Aer Rianta loses court battle over charges

The High Court has decided that the Commissioner for Aviation Regulation has power to specify the maximum levels of airport charges that may be applied over a five-year period at Dublin, Cork and Shannon airport.

The court yesterday rejected Aer Rianta's claims that the Commissioner did not have such powers. It will now proceed to determine, as part of a continuing challenge by Aer Rianta to the fixing of such charges, whether the Commissioner acted in accordance with fair procedures.

In a 115-page judgment, Mr Justice O'Sullivan said the Commissioner, in carrying out his duty of regulating airport charges, had a "positive duty to aim to facilitate the development of cost-effective airports". Mr Justice O'Sullivan was determining part of an action brought by Aer Rianta against the Commissioner. Two Irish airline companies, Aer Lingus and Ryanair, are notice parties. The case which began last November has been divided into three separate modules.

It was clearly within the contemplation of the Aviation Regulation Act 2001 that the Commissioner would consider the capital expenditure - past, present and future - of Aer Rianta in order to meet the overall objective imposed on him which was to "facilitate the development and operation of cost-effective airports which meet the requirements of the user".

The Commissioner had power to review Aer Rianta's operation including a review of its capital expenditure programme. The Commissioner had to have regard to the level of investment in an airport and was specifically equipped with power to reject any proposals in relation to capital expenditure programmes submitted to him by airport operators.

Two airport charges were specified by the Commissioner: a single overall charge for all passengers passing through the three airports and a separate "sub cap" for passengers passing through Dublin Airport alone which was appreciably lower than the overall charge for the three airports. These charges were €6.34 and €5.38 respectively.

Among the complaints made by Aer Rianta was that the Commissioner had disallowed an £73 million new terminal project for Cork and instead permitted only a £36 million extension.

Yesterday the judge gave his decision on the second module, in the case which related to the extent of the Commissioner's powers. The third module, which will now proceed, relates to whether those powers were exercised in accordance with fair procedures.

In relation to the second module, Aer Rianta claimed the Commissioner had no power to review its future capital expenditure programme including the five-year period affected by the Commissioner's award. It had argued the Commissioner was obliged to accept the company's projects and costs and did not have power to disallow capital expenditure already spent, subject to contract or approved by the Government.

Rejecting those claims, the judge said the Commissioner was authorised, if not obliged, to carry out an item-by-item analysis and review of Aer Rianta capital expenditure programme with power to allow or reduce that programme. This did not mean that he was carrying out management and development functions.

It might well mean that Aer Rianta's board of directors would feel itself constrained by the Commissioner's methodology and the information they had in relation to his approach to the expenditure programme but this did not mean it was his decision rather than theirs to carry it out or not. They were not reduced to the function of a rubber stamp.