Regulator sees no reason for airport charges to rise

There is no reason why airport charges should have to rise because of the break-up of Aer Rianta, a report commissioned by the aviation regulator has suggested.

The break-up of the company which begins today should not necessarily impact negatively on passengers, says the report produced by London-based consultants Econ.

The report done for aviation regulator, Mr Bill Prasifka, is a study of how the break-up is likely to impact on the regulation of airport charges in the Republic. It concludes that the break-up or "de-merger" does not of itself make a change in airport charges necessary.

"This is because economic efficiency requires that regulated charges are set with reference to underlying costs, including a reasonable return on capital employed by the regulated firm," says the report.

"Restructuring of the former Aer Rianta business along the lines set out in the 2004 State Airports Act should not be expected to automatically increase costs. On the contrary, we note that the Government expects the de-merger to generate benefits in terms of improved efficiencies, higher utilisation and lower costs," states the report.

It acknowledges that costs may rise for the new Dublin Airport authority, but even this does not necessarily justify higher charges being imposed on users of Dublin Airport. "This is because the cost increase would suggest that the decision to split up the former Aer Rianta business was itself inefficient and such inefficiency should not be rewarded by the regulator," it states. It says the future value of the Dublin Airport authority is in some way irrelevant to airport charges.

It points out that if charges rocketed, the ultimate beneficiary would be the Government as the owner of the Dublin Airport authority. "This would be incompatible with the objective of economic efficiency and a regulatory regime that facilitates the development and operation of cost-effective airports meeting the requirement of users".