on the Irish economy of the proposed
enhancement of Dublin Airport as an international hub.
The report is structured as follows:
► Section 2 sets the context and rationale for the development of a Hub at Dublin
Airport. We outline the opportunity that exists, why Dublin can take advantage of
the opportunity and what is required to do so.
► Section 3 contains findings from the Economic Impact Assessment. The primary
purpose of the economic impact is to ascertain the contribution that a Hub at
Dublin Airport would make to the Irish economy by way of additional GDP,
employment and Exchequer revenues. Impacts are captured during the
construction phase and subsequent operational phase of the development.
Catalytic impacts, in the form of increased tourism revenue, are also reported.
► Section 4 assesses the qualitative economic benefits of a Hub development in
Dublin and focuses on the positive impacts on trade and business investment
associated with improved connectivity.
► Section 5 presents the findings of a literature review which establishes the
academic or research based findings of the impact of hub airports.
07 September 2018 | Final Economic Impact of the development of Dublin Airport as a Hub Page 72 Context and Rationale Page 8 Economic Impact of the development of Dublin Airport as a Hub 07 September 2018 | Final
2 Context and Rationale 1 Executive Summary
2 Context and Rationale
Hub and spoke models are an established concept for network carriers 3
4
Economic Impact of the Hub
Qualitative Benefits of the Hub
around the world 5 Literature Review
European hub comparison - destinations ► In a hub and spoke network, the carrier organizes its network around one or a few central hub airports and
outside Europe by region (w/c 21 Aug 2017) the flight schedule for this airport is organized in a number of daily waves of incoming and outgoing flights, in
which all incoming flights can connect to outgoing flights
40
► City-pair connections exist on a point to point basis where passenger demand justifies airline investment.
35 However by implementing a hub and spoke system, passenger demand can be pooled from a variety of
30 regions and generate a sufficiently dense flow of passenger demand
25 ► Seat mile costs benefit from economies of traffic density1. With a smooth functioning “wave system”, whereby
20 a hub airport can pool demand from the populations of incoming flights, airlines can maximise load factors on
flights or increase aircraft size, reducing seat mile costs. The image on the left shows Helsinki as an example
15 of this system
10 ► The pooling of demand increases the sustainability of routes and helps justify airline investment, such as
5 increasing the frequency of flights. Cook and Goodwin (2008) outline how the addition of one new destination
only adds a single new route, utilising existing hub infrastructure, but this destination will potentially be
0
available to every airport in the network
Madrid
Heathrow
Dublin
Helsinki
Munich
Frankfurt
► As a result of the above, the economies of traffic density reduce the average cost per passenger. This allows
for competitive fares and should lead to a further increase in demand. An International Air Transport
Association (IATA) report found that the price elasticity of demand (i.e. the sensitivity of customers to a
Africa Asia Pacific Latin America change in price) for passengers between Europe and North America is very high compared to other long haul
Middle East North America destinations, primarily because it is such a well developed network and highly competitive2
► In the case of Dublin Airport, this research implies competitive fares will likely have a significant impact on
Source: CAPA Centre of Aviation - https://centreforaviation.com/analysis/reports/air-
europa-part-2-european-hub-airports-connectivity---how-do-they-compare-with-dubai- demand as European customers are highly responsive to changes in price
365103
1 Cook, G and Goodwin, J., Airline Networks: A comparison of Hub-and-Spoke and Point-to-Point Systems, (2008)
2 IATA Economic Briefing, Air Travel Demand, (2008), https://www.iata.org/whatwedo/Documents/economics/air_travel_demand.pdf
07 September 2018 | Final Economic Impact of the development of Dublin Airport as a Hub Page 92 Context and Rationale 1 Executive Summary
2 Context and Rationale
The National Aviation Policy and National Planning Framework outline the 3
4
Economic Impact of the Hub
Qualitative Benefits of the Hub
Irish Government’s desire to develop Dublin Airport as a hub 5 Literature Review
National Aviation Policy recognises the National Aviation Policy
opportunity at Dublin The National Aviation Policy (NAP) was published by the Department of Transport in August 2015. It’s purpose
was to make a formal statement of government objectives for Irish aviation and was the first such statement in
two decades. In relation to the development of Dublin Airport as a hub, it included the following key points.
Hub development
► The policy outlines how the government wants Dublin Airport to develop as a hub3, competing with UK and
other European airports in an expanding market.
Utilise Natural Advantage
► It also believes that Ireland should utilise its natural advantage and existing high levels of Transatlantic flights
to harness demand.
► With Heathrow nearing capacity, UK passengers are increasingly choosing Dublin over Schiphol as an
alternative international hub to North America, partly due to the avoided time lost “backtracking” to mainland
Europe4.
Capacity Requirements
► It highlights the requirement for the development of Dublin Airport to achieve the capacity required, including
the development of a second runway
► Dublin airport is nearing capacity and significant investment in areas such as taxiways, aircraft parking stands
and rapid exits are required to facilitate future growth
► The Government’s policy on Dublin Airport was further outlined in the National Planning Framework,
published in February 2018. This policy outlined the capital investments required as above as well as
improved accessibility to the Airport across the island of Ireland, including the building of a Metro line and
examining the feasibility of a high speed rail connecting between Belfast, Dublin and Cork
3 We note the policy uses the term “secondary hub”, which is not one which is recognised or defined in aviation or airline markets, nor
academic research. We make no distinction between secondary or any other kind of hub in our analysis as the demand aggregation noted
above works in the same way and produces the same benefits for all hubs.
