Leo Varadkar says decision to set up Shannon as an entity independent of the DAA justified

The decision to set up Shannon airport as an entity independent of the Dublin Airport Authority has been justified by its performance in the first year, Minister for Transport Leo Varadkar has said.

He said the new company was doing very well, and the arrangement was working out better than he had envisaged.

“Passenger numbers have recovered and the indications are that Shannon will break even financially this year.”

He said the new chief executive officer, Neil Pakey, had made a lot of good appointments to his team. Transatlantic traffic in July to the midwest was up almost 40 per cent compared to this time last year.

Mr Varadkar told The Irish Times that a lot of people had doubted that the midwest airport could hold its own, but its operations in the first year had confounded those doubts.

He also outlined some of the priorities he and his department would be arguing for in the run-up to the budget on October 15th.

He said the lower VAT rate of 9 per cent for the tourism and hospitality sector (which was introduced as a temporary measure) should be extended into next year. There were 14,000 more people working in tourism, or a quarter of all new jobs created. It was too soon to withdraw the incentive.

Meanwhile, the future of Waterford airport was a little more secure last night after an allocation of over €500,000 by the Irish Aviation Authority for infrastructure work.

However, the airport remains at "a critical juncture", according to local Fine Gael TD John Deasy, despite the IAA announcement which follows the recent release of funding of €405,000 towards a 150-metre runway extension.

The airport remains without a London route following the withdrawal of Aer Lingus Regional, and that link is considered vital to its future.

The Irish Aviation Authority’s €526,500 is to be spent on boundaries, fencing and flight aids this year and next year, and will bring capital expenditure funding for the airport to almost €1 million in 2013 and 2014. Mr Deasy said the announcement intensified the focus on finding a carrier for the “crucial” London route.