THE SHANNON Airport Authority (SAA) is expected to pursue Ryanair for financial compensation of more than €2 million for breaching the terms of a five-year sweetheart deal on airport passenger charges that is due to end next April.
This follows Ryanair’s announcement last week that it is reducing its number of aircraft at Shannon this winter from four to three with the loss of 50 jobs and could close the base altogether next year.
Ryanair said it expects to carry about 800,000 passengers at Shannon this year, down from 1.2 million in 2008 and well short of the 1.9 million target agreed with the SAA for the final year of the deal, which expires next April.
Ryanair chief executive Michael O’Leary last week blamed the Government’s “insane” €10 air travel tax for the decision to scale back services at Shannon.
In February, the airline announced a reduction in its services at Shannon for the summer period and said the Government air travel tax “renders the passenger target unachievable”.
Mr O’Leary added that the travel tax meant that its traffic target at Shannon was “rendered null and void” and said the airline would be in dispute with the SAA over any compensation payments.
This latest reduction in services leaves Ryanair open to a claim for an even bigger penalty fee, a move that the airline said it will resist.
Commenting in the wake of the latest cutbacks, a spokeswoman for Ryanair told The Irish Times: “The position hasn’t changed. There will be no compensation.”
It is understood that Ryanair’s deal with the SAA involves it paying between €1 and €2 per passenger in airport charges over the five years. Shannon’s standard airport charge is €4 per departing passenger, according to its website.
Ryanair was required to deliver about 1.9 million passengers in the year to the end of April 2010 or pay the full charge on any shortfall.
With Ryanair set to fall shy of its agreed target by at least one million passengers, the SAA is expected to pursue the airline for compensation of more than €2 million. A court action is a possibility.
The deal with the SAA is up for renewal and Mr O’Leary said last week that Ryanair had “put a proposal to them ”. “The Shannon base could well be closed; if there’s any increase in the cost base it will disappear,” Mr O’Leary said last Tuesday.
He said the base was loss making. “I have no desire to sustain that in the west of Ireland when Ryanair gets no thanks from the Government or the tourist bodies there for our Shannon services.”
The SAA declined to comment.
Shannon handled 3.2 million passengers in 2008 but this is expected to decline steeply this year due to the collapse in consumer demand and a reduction in services by several airlines.
Earlier this month, Delta pulled its flights to JFK airport in New York for the winter while Aer Lingus cut its service to Chicago.
