A confidential report prepared for the Dublin Airport Authority suggests building a terminal in the north apron area may involve an €80 million charge needed to pay for knocking down facilities owned by aircraft maintenance firm SR Technics.
The report, seen by The Irish Times, also says the Dublin Airport Authority (DAA) will need to consider carefully its level of debt if it is awarded the contract to build and operate the facility. It also draws attention to the aviation regulator, Bill Prasifka, who might not allow the airport to fully recoup its investment.
It is understood the DAA has almost €400 million in debt on its balance sheet. If it took on the added debt of a major new terminal, many observers believe it would have to raise landing charges significantly.
However, some other sources believe whoever builds the new terminal will have to operate a high charges regime.
The Cabinet failed to make a decision on a new terminal at a meeting last week, but debate is continuing and the issue is likely to be on the agenda at future meetings. The Government appears to have decided that a decision on a terminal will be made with a decision on Aer Lingus.
Government sources have indicated previously that the north apron site is currently the one with the most support, although no official decision has been made. This has angered the low-cost carrier Ryanair.
The report estimates that the northern apron site would come with ancillary or "facilitation"costs of €128 million. This is in addition to the actual cost of building the facility.
The largest part of the €128 million is accounted for by the cost of knocking down hangars owned by SR Technics, formerly FLS Aerospace. The report refers specifically to the costs involved in relocating this company elsewhere in the airport.
The remainder of the €128 million would be made up of land acquisition (€10 million); external roads (€5 million); new services infrastructure (€3 million); aircraft parking stands (€15 million); and an aircraft taxiway network (€15 million).
The report, entitled Options for a Second Terminal, went before the board of the authority in November. It is understood it has also been discussed in subsequent meetings.
The report looks at several sites around the airport and considers their advantages and disadvantages. It was prepared by senior executives at the DAA.
While it points to several disadvantages of a site to the west of the airport - believed to be owned by the McEvaddy brothers - it also puts the ancillary costs associated with this option at €120 million, somewhat lower than the northern area site. It does not refer to the actual cost of building a facility in the western area.
The DAA declined to say whether the figures included in the report had been revised in recent weeks. Asked last night about the contents of the document, a spokesman for the DAA said: "This was a very preliminary discussion document, outlining in broad terms a view at that time as to some possible ancillary costs associated with a number of sites on which a second terminal might be built."
Towards the end of the report, the DAA outlines four potential ownership models. The first would involve the DAA building and operating the facility. However, it claims the potential issues arising in this example are gearing and a "difficulty" with the regulator. It says this option would maintain DAA control at the airport.
The second option it highlights is the DAA building the facility, but asking a third party to operate it on a day-to-day basis. Once more, it says gearing would be an issue, and asking a third party would dilute its return on the project. It suggests this option might reduce difficulty with the regulator, Mr Prasifka.
The third option mentioned is a third party building and operating the facility, but DAA buying it out after 25 to 50 years. This would reduce the pressure on the authority's balance sheet.
The final option explored briefly is a third party building and operating the facility. While this would leave the authority's balance sheet in a strong position, it would mean the DAA missing out on a "potential market opportunity".
