Increased charges will damage us -- Aer Lingus
Aer Lingus chief executive Christoph Mueller has warned Transport Minister Noel Dempsey that increasing passenger charges at Dublin Airport would force the airline to find an additional €25m in annual savings.
Mr Mueller said the airline would have to absorb an up to 41pc rise in passenger charges from this year because it would not be possible in the "current and expected demand environment" to pass the increases on to consumers. That would force the airline to up its annual savings target from €97m to €122m.
The Aer Lingus chief made the comments in a letter to Mr Dempsey last November after the minister effectively ordered Aviation Regulator Cathal Guiomard to push through substantial rises in passenger charges at Dublin Airport to ensure that the Dublin Airport Authority (DAA) remained a financially secure operation.
The letter was released to the Irish Independent under theFreedom of Information Act.
In it, Mr Mueller said a 41pc rise in passenger charges at Dublin Airport would raise Aer Lingus's annual charges at the facility from about €62m to €87m.
"In the context of our cost reduction plan, the effect of your direction will be for the savings from staff taking paycuts or even being made redundant, having to be handed over to the DAA just to cover increased airport charges.
"This cannot have been your intention, however, it will be one of the consequences," Mr Mueller told Mr Dempsey.
"At a time when traffic is falling and the industry is seeing a structural change in what consumers are prepared to pay, we find it bizarre that you should, in effect, direct the DAA to increase charges further," added Mr Mueller.
The DAA subsequently said the charge increase wasn't big enough.
The Aer Lingus chief executive has been trying to finalise staff layoffs, wage cuts and changed work practices as part of the €97m 'Project Greenfield' plan.
Although all staff had eventually signed up for the cuts, cabin crew last week voted for industrial action in light of changes being made to their rosters.
After the minister's direction last year, the Commission for Aviation Regulation announced just before Christmas the new tranche of passenger charges that would apply at Dublin up to 2014.
"I must take account of the long-term development of the Irish aviation market and the significant role that adequate terminal and runway facilities at Dublin Airport will play in ensuring connectivity to key business and tourism markets," wrote Mr Dempsey. However, Ryanair chief executive Michael O'Leary accused Mr Dempsey in a letter of being more concerned about appeasing the DAA's bankers than reversing a sharp fall in airline passenger traffic.