4 The Telegraph, Dublin Airport “an alternate hub to Heathrow” (2013)
Page 10 Economic Impact of the development of Dublin Airport as a Hub 07 September 2018 | Final2 Context and Rationale 1 Executive Summary
2 Context and Rationale
The right infrastructure could enable Dublin Airport to become a successful 3
4
Economic Impact of the Hub
Qualitative Benefits of the Hub
Hub 5 Literature Review
Successful airport hubs have the following Hub characteristics
A hub airport is served by strong or multiple network carriers and airline alliances that provide scale in routes,
aircraft, crew and passengers.
A Network Carrier Large or sophisticated networks and strong passenger volumes are of little use unless the airport has the
that bases sufficient requisite facilities to support hub operations. These facilities include the following:
aircraft to operate a
Hub ► Airport facilities required to enable Hub airlines
► Appropriate facilities to handle passenger flight connections and ensure short distances between gates for
transfer passengers
► Appropriate facilities to handle efficient and expedited transfer of baggage
A large route ► Ability to deal with peak flows, high volume arrivals followed by distribution of passengers and bags prior to
network that departure wave
facilitates ► Adequate airfield and runway capacity including taxiway access, aprons and stands for airlines to operate
connecting traffic waves of arrivals and departures
These are key to minimising transfer times for passengers changing flights at the hub airport and enabling the
maximum number of efficient connections for a given network.
Dublin airport possesses many of these characteristics, to varying degrees, which we summarise below and
discuss in greater detail on the following pages.
Advantageous
geographical
location Dublin airport characteristics vs required hub characteristics
Network carrier Route networks Geographical advantage Hub infrastructure
The Hub
infrastructure
07 September 2018 | Final Economic Impact of the development of Dublin Airport as a Hub Page 112 Context and Rationale 1 Executive Summary
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Dublin is in a strong position to succeed as a hub 3
4
Economic Impact of the Hub
Qualitative Benefits of the Hub
5 Literature Review
North American Destinations (w/c 21/08/17) The table outlines Dublin’s key competitors in the European market. Heathrow, Frankfurt, Charles De Gaulle
and Schiphol are global hubs, providing services to every major world market. Airports such as Munich, Zurich
and Rome offer a similar scope of services however on a smaller scale. Reykjavik, similar to Dublin, is a niche
Airports North American Destinations hub focused on connecting the European and North American markets and so is a key competitor
Heathrow 34 Dublin Airport has a significant opportunity to increase its market share despite the intense competition in the
Frankfurt 37 Transatlantic market. The primary reasons for the potential of Dublin as hub are:
Charles de Gaulle 25 ► Dublin Airport has a large existing network that will help enable the success of the hub. As will be outlined
later in the report, Dublin has achieved high rates of passenger growth in recent years
Reykjavik 24
► As mentioned in the National Aviation Policy, Dublin Airport has an advantageous geographical location at
Schiphol 23
the western edge of Europe. Using Dublin avoids “backtracking” to a mainland European airport,
Dublin 19 particularly for UK passengers where Heathrow is capacity constrained
Munich 19 ► Ireland is the only country in Europe to currently offer Pre-Clearance to the United States, which is very
Zurich 16 useful for connecting passengers and provides flexibility for airlines as they can use domestic US
terminals
Rome FCO 14
► In Aer Lingus, Dublin Airport has a home based Network Carrier that bases sufficient aircraft to operate as
Madrid 14
a Hub airline.
Copenhagen 14
► Aer Lingus currently has 17 Long Haul aircraft and intends to expand to 25 by 2022. The additional
Source: CAPA - Centre of Aviation, OAG
aircraft will include A321 Neo LR, a narrow body aircraft that will open new markets, increase value and
increase flexibility on existing routes
The forthcoming Capital Investment Programme for 2020-2024 presents the opportunity to invest appropriately
in Hub infrastructure to address the existing capacity constraints.
Page 12 Economic Impact of the development of Dublin Airport as a Hub 07 September 2018 | Final2 Context and Rationale 1 Executive Summary
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There are identifiable benefits for passengers and for Dublin Airport 3
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Economic Impact of the Hub
Qualitative Benefits of the Hub
5 Literature Review
Irish Passenger Benefits
The development of Dublin Airport as the hub of a network also holds numerous benefits for Irish passengers,
including:
► The improved connectivity that comes with being a hub airport provides locals with direct routes to
destinations that may not be justifiable without pooled demand5
► Increased load factors reduce the average cost per passenger, thus leading to cheaper fares. As mentioned
above, customers between Europe and North America are highly price sensitive
► Pooled demand will lead to increased frequency and improved sustainability on existing routes. 1.3m
connecting passengers used Dublin Airport in 2017, enabling the viability of 20 destinations in North America
Dublin Airport Benefits
Hub development holds numerous benefits for the airport, including:
► Increased connectivity will result in higher growth in point-to-point passengers. The airport will benefit from
additional revenue from charges from these customers which would not materialise without the hub. These
added point to point passengers are a key benefit arising from the hub infrastructure and development.
► Hub operations allow for increased frequencies or upgauge of aircraft size on connecting short haul flights
offering Dublin Airport the opportunity to significantly increase its short haul seat capacity as well as long haul.
These larger or additional aircraft result in additional revenues for the airport.
