Aer Lingus and Ryanair back plan to cut passenger charges

DAA says cutting passenger charges by 22% would curb expansion of Dublin Airport

Aer Lingus and Ryanair have backed proposals to cut passenger charges at Dublin Airport in spite of warnings from Dublin Airport Authority that this would hit badly needed development at the State's largest airport.

State company DAA, which operates the airport, wants to spend €1.8 billion on extending new aircraft stands, piers and boarding gates, to ease bottlenecks and allow it handle up to 40 million people a year.

DAA says Commission for Aviation Regulation (CAR) proposals to cut Dublin Airport's passenger charges by 22 per cent to €7.50 a head between 2020 and 2024 would force it to slash those spending plans by between €500 million and €1 billion.

In a response to the regulator’s proposals, published along with 36 others on Monday, the State company said lower charges would prevent it from borrowing the cash it needed to finance its plans.


Original proposal

However, Ryanair argues that DAA could cut the final projected bill for the work it intends doing by €400 million. Consultants hired by the airline, York Aviation, say not all the projects included in the plan are needed at this stage.

The CAR’s original proposal argued that Dublin Airport could do the work involved for €1.48 billion, which would allow it to cut charges.

Aer Lingus said the new facilities should be built between 2020 and 2024 and supports the regulator’s position that DAA can pay for them even if it cuts passenger charges by 22 per cent.

The carrier also argues that DAA should be able to borrow cash to fund the extension if its charges are cut, but says that the regulator should hire an independent expert to review this.

The two Irish airlines are Dublin Airport’s biggest customers and were responsible for more than half the 30 million passengers that passed through the gateway last year.

Both favour the CAR’s “stage gate” proposal. This would involve using an independent financial surveyor to ensure that DAA does each phase of the work on time and within budget.

€9.30 a head

DAA says that charges need to remain at the €9.30 a head it now levies for the next five years, rather than be reduced, for it to extend the facilities.

The company noted it was not seeking any increase and its charges were up to 40 per cent less than similarly sized rival airports in other countries.

“The proposed 22 per cent reduction in airport pricing from 2020 is alarming,” DAA’s submission to the regulator states. It adds that this could cost it €50 million a year in revenue.

The State body also noted that its plans are required to ensure that the airport meets objectives set out in the Government’s national aviation policy.

Two carriers, Canada’s Westjet and China’s Hainan, back DAA’s argument that it should be allowed to leave charges unchanged, as they argue the extra stands and gates are needed.

Niall Gibbons, chief executive of all-island body Tourism Ireland, said that while his organisation cannot comment on "detailed pricing matters", it is critically important Dublin Airport's expansion plans proceed. Business group Ibec said the airport's expansion should proceed.

Barry O'Halloran

Barry O'Halloran

Barry O’Halloran covers energy, construction, insolvency, and gaming and betting, among other areas