PASSENGER CHARGES at Dublin airport could rise sharply over the next five years after Minister for Transport Noel Dempsey issued a “direction” to aviation regulator Cathal Guiomard to set the fee in a way that would allow the Dublin Airport Authority (DAA) recoup the cost of building Terminal 2 (T2) and other facilities.
The authority’s net debt is set to balloon to about €1 billion over the next couple of years as it meets the costs of a major revamp of facilities at the airport. This includes spending about €600 million on T2.
In a move that appears to have been made to avoid the exchequer being required to plug any future shortfall in the authority’s finances, Mr Dempsey last month outlined his thinking on the charges issue to the regulator.
In a letter to Mr Guiomard on October 27th, seen by The Irish Times, Mr Dempsey said it was “appropriate” to clarify the Government’s policy regarding “the financially sustainable development of Dublin Airport”.
“I am directing you under section 10 of the Aviation Regulation Act 2001 to ensure that the Dublin Airport Authority’s financial viability is protected in order to implement government policy,” the Minister added.
This policy includes the development of T2, which is to open in November 2010 and the operation of the authority on a commercial basis without receiving State funds.
Mr Guiomard is deciding what passenger fee the authority should be allowed to charge between 2010 and 2014. He is expected to make his ruling in early December.
The charge stands at €7.39. In an interim decision issued in June, Mr Guiomard proposed to increase it to €8.35 in 2010 with further rises allowed when the costs of T2 were established.
The authority had sought a minimum increase of €3 a head.
The Minister’s direction could force Mr Guiomard to increase the passenger charge by a higher amount than he had planned.
Such a decision would prove controversial with airlines at a time when passenger traffic in Dublin is set to decline by 15 per cent this year to 20 million and the Government has already introduced a €10 travel tax.
Ryanair chief executive Michael O’Leary has said its passengers will not use T2 or pay for its costs. He has threatened legal action if the regulator seeks to make the passengers using the existing terminal pay for T2. Ryanair is Dublin airport’s biggest customer and will continue to use the existing terminal there.
Mr Guiomard will today publish the findings of a consultants report into the likely operating costs of T2. The report by Booz Company, seen by The Irish Times, forecasts that it will cost €42 million to run T2 in 2011, its first full year of operation. This will rise to €46 million by 2014.
With DAA forecasting that 20 million people will use Dublin Airport in 2011, this would equate to passengers being charged an extra €2 a head to pay for T2.
Aer Lingus and long-haul carriers will operate from T2, which will handle about 40 per cent of Dublin airport’s traffic.