► Connecting passengers are likely to have significant dwell time at a hub airport providing significant retail
opportunities. Per a GlobalData report in 2017 global airport retail spending hit $38bn in 2017 and is projected
to grow to $49bn in the next four years. $10.1bn of 2017 spending was in European airports6. By expanding
its market share of flights in Europe and on the North Atlantic corridor, Dublin Airport has scope to grow its
retail business. Heathrow Airport, with over 30% of connecting passengers, shows the potential benefits of
retail at hub airports. Despite being “at capacity” for a decade, retail continues to grow, fuelled by the
redevelopments of terminals to include luxury brands, catering redevelopments and advertising growth7
5 Connectivity is a measure used by the IATA and is an index based on an airports number of destinations served directly, the relative
importance of that destination to the global air network and estimates on total seat capacity and the frequencies of the service
6 GlobalData, Global Airport Retailing 2016-2021 Report, (2017), https://www.globaldata.com/store/report/vr0010ca--global-airport-
retailing-2016-2021
7 Heathrow Financial Results, (2018) https://www.heathrow.com/company/investor-centre/results-and-performance/financial-results
07 September 2018 | Final Economic Impact of the development of Dublin Airport as a Hub Page 132 Context and Rationale 1 Executive Summary
2 Context and Rationale
Hub development will also significantly benefit the wider Irish Economy 3
4
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Qualitative Benefits of the Hub
5 Literature Review
Dublin Airport Benefits (Cont’d)
► The increased routes and frequencies of flights provide significant freight opportunities for hub airports. A
2013 study commissioned by the UK Airports Commission sought to examine the link between aviation and
trade (as well as FDI and tourism) using an econometric model with seat capacity across all UK airports as a
proxy for aviation connectivity. It found that a 10% increase in seat capacity was associated with an increase
in goods exports by 3.3% and goods imported by 1.7%8
Hub airports have been shown to have significant impacts on the wider economy. Hubs such as Dubai,
Singapore and Iceland show the potential scope for these impacts. The Irish economy could benefit in the
following ways:
► Employment: An increase in passengers will generate more jobs at Dublin Airport. As Ireland has a small
domestic market, pooling demand from across Europe provides the opportunity for continued growth at
Dublin Airport. The literature review shall outline how jobs created directly at the airport will create more
jobs in the wider economy
► Trade: A larger route network and increased scope for wide body aircraft due to pooled demand will allow
for increased freight capacity at Dublin Airport, providing Irish exporters increased opportunities –
particularly in the US market where Ireland currently exports $35bn annually
► Tourism: The tourism industry currently generates over €5bn in revenue for Ireland every year,
supporting 200,000 jobs and accounting for 4% of GDP. Increased connectivity at Dublin Airport will mean
a larger market size for both direct and indirect traffic. The development of a hub also creates the
possibility of “stopover tourism”, as can be seen in Iceland and Dubai, where an integrated approach from
the aviation and tourism industries can encourage connecting passengers to extend their layover
► Investment: Many studies have shown a positive link between investment and increased connectivity.
Ireland is a small, open economy which aims to attract foreign direct investment and the development of a
hub airport will increase the quality of Ireland’s proposition to global companies. Additionally, airport-
centred urban regions have been a growing trend around the world, for example the Zuidas district near
Amsterdam Schiphol, and the development of a hub in Dublin will increase this type of investment
8 Airport Commission https://www.gov.uk/government/publications/airports-commission-interim-report
Page 14 Economic Impact of the development of Dublin Airport as a Hub 07 September 2018 | Final2 Context and Rationale 1 Executive Summary
2 Context and Rationale
Short haul growth in the form of new routes and additional capacity has 3
4
Economic Impact of the Hub
Qualitative Benefits of the Hub
been significant in Dublin Airport in recent years 5 Literature Review
Short Haul Destination growth Dublin Airport’s summer season for 2018 consisted of 195 destinations in 42 countries operated by 56 airlines.
14 new routes were announced were announced for this schedule with the addition of 4 new airlines – Hainan
Destination Airline Year Added airlines, Cathay Pacific, Croatia Airlines and Icelandair. An additional 391,000 seats were added on flights to
Reykjavik Icelandair 2018 North America, a 14% increase from the previous year. European summer seat capacity has increased by 8%
with an additional 1m seats
Carlisle Loganair 2018
Short Haul & Asia
Frankfurt Ryanair 2018
As can be seen on the table, numerous new routes have been added in recent years. There have also been
Luxembourg Ryanair 2018
significant expansions from many of Dublin’s leading airlines:
Porto Aer Lingus 2017
► Lufthansa announced in 2018 that it was to introduce a 5th daily service to Frankfurt, increasing capacity by
Split Aer Lingus 2017 20%. The group is now Dublin’s third largest carrier, also serving Cologne, Dusseldorf, Frankfurt, Geneva,
Munich Transavia 2017 Munich and Zurich
London Southend Flybe 2017 ► Ryanair has increased frequency on 11 of its existing services in Dublin while also adding 7 new services,
bringing the total number of services from the airport to 76
Stockholm Norwegian 2017
Hamburg Ryanair 2016
► KLM has significantly increased capacity on its Dublin-Amsterdam route. Launched in November 2016 with
two daily flights, the airline now operated 5 daily services between the cities resulting in a 161% increase in
Murcia Aer Lingus 2017 capacity between winter 2016 and 2017
Amsterdam KLM 2016
► Aer Lingus has added routes and capacity from Dublin in recent years. For the 2018 summer schedule,
Nantes Aer Lingus 2015 there have been significant increases in capacity on existing routes from Dublin, to destinations such as
Bordeaux (19,000 seats), Lyon (22,000), Prague (18,000) and Vienna (21,000)
Hanover Aer Lingus 2014
► There has also been steady growth in Aer Lingus Regional, a brand created in 2010 and operated by
Source: Dublin Airport
Stobart Air. This brand carries over 1 million passengers a year on lower demand routes using smaller ATR
aircraft.
