Aviation Regulator Takes Wrong Option On Proposed Dublin Airport Pricing
The Commission for Aviation Regulation’s (CAR) proposed new pricing structure for Dublin Airport is the wrong option for Ireland’s economy, according to Dublin Airport Authority (DAA).
DAA has kept Dublin Airport charges flat in real terms over the past few years to stimulate passenger growth, while continuing to invest in improving the airport experience for consumers and properly maintaining the airport’s buildings and airfield assets.
The combination of flat charges and generous incentive schemes for growing traffic, and launching new routes helped Dublin Airport deliver an extra one million passengers last year and saw traffic at Dublin grow five times faster than the EU average in 2013.
This strategy has also seen transatlantic traffic at Dublin Airport grow to a record 1.9 million passengers last year and has helped create a successful transatlantic hub business with more than half a million passengers transferring at Dublin last year.
During the same period, Dublin Airport offered a better service to its customers on a sustained basis, which is acknowledged by the regulator and independent studies, which consistently place Dublin within the top five airports in Europe for customer service.
DAA welcomes the regulator’s confirmation today that Dublin Airport improved its product offering while simultaneously reducing its operating costs by more than had been forecast during the current regulatory period.
DAA wants to continue to grow passenger numbers at Dublin Airport by expanding routes and services, improving the passenger experience and growing its transfer and long-haul businesses. It had planned to do this with no increase in airport charges over the next five years, and had made this clear in its submission to the regulator.
However in his draft determination on Dublin Airport charges for 2015-2019, which was issued today, outgoing aviation regulator Cathal Guiomard has proposed lowering charges at Dublin Airport by 22% over the next five years.
“The regulator’s proposed airport charges regime will lead to stagnation, and flies in the face of the Government’s draft National Aviation Policy, which supports the development of Dublin Airport as a secondary hub and the delivery of additional routes and services from Irish airports to new and emerging markets,” said DAA Chief Executive Kevin Toland.
“To support and underpin traffic growth, Dublin Airport needs to continue to make appropriate investments to improve our infrastructure, maintain our assets and deliver a quality product for the travelling public and our airline customers,” Mr Toland added.
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. “By following this path, Ireland will be repeating the mistakes of the past which led to a substandard product at the country’s key international gateway,” according to Mr Toland.
The regulator’s draft proposal disallows many investments which are essential to grow passenger numbers at Dublin Airport on a sustainable basis over the next five years. These include the provision of a new dedicated transfer facility, a range of airfield improvements aimed at increasing the capacity of the existing runway, and upgrades to Terminal 1, which is now more than 40 years old.
Not investing in additional airfield enhancements to expand runway capacity over the next five years means that passengers and airlines are likely to face delays during the key early morning peak period at Dublin Airport. DAA had also intended to upgrade many areas within Terminal 1, where our customers have told us they want to see better facilities, including a much improved passenger security area.
The calculations underpinning the regulator’s draft determination, foresee DAA reducing its workforce at Dublin Airport by almost 700 people – which is equivalent to one third of its staff at Dublin – 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 regulator has taken the wrong strategic option for Ireland with this proposal,” Mr Toland said. “DAA is committed to growing passenger numbers and boosting Ireland’s connectivity with no increase in airport charges over the next five years, but the regulator’s proposal will lead to lower growth and a poorer airport product for our customers.”
DAA will submit its formal response to the regulator’s draft determination within the coming weeks ahead of the July 31 deadline. A final determination is due in September.