Dublin Airport is seeking a passenger charge increase to €14.58 in 2026 from €8.50 currently to support plans for €2.5 billion in investment to prepare the airport for the next decade.
State company DAA, the airport's owner, has responded to a review begun by the Commission for Aviation Regulation (CAR) of charges at the Republic's biggest gateway.
DAA wants the regulator to allow it increase the maximum per-passenger charge levied on airlines in stages to €14.58, a 71.5 per cent increase from €8.50 this year and €9 in 2023.
The company is seeking an increase in the charge to €12.85 next year instead of the €9 currently planned, and to €13.40 in 2024 and €13.69 in 2025, which amounts to an average maximum levy over the period of €13.68.
Damaged finances
Dalton Philips, DAA's outgoing chief executive, argues in the submission that Covid-19 has inflicted profound and lasting damage to the airport's finances, and completely changed the assumptions on which current charges are based.
“Despite implementing a vast programme of emergency mitigations, 66 million passengers, €900 million in revenue and over €500 million in earnings have been lost over the period 2020-2022,” he says.
Mr Philips adds that net debt had doubled to a record high of more than €1 billion from €575 million in December 2019.
While air travel is recovering rapidly, he cautions that it could plateau next year as pent-up demand subsides. He also maintains that it could be autumn before the industry can calculate how well business traffic is rebounding.
While Mr Philips agrees that the ideal is to provide affordable unconstrained services, he warns that a “high-quality airport experience” is unsustainable at ultra-low charges.
He calculates that Dublin Airport now needs to spend €2.5 billion to prepare it to handle an expected 40 million passengers a year by the end of the decade.
Investment
DAA estimated that investment at closer to €2 billion when it first announced its expansion plan in 2018, but national carbon-reduction targets require a further €400 million. And rising net debt will require the airport to generate more earnings to maintain its credit rating and keep borrowings within limits set out when charges were last set in 2019.
He warns that the commission must allow the airport to recover over the rest of the decade.
“The current levels of airport charges cannot sustain the tide of countervailing pressures,” says Mr Philips.
The CAR has reviewed Dublin Airport’s charges twice since the pandemic struck two years ago. This allowed for price caps of €9.94 per passenger in 2020 and €7.50 last year, which the regulator said was worth €108 million extra to Dublin Airport.
It began a third review in February, following which it will set new charges in June.
The commission acknowledged that it was reviewing the charges under very different circumstances to 2019, when Dublin handled a record 32.9 million passengers.
Regulators pledged to take several factors into account, including passenger numbers, operating costs, revenue, borrowing costs and financial viability. The commission’s review document also acknowledges that other big, regulated European airports are increasing their charges.
The CAR only regulates Dublin Airport’s charges as it has a dominant position in the Republic’s air travel market.