► Although long haul growth has mainly centred on North American markets, Dublin has added services to
cities such as Beijing, Hong Kong and Doha in recent years, through Hainan Airlines, Cathay Pacific and
Qatar Airways respectively. Beijing marks Ireland’s first direct flight to mainland China, offering significant
opportunities to the Irish economy. In 2017, 70,000 Chinese tourists visited Ireland, a 16% increase year-on-
year
07 September 2018 | Final Economic Impact of the development of Dublin Airport as a Hub Page 152 Context and Rationale 1 Executive Summary
2 Context and Rationale
The North American market has been significantly developed over the last 5 3
4
Economic Impact of the Hub
Qualitative Benefits of the Hub
years in particular with both new entrants and new routes 5 Literature Review
Long Haul Developments
Long Haul Destinations (North America)
Dublin Airport has seen strong long haul growth, with a number of key factors:
► Dublin Airport is now the 5th best connected European airport to North America,
trailing only the global hubs of Heathrow, Charles de Gaulle, Frankfurt and
Schiphol. In 2018, Dublin Airport has a total of 10 airlines flying 446 flights per
week to and from 16 destinations in the US and four destinations in Canada9
► Aer Lingus is among the chief contributors to this growth. In 2013, Aer Lingus
only served New York, Boston, Chicago and Orlando. In 2018, the number of
destinations had risen to 13 with a seat capacity of 2.75m
► There have also been significant increases in Aer Lingus’s capacity on existing
and newly added routes, such as Dublin-Chicago now twice daily, increasing Los
Angeles and San Francisco’s from 5 days per week to daily and operating a third
daily service between Dublin-JFK during June, July and August. Capacity
increases have also been achieved to Washington DC through the using of larger
Airbus A330-300 for 4 out of the 7 days, adding additional capacity of 31%
► Norwegian Airlines has steadily increased services from Dublin Airport and plans
to increase capacity to Providence by 40% in 2019, moving from 5 days a week
to daily. The airline has already doubled services to Stewart Intl., launched in
2017 as a daily service. The airline has also announced it’s first Canadian route
for summer 2019 to Hamilton, Ontario – an hours drive from Toronto
► Aer Lingus has also entered into wet leases (i.e. an aircraft lease where the
lessor provides flight crew members, aircraft maintenance and insurance) with
ASL for 4 Boeing 757’s to operate the Shannon-JFK, Shannon-Boston, Dublin-
Hartford and Dublin-Toronto routes. This has allowed the larger A330 fleet to
operate on the busier routes from Dublin, while also allowing Shannon operate
year round daily services to New York and Boston, as opposed to alternating
days as was the case when the A330 was based in Shannon
Destination
► US and Canadian carriers have also delivered growth, including new routes such
Seasonal Destination
as Dallas FortWorth (American June 2019), Boston (Delta May 2017) and
Destination from 2019 Montreal (Air Canada June 2018) and capacity increases Vancouver (Air Canada
June 2019) and Toronto (Air Canada Rouge June 2019).
9 Routes Online, Dublin Airport Opens New Transfer Facility, (2018)
Page 16 Economic Impact of the development of Dublin Airport as a Hub 07 September 2018 | Final2 Context and Rationale 1 Executive Summary
2 Context and Rationale
Dublin is already developing as a hub, with the UK being a key source of 3
4
Economic Impact of the Hub
Qualitative Benefits of the Hub
passengers 5 Literature Review
Connecting UK Passengers using Dublin
Per the ACI Airport Connectivity Report 2018, Dublin Airport is one of the fastest growing hubs in Europe, in
as a Transatlantic Hub by Airport
terms of hub connectivity score10. Dublin’s score has increased by 273% since 2008 and in 2017 was ranked as
the 19th airport in Europe in terms of hub connectivity and 18th in terms of direct connectivity (see pages 10 and
17 for explanations of these terms). UK traffic in particular has been important for short haul growth and for
transfer passengers. This growth has been driven by a number of elements:
► As mentioned previously, Dublin’s unique geographical position has encouraged passengers to use the
airport for connecting flights to North America. Plans to expand London’s passenger capacity (either at
Heathrow or elsewhere) have stalled for over a decade, giving Dublin the opportunity to increase the amount
of passengers who use it as a hub. The graph demonstrates the growth in UK passengers using Dublin
Airport to connect with flights to the US from 2011 to 2015
► Stobart Air (operating as Aer Lingus Regional), with its smaller ATR aircraft, has been utilised to reach new
markets, such as Newcastle. In 2015, the morning Newcastle departure from Dublin could connect with 5
inbound Trans-Atlantic flights. Similarly, the flight from Newcastle to Dublin could connect to 6 outbound
flights to US cities.
► FlyBe, with Q400s of similar capacity to Stobart, provide important connectivity to regional airports such as
Cardiff, Doncaster/Sheffield, Exeter and Southampton. New entrants such as LoganAir, with a brand strong
Source: O’Connell JF, Connolly D, the Strategic Evolution of Aer Lingus (2016)
in parts of Scotland and regional England, have routes to Carlisle and Inverness.
UK traffic aggregation ► Aer Lingus Regional has also been used to add the frequency required to operate a hub system without
flooding routes with excess capacity. For example, Aer Lingus currently offer 4 flights to and from
Manchester and Aer Lingus Regional offers an additional two flights. These flights increase frequency which
makes connecting flights more convenient for passengers and results in reduced wait times.
