Saturday 18 November 2017

Passenger charges at Dublin Airport will rise to fund planned €320m runway development

Passengers arriving at Dublin airport
Passengers arriving at Dublin airport
John Mulligan

John Mulligan

Passenger charges at Dublin Airport will rise in three stages over the next number of years under a plan to fund the planned €320m development of a new runway.

The Commission for Aviation Regulation (CAR), which regulates passenger charges at Dublin Airport, said it intends to raise the permissible fee by an additional 59 cent per passenger, but will phase in the increase as runway construction progresses.

The current maximum charge per passenger is €9.87.

The intended price increase is based on an assessment made in 2014 that the cost of the runway will be €247m. The likely overall cost of the runway project, however, which includes associated taxiways and other elements, is reckoned now by the Dublin Airport Authority to be €320m.

The fee increases the CAR plans are also enough to enable the DAA to spend €4.3m on buying houses that are beside where the new runway will be built.

The CAR’s draft decision published today would allow Dublin Airport to initiate a 6 cent per passenger charge increase in 2018 – the year after construction properly begins. The DAA, which operates Dublin Airport, commenced initial preparatory works on the project last December.

The CAR said the DAA is expected to spend €24.7m on the runway project this year.

The bulk of the additional passenger charge increase – 50 cent – can’t be implemented by the DAA until 2020, once the runway becomes operational. The remaining 3 cent charge applicable in 2023 when house buyouts have been completed.

But the CAR has also pointed out that Dublin Airport “would have significant funds from operations to put towards financing the North Runway should it choose”.

The CAR added: “In addition, current market conditions would suggest it could inexpensively raise debt on the bond markets.”

The CAR has now opened its draft decision up to public consultation.

Airlines including Ryanair are opposed to paying more for the runway. Ryanair chief executive Michael O’Leary has criticised the overall cost of the project, and claimed that the new runway length – at 3.1km – is about 500 metres too long than what is required at Dublin Airport.

But the CAR said that it has three statutory objectives in making its decision on the planned increases.

It said the planned increase will “facilitate the efficient and economic development of Dublin Airport” and the delivery of the runway in a “timely manner”.

It also said that, for the most part, runway users will only be paying for the project when it’s operational.

The CAR also said that the draft decision triggers “enable Dublin Airport to have financial metrics sufficient to allow an investment grade rating (Standard & Poor’s BBB or greater)”.

It added: “This was stress tested under a conservative growth scenario and two negative scenarios, stagnating and declining passenger traffic.”.

Dublin Airport handled slightly fewer than 28 million passengers last year, compared to the 25 million it handled in 2015.

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