Analysis: the original plan to upgrade Dublin Airport to a hub was hatched in the 1990s after duty-free sales were abolished

By Padraic ReganTrinity College Dublin

The recently published EY/Aer Lingus report recommends upgrading Dublin Airport to a hub. The opening of a new €16 million transfer facility (Pier 4) to cater specifically for passengers connecting between flights, highlights the importance of this strategy. But the genesis of this concept goes back at least 25 years, to the "Hub at Dub" campaign.

Back to the future

The early 1990s was a period of some turbulence at the airport. On the plus side, the impact of Ryanair was driving record passengers, routes and frequencies year-on-year since it commenced flights in 1986. On the negative side, however, the EEC decided in 1991 to abolish duty-free sales by 1999, an irreplaceable money-spinner for airports at the time.

The precarious financial position of Aer Lingus had both positive and negative implications; positive because its rescue plan included the abolition of the government’s Shannon Stopover policy (the Fly Dublin Direct initiative was launched in 1992), paving the way for Dublin to target the transatlantic market; negative because there was a real threat to the survival of the airline.

From RTÉ Archives, Geraldine Harney reports for RTÉ News on plans to abolish duty-free

Driven predominantly by the impending termination of duty-free sales, the airport looked to long-haul destinations (both east and west) as a source of more lucrative passengers and the resulting marketing campaign was titled "Hub at Dub".

The rationale was quite straight-forward: long-haul passengers were by definition non-EEC and hence could still avail of duty-free offerings. They had longer terminal dwell times (offering more revenue-generating opportunities for the airport) compared to short-haul passengers (180 v 90 minutes approx.) and could also be charged higher passenger fees under the pricing system in place at the time. Moreover, long-haul aircraft were heavier than short-haul (450 v 70 tonnes approx.) and therefore incurred higher landing fees.

The pitch

The advantages emphasised at the time to airlines, tour operators, travel agents, tourist bodies and passengers for Dublin Airport as an east/west connecting point were more or less the same as those espoused today. Geographically, passengers were travelling in the right direction (for the most part). Two significant fixed-base operators in Aer Lingus and Ryanair made for excellent route network and frequency coverage (Dublin Airport at the time offered superior UK regional coverage than Heathrow). Seamless single-terminal connections were conducive to minimising elapsed journey times for passengers and maximising aircraft utilisation for airline schedulers. 

From RTÉ Archives, a report on the Aer Lingus campaign to end the Shannon Stopover

US pre-inspection, trialled at Shannon from 1986, was on its way, initially as pre-inspection for Immigration checks and later as pre-clearance to include Customs and Agriculture. The regulatory environment was favourable to new route development as Europe was moving towards a liberalised air transport market. following on from the US Airline Deregulation Act of 1978. An additional benefit for Dublin Airport is that transfer passengers do not increase pressure on surface access and car parks as both – in the absence of a rail link - face ongoing challenges.

Armed with extensive market research, including the annual, internally-conducted Facilities Survey, long-haul carriers were the initial target to progress the Hub at Dub promotion as Dublin already enjoyed an extensive short-haul network. Existing long-haul carriers were approached to align their schedules with the most appropriate short-haul connections. Dublin was not a "co-ordinated" airport at the time so considerable flexibility existed in terms of landing and take-off slots. Prospective long-haul carriers were approached to consider the financial benefits of commencing services and a Route Profitability Model developed by the marketing department demonstrated market potential.

From RTÉ Archives, Mícheál Ó Briain reports for RTÉ News on the opening of a new terminal at Dublin Airport in 1972

This initiative had marked success in changing mind-sets amongst the Dublin aviation and tourist communities that a more proactive approach to business development was being pursued, a stance more closely associated at the time with Shannon Airport. However, it faced several regulatory and economic challenges in significantly increasing transfer passenger numbers.

On transatlantic routes, the Shannon Stopover was still in operation and a two-stop offering was unattractive to both passengers and airlines. Eastwards, the economic recession that gripped Japan in the 1990s and subsequently spread to South East Asia put paid to several discussions that had been commenced with prospective long-haul carriers (Japan Airlines and All Nippon Airways were early targets).

Fast-forward to 2018

Perhaps the most significant difference between then and now is scale. This is particularly so in terms of passenger numbers (30 million now versus five million then), terminal capacity (two terminals, including a dedicated transfer pier) and route network (Aer Lingus alone for example will be operating to 15 North American destinations from Dublin in Summer 2019, compared to three in the early 1990s). With the new Transfer Pier, plans by the DAA to invest €900 million in additional infrastructure, and EY projecting that some 24 percent of passengers could be connecting within 15 years, the future looks bright for this particular market segment. But the seeds were originally sown over a quarter of a century ago.

Dr Padraic Regan is Ussher Assistant Professor in International Strategic Management at Trinity College Dublin whose industry research focuses on Aviation Management

The views expressed here are those of the author and do not represent or reflect the views of RTÉ