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Keeping costs from taking off

As the finance manager at Ireland West Airport Knock I am responsible for keeping its costs as low as possible in order to remain competitive in the unpredictable aviation market.

As a senior executive, I also play a role in strategic planning. I have worked at Knock since 2003, having returned from the UK, where I’d been at companies including Cinema International Corporation, Nortel, Thanet Healthcare and Learning Curve.

It is classed as a regional airport, as it’s not a hub or near a city, which makes gaining and sustaining new routes relatively difficult.

Yet the airport has just had the busiest year in its history, achieving more than 685,000 passengers during probably the worst recession to have hit Ireland in two decades.

When I started here, annual passenger numbers were in the region of 200,000. Like all airports, Knock is capital intensive and has a large proportion of fixed costs, including for maintenance and extensive regulatory obligations in areas such as security and safety.

Cost efficiency is also important because, crucially, if an airline stops using an airport, the airport cannot make a corresponding cost reduction.

The loss of any route means that the business will lose both aeronautical and non-aeronautical revenues, which are vital in offsetting its fixed costs.

This increases the competitive pressure on the airport and it has to work hard to increase market share and passenger throughput by identifying new opportunities for growth.

The airport has succeeded in reducing its cost base by more than 20 per cent in the past few years, which has helped it to remain competitive.

We have used a number of measures to improve efficiency. Nearly two-thirds of our employees are trained in multiple disciplines, for instance, which increases their flexibility and helps to limit costs such as overtime.

Procurement is a key focus to ensure value for money, too. Our KPIs, which are monitored closely every month, include employee cost per passenger and operational cost per passenger.

Managers and department heads are very budget conscious and work with finance and senior managers to ensure that our targets are met

The aviation business is volatile and the loss of any route can have severe consequences for an airport.

Cash flow forecasting is essential in order to ensure that the airport has enough funding to enable it to react to risks and survive.

We also use both short- and long-term business plans, together with rolling forecasts, to ensure that we are always aware of our financial position and the challenges facing us.

Photo: Alamy

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