Monday 23 September 2019

Watchdog calls in consultants to price DAA plan

Bill for outside experts keep rising at CAR as it mulls decision on airport charges, writes Fearghal O'Connor

Dublin Airport. Photo: PETER MUHLY/AFP/Getty Images
Dublin Airport. Photo: PETER MUHLY/AFP/Getty Images

The aviation regulator has appointed consultants Centrus to examine how a major capital programme to expand Dublin Airport can be financed if the regulator pushes ahead with its proposal to cut passenger charges.

The Commission for Aviation Regulation (CAR) has already spent at least €1.2m on six different economic consultancy firms over the past two years, largely as part of its determination on a new maximum level of airport charges for the next five years.

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In May the regulator proposed a €2 cut in the maximum charge that DAA can levy per passenger.

Airlines such as Ryanair and Aer Lingus have backed the cut.

But last month DAA chief executive Dalton Philips told the Sunday Independent that such a cut would curtail expansion at Dublin Airport, lead to hundreds of job losses and means the company will be unable to pay an annual dividend to the Government.

The regulator has since received 37 responses to its draft determination.

"We are currently considering the points raised in these submissions before making our final decision," it said in response to queries from the Sunday Independent.

"Following requests from a number of stakeholders (including Dublin Airport) CAR appointed Centrus Financial Advisors to provide independent advice on the financeability of Dublin Airport's capital investment plan in the context of our decision on the maximum level of airport charges for the period 2020 to 2024. Their work will inform CAR in its deliberations."

A final decision on the price cap would be made this autumn, the regulator confirmed.

CAR said that its spending on consultancy had increased in the past two years and that "the key driver of this increase is the stage we are at in the five year regulatory cycle".

"CAR is now assessing a €2bn capital investment plan and revenues in the region of €2.5bn for the period 2020-2024. Hence the requirement for an increase in consultancy spend. This spend will fall post determination.

"Other drivers of consultancy spend are our assessments of slot capacity at Dublin Airport and our review of insolvency protection arrangements for consumers purchasing package holidays."

New legislation currently working its way through the Oireachtas could also mean that CAR will "no longer be mandated to have specific regard to the financial sustainability and viability of the DAA in making a regulatory determination", a Departmemt of Transport official outlined to an Oireachtas committee meeting in May.

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