Asia Matters

Ireland China Business Summit

8 July 2015Radisson Blu Royal Hotel, Dublin

‘The Role of Twin Cities in Driving Business Partnerships’

8 July 2015Radisson Blu Royal Hotel, Dublin

The Crucial Role of Airports and Airlinks in Driving Economic Growth

Kevin TolandChief Executive, Dublin Airport Authority

Ireland-China Business Summit

The role of airports in driving economic links 8th July 2015

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 ?

daa Overview

daa Overview

• 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

Financial Performance 2014

• 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

Quality At A Competitive 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

Strong Growth At Dublin Airport

• 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

Dublin Airport Passenger Traffic – Recovering Fast

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 201410,000

12,000

14,000

16,000

18,000

20,000

22,000

24,000

15.9m17.1m

18.5m

21.2m

23.3m 23.5m

20.5m

18.4m 18.7m 19.1m20.2m

21.7m

Dublin Airport Historical Traffic

Pass

enge

rs (0

00’s

)

Fast Recovery

15% growth from Jan-Jun 2015 (+1.5m passengers) versus 2014

Cork Airport

• 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

Connecting Ireland to the World for 75 Years

• 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

The Economic Importance of Dublin Airport

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

Dublin Airport’s Economic Impact

DIRECTAt airport and airport related businesses

Jobs: 15,700GDP: €1.3bn

INDIRECTSupplying and supporting businesses

Jobs: 9,600GDP: €0.7bn

INDUCEDEmployees spending in the economy

Jobs: 12,000GDP: €0.8bn

CATALYTICAir service facilitating: tourism, trade, investment, productivity

Jobs: 60,100GDP: €4.2bn

TOTALJobs: 97,400GDP: €6.9bn

Dublin Airport = A Major Employer Onsite

Total: 15,700 Direct Jobs

Dublin Airport is Ireland’s Airport

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

Long Haul Routes from Dublin in 1996 – Limited Network

Long Haul 2015 – Significant Expansion in North America

Our Long-haul Expansion Plans

Dublin’s USP – Unrivalled Combination of Market Opportunities

168 flights per week from US/Canada can connect to 787 flights per week to UK and 1016 flights per week to Europe

Capabilityfor flights from China and other parts of Asia to access the same UK and European network

Dublin = 14th Best Connected Euro Airport

China Market potential

Growing Demand from Ireland to China

Source: Airport IS 2009 - 2014. Information based on indirect two-way traffic from Whole Island Airports.

2009 2010 2011 2012 2013 20140

10,000

20,000

30,000

40,000

50,000

60,000

70,000

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

Beijing, CN Shanghai, CN Rest China

Pass

enge

rs

2014 65,000 passengers travelled between China and

Ireland

Ireland- Beijing Traffic Flows 2009 – 2014*Dublin accounts for 85% of demand to Beijing

2009 2010 2011 2012 2013 20140

5

10

15

20

25

30

2018 17 18 20 18

4

3 33

33

Dublin Rest Ireland

Pass

enge

rs (,

000)

Source: IATA Airport IS 2009-2014, * Ireland includes Northern Ireland

Airline Economics

What do airlines look for in a new route?

Direct services to China have to commercially sustainable – Chinese airlines are financially well structured and astute. There are no charity cases…..

• 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

Fuel46%

Airport3%

Handling4%

Maintenance8%

Navigation3%

Aircraft16%

Crew + Trng9%

Catering6%

Sales1%

Other3%

Cost Breakdown

Fuel Airport Handling Maintenance Navigation Aircraft

Crew + Trng Catering Sales Other

Typical Long Haul Scheduled Carrier Operating Economics

Are We Starting to Lose The Race ?

• 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

Direct Services to China – Next Steps ? Strong Ireland Inc message, based on economics rather than sentiment, needs to be consistently

presented to Chinese stakeholders to support a potential new route

www.dublinairport.com

Thank you !