Incentives to airlines will include €3 tax waiver

 

THE DUBLIN Airport Authority has put together a generous package of incentives for airlines in an attempt to increase traffic at Dublin, Cork and Shannon over the next three years.

The route incentive schemes will form part of the Government’s jobs initiative strategy, which will be announced today.

They are aimed at stimulating growth in the number of tourists visiting the country. It is understood that Minister for Transport Leo Varadkar will indicate his willingness to scrap the €3 air travel tax if airlines – in particular Aer Lingus and Ryanair – can deliver growth between now and 2013.

Under the terms of the scheme, Dublin, Cork and Shannon airports will waive passenger charges when the number of travellers through the airports exceeds the levels recorded in 2010.

In Dublin’s case, this figure will be 18.431 million. In Cork it will be 2.425 million while in Shannon it will be 1.755 million. When traffic exceeds these levels, airlines will be rebated retrospectively, based on their contribution to the overall growth at the airport.

The rebated money for this year will be paid to the airlines in 2012.

Setting the figure at 2010 levels is significant. The volcanic ash crisis in the first half of the year had a once-off impact on passenger numbers through Irish airports that will not be repeated this year. This makes it highly possible that there will be growth at the three airports this year in spite of the recession.

It is not clear how much in revenue the authority will forgo.

The airport has committed to waiving the passenger charge of €11.50 in Dublin. So, if the airlines were to generate an additional 500,000 departing passengers this year in Dublin, the airport authority would be waiving €5.75 million in revenue.

The incentives at Cork and Shannon are even more attractive.

At Cork and Shannon, airlines will receive a rebate of €7.15 per person in passenger charges and €5.50 a head in security charges.

This move follows weeks of negotiations between the authority and the Department of Transport, which, in turn, has held talks with several airlines.

It is understood that Mr Varadkar has received positive signals from the airlines in relation to the new schemes.

Aer Lingus last week said it would seek to renegotiate its airport charges here in a bid to cut costs, while Ryanair has consistently stated it would not increase its Irish traffic until airport charges were cut and the travel tax was axed.