No airport charges hike fund new terminal

Charges for travellers flying from Dublin Airport will remain the same for the next two years, the Aviation Regulator announced today.

Despite calls from Dublin Airport Authority (DAA) for an increase to fund the building of a new multi-million euro terminal, fees will stay at 6.34 euro per passenger until T2 is open for business.

Cathal Guiomard, Commissioner for Aviation Regulation (CAR), said that passenger growth could finance the €400m build.

DAA had sought an increase of just over 1 euro over the next three years to pay for T2 and other new facilities, which in total will cost €1.2bn.

But Mr Guiomard found that Dublin Airport’s financial position has significantly improved since 2005, primarily because of passenger traffic growing well ahead of forecasts.

He said even without an immediate price increase, the DAA would be able to undertake the investments associated with Capital Investment Plan (CIP2006) while remaining financially viable within the period of the current price control.

Mr Guiomard stated that airport users should begin to pay for T2 once the additional services were in use.

DAA has said it is disappointed with the decision.

“It is not the role of a price regulator to dictate to a regulated firm the location, scale or design of a project,” said Mr Guiomard.

“The DAA, in full consultation with its users, are the organisations best placed to do so.

“Therefore the CAR’s proposals do not seek and do not require any change to the DAA’s plans or designs for T2.

“Instead, what our proposals do address is the regulatory treatment of the T2 that the DAA proposes to build in line with the Government’s Aviation Action Plan.”

Today’s announcement was a draft decision after four weeks of consultations. The final decision will be revealed following representations from interested parties.

Its aim is to provide incentives for DAA to carry out much needed infrastructure investments to boost capacity at Dublin Airport while ensuring passengers do not have to over-pay for investment.

On T2’s capacity, Mr Guiomard pointed out that Dublin Airport proposes to build a larger terminal than passenger levels demand rather than opting for a smaller facility and adding an extension at a later date if needed.

The new 75,000 sq metre passenger terminal will mean Dublin Airport will be capable of handling up to 15 million passengers per year. It is due to be open in autumn 2009.

“We have concluded that Dublin Airport’s ability to obtain the funds to allow its investment plans to proceed will not be compromised by leaving the price cap at its current level of 6.34 euro per passenger,” added Mr Guiomard.

A spokeswoman for DAA said it was disappointed the Commission has not approved the modest immediate increase in airport charges that would have provided the full funding clarity required to proceed with the building programme at Dublin Airport as soon as the planning appeals process is complete.

“The DAA welcomes the Commission’s findings that the vast bulk of the company’s near-term, €1.2bn investment programme for Dublin Airport is both necessary and reasonably-priced,” she said.

“But it questions why this investment should be remunerated by a prospective larger incremental increase in airport charges for users from 2009, rather than the clarity of a smoother phased increase, commencing this year.

“The DAA must borrow very significant sums of capital to fund Dublin Airport’s second terminal and other passenger and airfield facilities.

“It will now engage with the Commission to establish how the company and potential lenders can be assured that the deferred increase in airport charges will occur and will remunerate their investment appropriately.”