Dublin Airport is halting work on a €2 billion expansion following regulators’ proposals to cut the gateway’s passenger charges, hitting projects needed to accommodate record numbers of air travellers.
The Commission for Aviation Regulation (CAR), which determines what Dublin Airport charges airlines for the passengers they fly from there, recently proposed cutting the levy to €7.50 a head for 2020-2024 from €9.30 currently.
Dalton Philips, chief executive of the airport's owner, DAA, has told senior staff that the State company's board is "standing down" work on a planned €2 billion expansion timed for 2020-2024, blaming the uncertainty created by the CAR.
Mr Philips points out in a memo to senior colleagues that DAA’s investment plans depend on charges staying close to €9.65 a head, its 2018 cap, for the next five years.
He states that the CAR’s proposal to cut the levy by 22 per cent means “it would not be prudent to progress the capital investment plan” at Dublin Airport, where airlines warn bottlenecks are already causing delays. A record 30 million people travelled through there last year.
The investment freeze has already hit work on the south apron, where DAA is spending €500 million, the lion’s share of it on extra aircraft stands close to terminal two to accommodate Aer Lingus’s growing transatlantic business.
DAA agreed this project with Aer Lingus, which is growing both its North American services and the number of passengers who use Dublin as a hub to transfer between European and transatlantic flights.
Aer Lingus and DAA want to increase Dublin’s transfer business. Mr Philips said last year that developing the airport as a hub would boost the number of routes it offered, which was also Government policy.
The DAA board decision comes ahead of next month’s deadline for submissions from interested parties on the CAR proposal. Airlines and the airport owner are likely to make their views known.
Mr Philips states that as the CAR wanted to cut the charge “so dramatically” the board had to stall all investment barring a new baggage screening system required by regulations.
However, it will not hit Dublin’s new runway, which is part of an earlier investment programme and on which work is already under way.
Under the stalled plan, DAA also intended to spend €400 million adding piers and aircraft stands at northern side of the airport that would have been accessed via terminal one.
DAA says airlines supported the investment plan, on condition that passenger charges stayed flat, as the money would be spent on facilities they specifically sought.
Neither the CAR nor Aer Lingus would comment yesterday.