Irish Aviation regulator aims to cut airport charges by 22%

The State's aviation regulator is proposing that Dublin Airport Authority (DAA) cut passenger charges by 22 per cent over the next fiv

e years to €8.35, in a move that the company argues would result in the loss of almost 650 jobs.

The Commission for Aviation Regulation (Car) proposed in a consultation document issued yesterday that the DAA slash the amount it charges airlines for passengers travelling through the airport by 4.8 per cent a year from their current maximum of €10.68 a head to €8.35 by 2019.

The commissioner, Cathal Guiomard, said the savings are based on the fact that the airport's running costs are lower than predicted in 2009, when the charges were last set, while the numbers using it are likely to grow by 3 per cent a year to 24 million in 2019. "We propose to pass through the benefits of these developments to airport passengers beginning in 2015," Mr Guiomard said. Airlines generally pass on airport charges to their customers and the commissioner said yesterday that the reductions should have some impact on air fares.

However, the DAA wants to be allowed to cap the figure at €13.50, which it argues is a fair economic return. The company says it will not charge this amount and will instead leave its prices “flat in real terms”.

Earlier this month, its chief executive, Kevin Toland, pledged that the DAA would not seek any increase beyond inflation.

Workforce

The company also argued that the commission’s figures are based on it shedding 648 jobs, one third of its workforce, over the next five years. “But the regulator fails to explain how this could be achieved, or paid for, and how Dublin Airport would continue to operate in those circumstances,” the DAA said.

Mr Guiomard responded that the regulator was not recommending that the DAA cut jobs. “How the company achieves those efficiencies is a matter for themselves,” he said, but he added that staff terms and conditions have to change.

He pointed out that consultants, Steer Davies Gleave, which produced a study for the regulator, found "big discrepancies" between staff costs in Dublin Airport's original terminal one and the newer terminal two, a result of higher salaries paid to longer-serving workers.

The commission’s document says the DAA has addressed this “somewhat” since passenger charges were last addressed in 2009, but says there is scope for it to fall further.

Mr Guiomard stressed that staff costs are only one element of the commission’s calculation of what the charges should be, which he said were mainly based on passenger growth and lower operating costs.

DAA is also seeking to spend €550 million on its facilities, including a new runway. However, the commission’s figures allow for just €300 million. It argues that the new runway should be built after traffic at the airport hits 25 million, which is likely to happen around 2024.

Mr Toland warned yesterday that the Car’s overall recommendations were the “wrong option” for the economy.