DALTON PHILLIPS – ‘ENGAGED PEOPLE GET THINGS DONE’

THE BIG INTERVIEW: DALTON PHILLIPS

‘ENGAGED PEOPLE GET THINGS DONE’

Dublin Airport is at the heart of Ireland’s economy, accounting for about 95% of all incoming and outgoing air traffic. It’s also a huge source of activity within Fingal, creating direct employment for about 21,500 people in a variety of jobs – from the daa itself to airlines, air traffic control, goods handling, aircraft maintenance, security, immigration and customs. When indirect employment, including food services and retail, is included, that figure rises to about 50,000 people. daa Chief Executive Dalton Philips spoke to Fingal Network about the challenges created by the pandemic and why he remains optimistic about the future for this important facility.

“You still often hear the old regional debates, Shannon versus Dublin, or Shannon versus the north west. But that’s not the real issue, it’s far more global than that. When we compete for a route we’re up against the likes of Copenhagen or Manchester or Vienna. An airline is just trying to join up two dots on a map where it thinks it can get the best return with the ultimate movable asset,’ says Dalton Philips, keen that the challenges for Dublin Airport be seen in an international context.

Responsible for the running of “a big mini-city right in the centre of Fingal,” his task is as much akin to that of a mayor as it is to running a business. “With just about every possible service that you could think of located here, we recognize there’s a huge community aspect to what we do. We have to be a brilliant neighbour and do everything we can to engage with the wider community – and that’s not always straightforward,” he adds.

He cites the new runway, scheduled to open this August, as an obvious example. “On the one hand, there is a huge body of people who will benefit enormously from the increased economic activity in terms of trade, tourism and FDI as a result of this increased capacity. On the other, there’s a much smaller number impacted by increased activity and noise levels. But if you are in the latter group the size of that number is immaterial and we have to be cognizant of that. So we have to take a balanced approach to growth; we have to be responsible with the mandate we’ve been given by the government to connect Ireland to the rest of the world.”

The pandemic has disrupted Dublin Airport’s ambitious growth plans, but more in terms of timing than direction, Philips says. “We’ve lost a couple of years, for obvious reasons. It has delayed the development of Dublin Airport Central, for example.” This stateof-the-art business environment has enticed large multinational businesses to establish European bases at the airport. Cereals giant Kellogg’s, for example, has its European Regional Headquarters here. “We were meant to be working on building phases three and four of DAC by now and we’ve pushed that out. But rest assured, it’s still going to happen because it’s the right thing to do.”

Looking ahead, Philips freely acknowledges that the daa capability and the capacity to build some of the larger infrastructure it expects will be needed by the end of this decade is dependent not just on the extent of the recovery in air traffic but also the company’s own financial position.

“We know that aviation will bounce back but there is a question of whether we will have the money we need because our balance sheet is so constrained. We lost €300 million last year and had to raise a billion euros of liquidity.” daa has plans to build a new pier, positioned at right angles to the still relatively new one familiar to Aer Lingus passengers and people departing to the US. “Now we have to ask ourselves, can we really afford to do this? The pandemic hasn’t changed our vision or our appetite. But it has constrained our ability because we just don’t have unlimited resources.”

Philips also notes that Dublin is unusual in having some of the very lowest airport charges in Europe. “We don’t set the charges and in general they are 40% to 50% lower than any other airport of a comparable size across Europe. So that is unusual because I can’t think of any other service in Ireland that is 50% cheaper than its European equivalent. There are clearly some benefits from having very low charges, but they can also constrain your ability to invest in the future. So we’re challenging the regulatory system, which we think is fundamentally flawed and broken because we need to invest in infrastructure for Dublin Airport.”

Back in 2014, the daa initiated judicial review proceedings against the Commissioner for Aviation Regulation, complaining that the regulator’s final determination of airport charges for 2015-2019 would adversely affect its plans for the DAC development. Although this action was later dropped, the role of the Regulator in setting limits on a substantial proportion of its revenues has been a constant source of irritation.

Recently daa has engaged with the Minister for Transport to set out its concerns once again, emphasizing its commitment to meeting the environmental challenge with sustainability goals of reducing its footprint by somewhere between 30% and 50% by the end of the decade, and its desire to do this by being self-financing.

“We pride ourselves on having lower airport charges versus other airports because we want to compete against them. But I just think we need to have a regulatory system that considers all these different variables, including our ambition to have the best sustainability credentials of any airport of scale across Europe. Building a solar plant, putting in world class drainage and water filtration systems and all the many other things needed to achieve that come at a price – there simply isn’t a magic money tree!”

Philips says that having spent 25 years in the grocery trade (five as CEO of UK supermarket chain Morrisons up to March 2015), he is acutely aware of the competitive pressures of price elasticity. “But at the same time,” he says, “if you’ve got a regulator who is only forcing your pricing in one direction, downwards, and you’ve got a climate agenda which means you have to invest in new infrastructure, then something has to give.”

The challenge of dealing with day-to-day funding while at the same time making long-term infrastructural plans can be a real challenge for an enterprise like a large airport. Speaking about the new runway Philips says with understandable pride: “it’s going to be the fastest built and best value for money runway built anywhere in Europe for probably two decades.” But he is equally quick to acknowledge that this was no overnight achievement. “We are the beneficiaries of really clever planning that started back in the 1960s. It was one of the very far-sighted plans within the Fingal region which has made this possible for us now, all these years later.’

But things have not progressed as well to the south of the airport. Philips admits to being “massively disappointed” at the lack of momentum behind the development of the long-promised but constantly long-fingered metro to link Dublin Airport with the city centre. “I was recently in Saudi Arabia and they’re currently building seven metro lines there at the same time. Yet here we are, a capital city with a massive sustainability agenda that doesn’t have a connection point into the city. It is terribly frustrating. I know it requires funding, but it is an essential piece of infrastructure.”

As part of efforts to cope with the pandemic, Dublin Airport reduced its cost base materially last year. All staff took pay decreases of between 20% and 45% for 11 months and overall costs were cut by nearly 60%.

Reluctant to oversimply the lessons of the pandemic, Philips says that one thing that does stand out for him is the importance of engaging people with a real clarity of purpose. “Engaged people with a real sense of purpose get things done in a way that disengaged people with a lack of clarity don’t and I think that’s relevant wherever you work. We’ve had huge challenges over the last two years, we’ve had to say goodbye to a third of our workforce in Ireland, the majority of them obviously in the Fingal area, so it can be difficult to make sure you have an aligned and engaged workforce. Resilience is obviously a bit of a buzzword from the pandemic, but it is so very true. You’ve got to just pick yourself up and go again. And I think that’s hard for businesses and it’s hard for individuals within them.”

Philips is a strong believer in managing both his physical and mental health, which he sees as intrinsic to his responsibility to be an effective leader. He exercises at least five days a week and usually six. “You just have to find the time. Even when business is hectic and you may be travelling a lot it’s important to try and carve out one hour in the day for exercise. That’s not a vanity project. You’re paid to make good decisions and if you’re not looking after your mental and physical health you’ll make poor ones.”

Philips also says that the sense of purpose he derives from his faith is very important to him while acknowledging that other people will have other things that are important to them. He grew up as Christian and says that as he has got older his faith has deepened. “It’s fundamental to my makeup” he adds.

Dalton Phillips