Dilger wants changes to way air passenger charges set by regulator

DUBLIN AIRPORT Authority chairman David Dilger yesterday warned the airport manager would not be able to invest in big-ticket infrastructure projects at Irish airports unless there were major changes to the way passenger charges are determined by the aviation regulator.

“Terminal 2 is only going to be remunerated by CAR when it’s pretty well full of passengers,” Mr Dilger said.

“It doesn’t make any sense. If you keep doing that, no risk investor will invest in a project like that because the post office is a way better bet. This thing has to change and it will change, because if it doesn’t, airport infrastructure in Ireland will be driven into the ground.”

The DAA has spent more than €600 million building Terminal 2 and is spending €1.2 billion revamping Dublin airport.

Its net debt has soared over the past year as a result and will stand at more than €800 million by the end of 2010.

“It’s not acceptable to only remunerate a project when the capacity is full. The result that’s required is that a really efficient operator can earn a reasonable return having regard to the risks that the airport operator runs.”

Mr Dilger said the DAA’s cost of capital is currently running at about 7 per cent. The DAA will increase its airport passenger charge by €2.40 in May, having been granted an increase last year by the regulator for the period to 2015. The DAA had sought a bigger increase to meet the costs of its growing debt but the increase was opposed by Aer Lingus and Ryanair.

In his chairman’s statement in the DAA’s 2009 annual report, published yesterday, Mr Dilger said the “current regulatory system places an over-reliance on the views of airlines”.

Chief executive Declan Collier said the average passenger charge over this period will be €9.80, making Dublin one of the cheaper airports in Europe.

The DAA was entitled to hike the passenger charge on January 1st but chose to wait until May. “We took a decision to give some mitigation to the airlines during a period [winter] when they told us they would have most difficulty in filling their aircraft,” Mr Collier said.

The DAA said yesterday that test flights will begin in October for Terminal 2, which is expected to open in November.

Mr Collier said about 40 per cent of Dublin airport’s passengers would use T2 when it is fully open. Aer Lingus will be the anchor tenant and its 28 check-in desks are being fitted out.

Mr Collier rejected criticism of the cost. “In 70 years’ time, T2 will still be used by passengers,” he said.

“It’s by no means a Taj Mahal.”