Business

Thursday 8 December 2016

IAG wants cost probe into Dublin runway bid

Published 14/10/2016 | 02:30

IAG boss Willie Walsh
IAG boss Willie Walsh

Aer Lingus owner IAG wants an independent study to be undertaken for the economic justification of the planned new runway at Dublin Airport.

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It insisted that the planned €320m project, which the DAA hopes to have completed by 2020, has never been subject to a rigorous economic business case process.

IAG, which is headed by chief executive Willie Walsh has welcomed the runway plans, but nevertheless urged the Commission for Aviation Regulation (CAR) to initiate the study.

Its plea came as the CAR considers an interim review of a 2014 determination on passenger charges that can be levied at Dublin Airport in order to help fund the runway development.

And in an update published yesterday that determined the scope of the charges review, the CAR said that it will not allow Ryanair, Aer Lingus, or other runway users and stakeholders, to participate in the runway tendering process.

The airlines had also called for the planned length of the new runway - at 3.1km - to be reviewed.

But the CAR has insisted yesterday that there are "no exceptional circumstances" that would merit such a review.

Both IAG and Ryanair have told the CAR that a 3.1km runway is not required, although the Irish Aviation Authority favours it for "future-proofing" the airport. While the CAR's 2014 pricing determination stated that the maximum charge per passenger that could be levied in 2016 by the DAA at Dublin Airport was €9.87, it included a trigger to remunerate the DAA for the capital costs of the new runway.

That trigger added 59 cent to the price cap once 25 million passengers were served by Dublin Airport in a 12-month period.

Dublin Airport handled just over 25 million passengers last year, and is on track to handle over 27 million this year.

Last December, the CAR said there were substantial grounds for conducting an interim review of the runway trigger, with a view to potentially "realigning remuneration to more closely match the expected timeline for delivery of the project".

The CAR has also eliminated capacity assessments of the runway, and a 50-50 risk-sharing mechanism that would see airlines cough up part of any overspend on the runway project, from its review.

"Given that the final cost estimate of the project will not be known for some time, the revised estimate of €320m remains uncertain," the CAR said yesterday.

"Therefore we do not believe the level of information is available to assess if substantial grounds exist to examine the cost allowance, and in particular if there are circumstances outside of the control of Dublin Airport that affected cost," it added.

Irish Independent

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