► Ryanair provides significant capacity on routes to 12 UK destinations including key cities such as
Birmingham, Liverpool and London-Luton, which have limited or no US services.
► There is no pre-clearance to the US at UK airports. The major transatlantic gateway is Heathrow and the
multiple terminals for US traffic make pre-clearance difficult to operate, while other UK airports lack the traffic
volume to justify the investment in pre-clearance. IAG is investing in Aer Lingus growth as a value carrier
North America across the Atlantic and British Airways (another IAG company) has limited non-stop long haul flights from UK
regional airports. Air France, Lufthansa, and KLM are all diverting traffic from the UK Regions to their hubs.
► In total, 6 airlines provide 868 flights every week to 25 UK destinations, the majority of which have no US
services, and limited prospects of securing such routes.
Source: SRS Analyser, Flighglobal 10 ACI Europe – Airport Industry connectivity Report 2018, (2018)
07 September 2018 | Final Economic Impact of the development of Dublin Airport as a Hub Page 172 Context and Rationale 1 Executive Summary
2 Context and Rationale
Immigration pre-clearance is a significant selling point 3
4
Economic Impact of the Hub
Qualitative Benefits of the Hub
5 Literature Review
US passengers at Dublin Airport The Impact of US Pre-Clearance
3,500 US Pre-clearance has been in place since 2008, allowing US bound flights from Dublin and Shannon to be fully
cleared prior to landing. This allows for efficient boarding, avoids the lengthy entry process on US soil and allows
3,000 airlines use domestic terminals which enhances connectivity on arrival for onward air travel. Per the graph on
the left, Transatlantic flights out of Dublin have been growing steadily since 2010, and although pre-clearance
2,500 isn’t the primary driver, it has helped facilitate growth in the following ways11:
Passengers (‘000s)
2,000 ► Connecting Passengers: US pre-clearance has been cited as particularly beneficial in attracting passenger
who intend on connecting in the US. The Centre for Aviation outlined in a 2016 conference report that there is
1,500
a much reduced risk of border delays causing them to miss their connection or have issues getting baggage
1,000 onto their connecting flight
► Flexibility: The Centre of Aviation report also discusses how pre-clearance allows greater flexibility for
500
airlines in where they operate routes. The CAPA report outlines how the next-generation narrow body aircraft
0 can open the Transatlantic market to airports that previously wouldn’t have been considered. These smaller
airports may not have customs and immigration facilities, hence requiring pre-clearance
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Source: CSO
Increasing competition
► Ireland is at risk of losing its status as the only country in Europe which offers pre-clearance facilities. The US
Department of Homeland Security has approved 10 airports to provide pre-clearance, 8 of which are
Airports approved for US preclearance European airports (see table)
London Heathrow Amsterdam Schiphol ► However, Dublin has a number of advantages over these airports, including the purpose building of Terminal
Manchester Madrid-Barajas 2 with pre-clearance in mind. Heathrow for example has its Transatlantic flights spread across multiple
Stockholm Arlanda Brussels terminals, making the introduction of pre clearance very expensive and logistically difficult. The CAPA report
outlines that some of these airports may never introduce pre-clearance for these reasons
Oslo Tokyo Narita
Punta Cana Istanbul Ataturk ► Stockholm appears to be the first airport on the list to actually go ahead with the introduction of pre-clearance,
and this will provide the first indication of the effect of this policy
Source: CAPA centre of Aviation
11 CAPA Centre of Aviation, US immigration pre-clearance: Dublin Airport’s rapid growth has been supported by enhanced US access, (2016)
Page 18 Economic Impact of the development of Dublin Airport as a Hub 07 September 2018 | Final2 Context and Rationale 1 Executive Summary
2 Context and Rationale
Passenger growth at Dublin Airport has been significant and is continuing 3
4
Economic Impact of the Hub
Qualitative Benefits of the Hub
throughout 2018 5 Literature Review
Dublin Airport passenger movements
Passenger growth
30
Per the 2017 daa Annual Report, 29.6 million passengers went through Dublin Airport in 201712. This represents
27 a 6% increase from 2016. Passenger numbers for 2018 show that there are no signs of this growth easing and
in fact ACI figures show Dublin’s passenger growth rate for May was 10.2%, making it the 4th fastest growing
Passengers (m)
24 large European airport13. 1.8 million passengers used the airport as a hub in 2017, a 32% increase on the
previous year. Significant growth areas included the Middle East and Africa, with a 14% increase to 850,000
21 passengers.
18 As can be seen on the graphs, passenger Traffic increased to all major regions in 2017:
► Total passengers to Continental Europe increased to 15.2m, a year on year increase of 6.7%, following on
15
from high growth in the two previous years of 15% and 11%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
► Growth in the UK market slowed in 2017 to 0.6%, for a total of almost 10m passengers
Source: CSO
► Transatlantic grew rapidly in 2017, with a 20% year on year increase, totalling 3.3m
Year on Year Passenger increase by Region
► Other destinations (primarily the UAE) remain a minor part of the airports total passenger numbers. Growth in
30% this market is volatile but is on an upward trend with passenger numbers up 64% from 2013 to 2017.
25% Dublin has also been developing as a hub for connecting passengers in recent years. The number of
passengers transferring at Dublin Airport has increased from 550,000 in 2013 to almost 1.6m passengers in
20%
201714. This growth is continuing into 2018, with a further increase of 17%.
15%
The growth has been considerably ahead of expectations, including those used in the most recent price
10% determinations, and approvals for capital investment. As noted on page 21, infrastructure in certain areas is
limiting growth and impacting the passenger experience. Investment in this infrastructure, and the infrastructure
5% required to improve hub functionality, should position the airport for continued growth.
