Cut airport charges 22%

The aviation regulator has proposed a cumulative 22% drop in charges at Dublin Airport over the next five years.

In its draft determination on what the DAA can charge airlines at Dublin on a per-passenger basis between 2015 and 2019, the Commission for Aviation Regulation yesterday proposed that the current price of €10.68 per passenger be lowered to €10.17 next year and by 4.8% each year until a maximum charge of €8.35 is arrived at in 2019.

Explaining the proposals, regulator Cathal Guiomard said the factors that put airport charges under upward pressure in recent times have moved into reverse.

“Passenger traffic is increasing, along with commercial revenues; the operating costs of the airport have been below forecast; investment costs are lower than when Terminal 2 was under construction and interest rates and financial market conditions generally have eased substantially.

“Arguably, our proposals are an example of how incentive regulation is supposed to operate: a regulated firm is given an incentive to find efficiencies, it keeps the proceeds of any incentives it achieves for a period, after which the benefit is transferred to customers.”

Passenger numbers at Dublin Airport grew by 6% last year, to 20.2m and are expected to rise to 24m by 2019.

Mr Guiomard said he remains open to further suggestions when the public consultation process surrounding this draft cycle closes in two months time.

“We would expect that the airport would push for higher charges and the airlines to push for lower. “We’re open to change [on the draft terms] but we would need to hear very strong reasons, from parties wanting such change, before doing that.”

The DAA recently said it would keep passenger charges, at Dublin, in line with inflation, but has also suggested the regulator increase the price cap to around €13.50 per passenger, even though it wouldn’t envisage enforcing that.

The CAR has set a submission deadline of July 31, and is to make its final determination in September, before new charges come into effect next January.

Ryanair yesterday attacked the regulator for not going far enough with these proposals, saying the reductions are “too little, too late from this failed regulator.”

The DAA said the regulator has taken the “wrong option” with its proposal and lowering the cap will lead to “stagnation” and make it harder for the airport to remain competitive.

“Airport charges at Dublin Airport are already lower than the comparable European average and the regulator’s proposal for a significant reduction in charges over the next five years would leave them at unsustainable and uneconomic levels,” according to DAA chief, Kevin Toland.

Mr Guiomard finishes his tenure as regulator today — after seven years — with his deputy, John Spicer becoming acting chief. The Government will advertise for a new regulator shortly.