DAA's parking charges fly ever higher

BUSINESS OPINION: THE NUMBER of people lining up to kick the Dublin Airport Authority is roughly about the length of the queue for a taxi at the airport on a busy Friday, writes John McManus. First in the queue is, as always, Michael O'Leary of Ryanair.

Much of the criticism is unfair, but the DAA does have a knack for shooting itself in the foot and and the decision to add another 2,900 parking spaces at Dublin has once again highlighted the extraordinarily high price of parking at the airport. Indeed, it raises a question as to what exactly the DAA's core business is: operating car parks, developing shopping malls or getting people on and off aircraft efficiently?

The DAA is extremely coy as to how its domestic revenues (€465,813 in 2006) are generated. Commercial revenues are broken out (€293,998 in 2006) but no information is given as to how they are generated or how they are divided across the three airports its operates.

But what can be gleaned from its website is that the DAA has some 2,200 short-term and 19,600 long-term car parking spaces at Dublin airport at the moment. Based on the current tariffs of €40 a day for short-term and €9.5 a day for long-term parking, the DAA could potentially earn some €100 million a year from its car parks.

Shannon airport boasts another 5,000 spaces, of which 4,150 are long-term spaces at €9.00 per day and the remainder at short-term spaces at €20 a day. They could potentially generate €20 million a year.

Cork airport has some 4,600 parking spaces. There is no breakdown between long and short-term, but the rates are €9 per day for long-term stays and €16 per day for short-term stays. Assuming the same sort of mix between long- and short-term parking as pertains at Dublin and Shannon, this suggest potential revenues of €17 million a year.

Putting all three airports together, you get a maximum potential parking revenue figure of €137 million.

Obviously all the spaces are not full all the time. But even if you assume that on average they are full only 60 per cent of the time, which seems conservative to anyone who has been through Dublin airport recently, then the DAA earns something in the region of €80 million a year from parking, or close on a third of its commercial revenues.

It's an important revenue stream, but clearly it's not the dominant one. It's dwarfed by the aeronautical revenues (ie the fees charged to passengers and airlines for using the airport facilities) which came to €171 million in 2005. But one suspects it is the most lucrative activity that the DAA engages in.

Based on the above figures, the DAA gets about €2,547 a year per parking space, which is way ahead of the average for the car parking business.

Q-Park, the Dutch parking giant, has some 525,098 parking spaces at 4,291 locations across Europe, including Ireland. Its revenues are in the region of €325 million a year, which works out at around€600 per space per year.

Closer to home, the big UK car parking company National Car Parks, which has 200,000 spaces, many of them at British airports, turned over £330 million from its parking business in the 18 months to December 29th, 2006.

This works out at around £1,089 per space per year or €1,432 per space per year. And it should be borne in mind that NCP does very well.

According to its 2006 accounts, it made a gross profit of almost £42 million from its parking operations in the 18 months to December 2006. This represents a gross margin of around 13 per cent.

This in turn suggest a gross profit for DAA on its parking activities in excess of €10 million. In fact, it's probably considerably in excess of that.

If you assume the same cost per parking space as NCP, of €1,345, then DAA is making a gross profit of €1,202 per space per year or €37 million.

Not bad when you consider group profits in 2006 were €17 million after the once-off gain from selling the Great Southern hotel chain is stripped out.

While these figures are illuminating, they are obviously highly speculative.

But whatever way you cut it, it's obvious that the DAA derives a significant amount of revenue through levying very hefty parking charges.

Arguably they have little choice. So successful has been Michael O'Leary and Ryanair's campaign to make passenger charges a national issue, the company is terrified to look for an increase and the regulators equally terrified to grant one.

As a result, the DAA is following the line of least resistance, and pushing up unregulated parking charges.

For the travelling public, it all amounts to the same thing: using the three main Irish exports is costly, whether it's via high airport taxes, high parking charges or even the high price of coffee sold by the retailers renting expensive space from the DAA.

The real question, and the one that is impossible to answer from the information put into the public domain by the DAA, is whether it should cost as much to run Dublin, Shannon and Cork airports as it does.