0%
Europe UK Transatlantic Other
-5%
2014 2015 2016 2017
Source: CSO
Passenger mix
Europe UK Transatlantic Other
Pax (m) 15.2 10 3.3 0.9 12 DAA, DAA Annual Report 2017, (2018)
13 Dublin Airport, Dublin Airport Tops European Airports Growth League, (2018)
% 52% 34% 11% 3% 14 Dublin Airport, Dublin Airport Opens New Transfer Facility, (2018)
07 September 2018 | Final Economic Impact of the development of Dublin Airport as a Hub Page 192 Context and Rationale 1 Executive Summary
2 Context and Rationale
Cargo Traffic is on an upward trend, albeit with a less consistent growth 3
4
Economic Impact of the Hub
Qualitative Benefits of the Hub
pattern than passenger traffic 5 Literature Review
Total (Arriving and Departing) Freight
► As can be seen on the first graph, freight passing through Dublin Airport has experienced growth in the years
160 following the recession, although without the same consistency as passenger growth. It can also be seen that
freight didn’t fall significantly as passenger numbers did during the recession
140
120 ► We also note the tightening gap between arriving and departing freight, with the absolute gap falling from
Tonnes (‘000s)
100 18,900 tonnes in 2008 (and still 8,200 in 2015) to just 2,700 tonnes in 2017
80 ► Both pie charts opposite show the significant change in recent years in both the destination of departing
60 freight and the country of origin of arriving freight. The UK, for example, accounted for 28.6% and 32.6% of
40 departing and arriving Freight in 2013, respectively. These percentages have fallen to 21.8% and 26.8% in
2017
20
0 ► These changes in composition have been caused by growth in Transatlantic for departing freight (it
comprised 29.6% of departing freight in 2013, growing to 37.11% in 2017) and other international for arriving
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
freight (17.5% in 2013, up to 21% in 2017). The increased trade with regions outside of the UK, Europe and
Total Arrival Departure
North America is driven almost entirely by trade with the UAE as services to the region have increased in
recent years
Source: CSO
► Trade with Europe has increased for both arrivals and departures but the relative share of total trade remains
similar
Departing Freight Destination, 2013 (Inside Arriving Freight Region of Origin, 2013
Ring) vs 2017 (Outside Ring) (Inside Ring) vs 2017 (Outside Ring)
4.3% 2.8%
21.8%
18.3% 21.0% 26.8%
5.0% 3.7%
17.9% 17.5%
28.6%
32.6%
23.2%
29.6% 18.8%
18.5% 23.0%
24.0%
25.3%
37.1%
Source: CSO UK Europe T-A Other Ireland Source: CSO UK Europe T-A Other Ireland
Source: CSO
Page 20 Economic Impact of the development of Dublin Airport as a Hub 07 September 2018 | Final2 Context and Rationale 1 Executive Summary
2 Context and Rationale
As a result of the rapid growth, Dublin Airport now faces significant capacity 3
4
Economic Impact of the Hub
Qualitative Benefits of the Hub
constraints in a number of areas 5 Literature Review
Dublin Airport departure constraints Dublin Airport Capacity Review
► In March 2018, Helios produced a capacity assessment for Dublin Airport for the purpose of setting slot
coordination parameters15. This report gives an insight into the capacity of the airports runways, taxiways,
aircraft stands, airspace capacity and terminals and identifies the most significant pinch points
► The maximum throughput of the main runway (10/28) is 24 arrivals/hour, 41 departures/hour, and 48
movements/hour in mixed mode. This has been specified as a significant pinch point, with numerous hours
during the day forecast to be at or above capacity in 2018
► The capacities of the taxiways can cope with current demand, although there are some delays at peak
periods. This is subject to efficient Air Traffic Control and stand planning procedures. The report outlines there
is a pinch point in the area where Runway 28 joins Runway 34 due to multiple runway entry points and
converging taxiways
► The report does not believe the current airspace structure causes any capacity constraints on Dublin Airport
► There are 61 contact and 31 remote turnaround stands for passenger services and an additional 36 remote
stands used for long term parking, general aviation or cargo operations. Stands are at capacity during the
peak morning period and so are also considered a pinch point
► Terminal 1 and 2 departure throughputs are limited by the security process and the report suggest the
maximum capacities are 4,600 and 3,700 passengers per rolling hour, respectively. Similarly for arrival
throughputs, to guarantee reasonable waiting times at immigration, the report suggests a maximum of 4,100
and 3,050 passengers per rolling hour, respectively.
