The Commission on Aviation Regulation has approved the new maximum passenger charges that may be collected by the Dublin Airport Authority for the next five years.
The charge, known as the 'price cap', has been set at a maximum of €9.32 per passenger if the new Terminal 2 (T2) is operational by November 2010 - almost a year later than the timetable set out in the Government's 2009 aviation action plan.
If the terminal is not ready by then, the maximum charge will be €8.93. The regulator said the annual 'uplift' to the price cap for T2 in a full operating year was €2.33 per passenger.
The determination makes a direct link between the quality of service users receive at Dublin airport and the level of the price cap.
The set targets relate to a number of different aspects of service quality at the airport, including security passenger search time, out-bound and inbound baggage handling systems, airport cleanliness, ease of way-finding, courtesy or helpfulness of airport staff and overall satisfaction with the airport.
"This determination, the commission’s third since 2001, has posed a number of significant challenges. Its timing coincides with the prospective completion of a very large infrastructure project -Terminal 2 at a cost of €600-plus million - and a global recession that has hit Irish air travel particularly hard," aviation commissioner Cathal Guiomard said.
“With fewer passengers to share the costs of investing in and operating the airport, prices in the earlier years of the determination are higher than they otherwise might be.
"Assuming passenger growth to 2014, prices would be expected to fall back to 2009 levels, except for the impact of Terminal 2. In a full year of operation, the determination allows for an extra €2.33 per passenger to be collected in order to recoup the costs of the new terminal.”
Mr Guimard said the impact of the decline in passenger traffic on airport charges has been reduced by challenging but feasible efficiency targets set for the DAA: a 10 per cent nominal reduction in the operating costs of existing facilities in 2010, no real wage increase to 2014, and pay costs for T2 set with reference to benchmark data from the general economy rather than existing contracts at Dublin airport.
“In addition, as the commission has signalled since 2007, part of the recovery of T2’s capital costs are deferred to later years. About €100-plus million of the terminal’s costs will be recovered only when traffic through the airport warrants a facility of the size of T2.”
The Dublin Airport Authority said the increase suggested by the aviation regulator would keep the airport's passenger charge “highly competitive” compared to those of Dublin airport’s European peers, which had an average charge of €12.50 per passenger.
It said it would review the 180-page report by the Commission for Aviation Regulation in detail to assess its likely impact on the operation of Dublin airport..
“The most likely scenario envisaged by CAR is that the average maximum passenger charge will increase to €9.97 for the next five years.
“This charge includes a fee for the provision of services to persons with reduced mobility (PRM), which was never previously included in the passenger charge. So on a like-for-like basis, the maximum average passenger charge will increase to €9.80 - a 33 per cent increase over the five-year period.”
The authority said its passenger charges had fallen by 30 percent in real terms over the past 20 years and that the charge offered consumers “genuine value for money”.
DAA chief executive Declan Collier said: “The passenger charge has to fund the operation of Dublin Airport 365 days per year and makes a huge contribution towards the running costs of passenger facilities and critical equipment and services on the airfield. The charge also has to fund the cost of essential new facilities that are radically improving the passenger experience at Dublin Airport and providing the essential infrastructure for future growth.”
DAA said it had invested heavily in recent years to address the “inadequate facilities” that had pertained at Dublin airport, for the benefit of passengers, airlines and the entire Irish economy.
“This €1.2 billion investment programme, which includes the €609 million T2 project, is being undertaken without any State funding and is aimed at improving, expanding and modernising Dublin airport for many decades to come.”
Dublin Chamber of Commerce welcomed the commission's announcement.
“Regular users of the airport look forward to the opening of Terminal 2 next year,” said Aebhric Mc Gibney, policy director.
"The whole facility is funded by user charges. The fee increase is not the enemy here. Any increase is clearly linked to customer service performance. We are far more concerned at the many additional surcharges applied by airlines and the Government that drive up travel costs and drive away tourists. With the Budget coming up next week, [the] Government needs to abolish the €10 departure tax to keep Dublin and Ireland the location of choice for tourists.”
Ryanair, however, accused the regulator and the Department of Transport of attempting to protect "the DAA monopoly" and of "wasting" money on the T2 "white elephant", which it said the DAA originally promised to deliver for less than €200 million.
Ryanair spokesman Stephen McNamara said: "Airports all over the UK and Continental Europe are lowering charges, in some case to zero, to attract tourism growth and protect jobs. Only in Ireland can a hapless Govt Regulator sanction a 41 per cent increase in airport charges for a Government-owned airport monopoly."