Aer Lingus parent boss says airport could fund expansion with lower charges

Dublin Airport should get "different people to run the business" if it cannot fund its expansion from reduced passenger charges, according to Willie Walsh, chief executive of Aer Lingus owner International Airlines' Group (IAG).

Aer Lingus backs a Commission for Aviation Regulation (CAR) proposal to cut the airport's passenger charges by a fifth to €7.50 a head from 2020, despite warnings from the hub's owner, DA, that this will leave it unable to finance a €1.8 billion expansion needed to cater for expected growth.

In an interview after IAG reported that the Irish carrier’s profit fell 25 per cent to €78 million in the six months to June 30th, Mr Walsh said “they need to get different people to run the business” if the airport cannot finance the plan at €7.50 a head.

He pointed out that Aer Lingus cut costs by 18 per cent while growing its transatlantic business. “This is our model, it’s what we do, we’re making it easy for them, we’re growing passenger numbers through Dublin Airport,” Mr Walsh said.

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DAA wants to add new piers, aircraft stands and boarding gates so Dublin can cater for 40 million passengers a year and continue growing its position as a connecting airport for people travelling between Europe and North America.

‘Surprising’

A Dublin Airport spokesman said Mr Walsh’s comments were “surprising” given that IAG told investors in November that the charges were “expected to remain broadly flat”, allowing Aer Lingus to continue growing.

In a presentation to backers at that stage, IAG described as “constructive” talks on DAA’s plan to keep airport charges flat while spending almost €2 billion on new facilities.

“Dublin Airport is also hugely price competitive compared its peer group, with airport charges that are 30 per cent lower than the average price for large European Airports,” the spokesman said.

Dublin's average cost per passenger last year was €8.51, compared with €10.74 for Gatwick, €8.74 for Vienna, €8.68 for Manchester and €7.93 for Stansted.

Critical

Aer Lingus chief executive Sean Doyle said it was critical that the infrastructure included in DAA's investment plan was built in a timely and efficient manner. The airline supports the plan, but believes the airport can finance it even if the CAR orders it to cut charges.

The first of 14 Airbus A321 long range craft that Aer Lingus has ordered joined its fleet yesterday. The carrier said last year that it intended growing the number of planes in its transatlantic fleet to 30 in 2024 from 17 .

Aer Lingus began a Dublin-Minneapolis service in July. Mr Doyle said the Seattle and Philadelphia routes launched last year were performing well.

He noted that the fall in profits occurred mainly in the first three months of 2019 and partly blamed rising fuel prices and higher than usual maintenance costs.

“We continue to focus on delivering further cost efficiencies for the business in order to improve our competitiveness,” he said in a statement.

IAG’s operating profit for the six months to June 30th, 2019, was €1.1 billion before exceptional items, which was down from €1.7 billion in the first half of last year.