► The report also estimates the US Preclearance Area has capacity for 1,080 passengers per hour. Terminal 2
is considered to have insufficient resources in the check-in halls. Both of these have also been identified as
Source: IAA
pinch points
► In summary, the key airside constraints are Runway 10/28, dual runway threshold with its entry points and
stand capacity while in the terminals the pinch points are identified as being the check-in hall in T2, the
security control areas in T1 and T2, the US Preclearance area in Pier 4 and the immigration desks in T1 and
T2
Source: daa Interim CIP proposal (25 Oct 2017)
15 Helios, Capacity assessment at Dublin Airport for the purpose of setting slot coordination parameters, (2018)
07 September 2018 | Final Economic Impact of the development of Dublin Airport as a Hub Page 212 Context and Rationale 1 Executive Summary
2 Context and Rationale
daa have development plans in place to combat some of the identified 3
4
Economic Impact of the Hub
Qualitative Benefits of the Hub
constraints 5 Literature Review
Selected Dublin Airport expansion projects Planned Investment
Dublin Airport undertook €174m of investment during 201716. The largest projects included a total resurfacing of
Project €m SC* Purpose
the main runway, a new boarding gate area with five boarding gates serving nine aircraft parking stands, the
Efficiency extension of Pier 1 adding four new boarding gates and upgrade of Pier 2 for improved passenger experience
T1 and T2
5.5 Q2 2018 and capacity
CUSS Check-in
@ Check-in Due to accelerated passenger growth in the 2015 - 2019 regulatory period, daa submitted infrastructure
T1 and T2 Higher development plans to the Commission for Aviation Regulation (CAR) in order for the airport to handle 32m
Immigration 11.1 Q3 2019 immigration passengers per annum without reducing service quality17. In June 2018, CAR approved a capital expenditure
Facilities capacity allowance of €269.3m for 23 projects including additional boarding gates, additional aircraft parking stands and
Additional taxiway improvements for improved efficiency on the airfield. One such project that has been completed is a
T2 Level 15 gates for new €16m transfer facility built adjacent to Pier 4, specifically designed to improve the flow of connecting
5.9 Q4 2020
Bus Gates remote passengers through the airport. The facility is 3 storeys high and comprises of airline information desks,
stands boarding card checkpoints and immigration and customs facilities18.
Apron 5H and Additional
Long Term Capacity Planning
Taxiway 49.1 Q2 2020 aircraft
Rehabilitation parking As mentioned above, daa is currently undertaking €269.3m of investment in capital infrastructure however this
stands,
which are only forms part of the airport masterplan to allow for capacity to increase to 40m passengers by mid-2020’s and
Upgrade and
required to 50m by mid 2040’s. To reach these goals, daa has outlined a number of key steps including:
Realignment of 4.8 Q2 2018
Stands 101-104 meet
demand ► Delivery of the Northern Parallel Runway while maintaining the use of the crosswind runway. Originally
granted in 2007, planning permission for the airport’s second runway was extended by An Bord Pleanála to
Realignment of
5.3 Q1 2021 Improved 2022, with all pre-construction work completed. daa are seeking changes to the restrictive conditions imposed
Taxiway A efficiency on by An Bord Pleanála with regard to night flights and sound management
Dual Taxiway F 37.3 Q1 2021 airfield
► Both terminals to be expanded with new boarding gates added and the addition of new aircraft parking stands
Source: CAR
* Scheduled Completion ► Allowance of space for the building of a Metro station
► Continued discussion with An Bord Pleanála regarding the lifting of the current limit of 32m terminal
passengers imposed in the planning permission for Terminal 2. This condition was put in place due to
anticipated private car traffic outside the airport, however daa outline in their 2017 Annual Report that there
has been a shift away from using personal cars to access the airport
16 DAA, DAA Annual Report 2017, (2018)
17 Commission for Aviation Regulation, Decision on the Second Interim Review of the 2014 determination in relation to a Supplementary Capital
Expenditure Allowance for Dublin airport, (2018)
18 Dublin Airport, Dublin Airport Opens New Transfer Facility, (2018)
Page 22 Economic Impact of the development of Dublin Airport as a Hub 07 September 2018 | Final2 Context and Rationale 1 Executive Summary
2 Context and Rationale
The Development of Dublin as a Hub airport requires more than just 3
4
Economic Impact of the Hub
Qualitative Benefits of the Hub
additional capacity 5 Literature Review
Potential hub enhancements Airport Facility Requirements
To enable hub airlines to operate efficiently, airports must have certain facilities in place, including:
► Facilities to handle passenger flight connections and ensure short distances between gates for transfer
passengers, as well as facilities to handle efficient and expedited transfer of baggage.
► Ability to deal with peak flows, high volume arrivals followed by distribution of passengers and bags prior to
departure wave.
► Adequate runway capacity including taxiway access and apron size for airlines to operate waves of arrivals
and departures.
Proposed infrastructure to support Hub development
► Development of new Pier 5 in the South Apron to develop and expand Terminal 2 operating capability.
► Improved Dual Code Taxiway access to South Apron.
► A new larger centralised US Customs and Border Protection (CBP) facility with double the peak hour
passenger processing capability.
► Enable departure of US CBP/TSA processed flights from remote stands, Pier 3, Pier 4 and the new Pier 5.
► Increase in additional Narrow Body Equivalent stands (including both contact and remote stands) to total
17 additional stands compared to the current South Apron capacity
► Development of new baggage transfer infrastructure to support connections.
► Optimisation of runway capacity
We understand the daa is considering proposing infrastructure development of the above approximate scale
within the Capital Investment Programme for the next regulatory period 2020-2024
07 September 2018 | Final Economic Impact of the development of Dublin Airport as a Hub Page 232 Context and Rationale 1 Executive Summary
2 Context and Rationale
The Aer Lingus strategy has been informed by the National Aviation Policy, 3
4
Economic Impact of the Hub
Qualitative Benefits of the Hub
its objectives and the opportunity at Dublin Airport 5 Literature Review
Vision and Strategy A clearly articulated strategy
► Aer Lingus’ stated mission is to be the leading value carrier across the North Atlantic. Enabled by a profitable
and sustainable short-haul network, supported by a guest focused, brand and digitally enabled value
proposition
► Leveraging Dublin as a hub
► Management of network and partnerships
► Creating a compelling connecting proposition
Demonstrable growth
Building the Dublin Hub ► In 2017, Aer Lingus commenced operations to Miami and added capacity to Chicago, Orlando and Los
Angeles and added 100,000 seats to their Short Haul network.
