Aer Lingus would accept higher charges at Dublin Airport for a period

Aer Lingus would accept higher passenger charges at Dublin Airport for a period if they were needed to complete the hub's proposed €1.8 billion expansion plan, according to the airline's chief executive, Seán Doyle.

The Irish carrier backs proposals by the Commission for Aviation Regulation (CAR) – which determines Dublin Airport's passenger charges – to cut the levy by 22 per cent to €7.50 a head between 2020 and 2024.

Dublin Airport owner, DAA says this would threaten its plans to add new piers, aircraft stands and boarding gates between now and 2024 as it would not be able to afford the €1.8 billion needed at the new lower per passenger charge.

Mr Doyle said yesterday that Aer Lingus regarded DAA’s expansion plan as critical to developing Dublin Airport as a hub. The airline is focused on growing its transatlantic business through Dublin.

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He added that the airline could agree to increased passenger charges in the later years of the 2020-2024 period “if there are financial challenges”.

He added that this would have to be independently confirmed and that the CAR could build this into the rules governing Dublin Airport’s charges when the regulator makes its final decision in October.

The commission sets Dublin’s charges every five years. The DAA wants them left unchanged between 2020 and 2024, saying this would allow it raise the cash needed for its expansion.

DAA says that if it had to charge €7.50 a head, this would force it to cut the total it spends on its expansion by between €500 million and €1 billion as the reduction would limit its borrowing power.

However, Mr Doyle argued yesterday that DAA could finance the expansion while cutting the airport’s charges. He noted that the company exceeded the passenger growth expected when the regulator last set charges five years ago. “That gives them a very good platform starting into the next regulatory period,” he said.

Ratings agency

He pointed out that Standard & Poors, a multinational agency that assesses businesses’ ability to repay their debts, ranked DAA at “A- stable”, meaning that there is a low risk of it defaulting, which should allow it to borrow the cash it needs.

S&P’s analysis has stated that the proposed tariff change for Dublin Airport would harm DAA’s credit metrics.

Dónal Moriarty, Aer Lingus chief corporate affairs officer, said the airline would agree to independent testing of DAA’s ability to raise the cash.

A DAA spokesman argued that the company worked closely with airline customers when developing its investment programme to ensure it met their needs and those of passengers.

“The capital expenditure plan of almost €2 billion, which is fully in line with Government policy to expand the airport and further develop it as a hub, was supported by almost all of Dublin Airport’s airline partners following a detailed consultation process,” he said.

He added that cutting the proposed spend by between €500 million and €1 billion would be “contrary to the interests of passengers and airlines”.