► Following the commencement of new routes to Seattle and Philadelphia, Aer Lingus will operate 115 weekly
frequencies to 13 North American destinations in 2018.
► With their Airline partners, Aer Lingus connects to over 100 destinations in North America and to over 70
across Europe.
Next generation aircraft
► Aer Lingus announced long haul fleet growth plans at the IAG capital markets day in November 2017.
► Key to this was the introduction of the A321 Neo Long Range aircraft in 2019 - a narrow body aircraft with
long haul economics.
Future Growth
► This aircraft offers deployment flexibility for the airline as can fly long and short-haul improving network reach.
In particular, the total number of seats means it can profitably and efficiently serve long haul routes to
destinations which would not sustain widebody aircraft.
Page 24 Economic Impact of the development of Dublin Airport as a Hub 07 September 2018 | Final3
Economic Impact of the Hub
07 September 2018 | Final Economic Impact of the development of Dublin Airport as a Hub Page 253 Economic Impact of the Hub 1 Executive Summary
2 Context and Rationale
We have calculated the economic impact of a Hub at Dublin Airport using 3
4
Economic Impact of the Hub
Qualitative Benefits of the Hub
client data, CSO Input-Output tables and our Economic Impact Model. 5 Literature Review
Background to Input-Output (IO) Tables
1. Direct 2. Indirect 3. Induced The IO tables are produced by the CSO and show the relationships between every sector in the economy. They
show the value of goods and services in each industry and which industry’s inputs are used to produce them.
Using these tables, we can calculate the multiplier impacts for an increase in demand for one sector on the other
Economic Economic Economic sectors of the economy.
activities of the activities of activities 1. Direct impacts
firm the firms Irish generated by
suppliers income spent The direct economic effect of any activity on its local economy can be quantified as:
by direct and ► The number of individuals directly employed by the activity
indirect
employees ► The wages and salaries those workers are paid and the profits generated
Measuring only the direct impacts captures only part of the economic significance of a given activity, and
excludes the linkages with other sectors of the economy. These linkages can be described in terms of indirect
and induced economic impacts and constitute the upstream and downstream economic effects which generate
business, support jobs, and provide wages in other sectors of the economy.
The additional 2. Indirect impacts
benefit from an
additional euro of Indirect impacts result primarily from the value of purchases made by the firm in the economy, and the related
the firms economic activities conducted by suppliers of goods and services the firm. The distinguishing feature of indirect
production impacts is that the activity can be attributed to the presence and operations of the firm, even though the actual
activity is conducted outside of the company (in the supply chain).
Total multiplier 3. Induced impacts
Induced impacts result from the spending of incomes generated from activities directly and indirectly related to
the firms activities. Induced impacts are the knock-on impacts which occur as the firm employees, contractors
and its suppliers’ employees spend their incomes, creating further impacts through the economy.
4. Catalytic impacts
The catalytic impact is the way a firm facilitates the business of other sectors of the economy. Tourism is
assumed to be the key catalytic impact in relation to the operation of the Hub as increased connectivity
increases tourism opportunities for a region.
Page 26 Economic Impact of the development of Dublin Airport as a Hub 07 September 2018 | Final3 Economic Impact of the Hub 1 Executive Summary
2 Context and Rationale
The three key outputs of our modelling are categorised under GDP, 3
4
Economic Impact of the Hub
Qualitative Benefits of the Hub
employment and Exchequer impacts 5 Literature Review
GDP contributions Employment contributions Exchequer contributions
A sector’s contribution to national GDP can be The employment impact shows the number of The main Exchequer contributions from the Hub’s
measured in terms of the additional payroll and people employed throughout the economy in order activities are in the form of profits taxes, payroll
profits generated throughout the economy as a to support the Hub’s activities. As with GDP taxes and social insurance contributions,
result of its activities. It is the additional value contributions, we are concerned here with: consumption taxes – most importantly VAT, and
added in the economy attributable to the Hub. dividends to the State.
► The number of people employed by the firm
GDP contributions arise at three levels:
(direct contribution) and its contractors (treated As with the economic and employment
► Direct – generated in the business directly here as direct contribution) contributions, we can analyse the Exchequer
undertaking the economic activity. This contribution in terms of the:
► Employment in the supply chain serving the
comprises wages and profits
firm (indirect contribution) ► Direct – taxes paid by the firm and its
► Indirect – generated in Irish firms supplying employees
► The employment generated as the direct and
goods and services to the firm, back through
indirect wages are spent throughout the wider ► Indirect – taxes paid by the Irish suppliers of
the Irish supply chain
economy (induced contribution) the firm and their employees by virtue of their
► Induced – generated as a result of the business with the firm
Any increase in employment opportunities, in
additional incomes from the direct and indirect
terms of aviation related employment and in the ► Induced – additional taxes paid in the wider
contributions being spent in the wider
wider economy e.g. tourism, will result in economy by virtue of the additional
economy i.e. the wages of the firm’s
increased tax revenue and wider business expenditure by employees of the firm and their
employees, contractors and employees in the
opportunities for the economy. Irish suppliers
supply chain being spent in the economy
► Catalytic – consumption taxes paid by
There are also catalytic impacts, generated as a
additional connecting passengers in the hub,
result of increased stopover tourism from greater
who have a greater dwell time and potential to
connectivity to North America, UK and Europe.
spend than point to point traffic, and additional
This increase in tourism will have a direct impact,
tourists, including ‘stopover tourism’ in the
though accommodation, food and retail etc., and
wider economy
indirect and induced impacts via the supply chain
and additional incomes.
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