The DAA, which operates Dublin and Cork airports, availed of its interim results announcement to kick-start its campaign to increase the fees it charges airlines to use its airports. Looking past its interim pretax profit of €77.8 million, the group pointed towards “sustained cost pressures, from energy and regulatory compliance to construction and wage inflation” and thus the need to increase charges in order to maintain services and invest in facilities.
The airport’s two biggest customers, Ryanair and Aer Lingus, were quick out of the traps in response. Aer Lingus said the DAA had made “very significant profits in recent years despite repeatedly claiming that airport charges are too low”.
Ryanair was a little more trenchant, claiming the airport operator had “the same attitude to the truth as Donald Trump” before adding that “their claims about unsustainably low charges and/or charges being among the lowest in Europe are false”, claiming it is instead “already one of Europe’s most expensive”.
What gets lost in all the noise around airport charges is how much money the DAA extracts from passengers to effectively subsidise airlines. If your commercial revenues per passenger are at the upper end of the scale and your aeronautical revenues per passenger are at the lower end of the scale – as is the case with Dublin Airport – it’s pretty clear who is contributing to your profits and who isn’t.
Dublin Airport charges airlines between €12.70 and €3.25 per departing passenger depending on the time of year and whether the airline is using an air bridge or making its customers walk up and down a set of stairs from the tarmac. Ryanair adopts the latter model while Aer Lingus uses a mixture.
According to the Irish Aviation Authority – which sets these charges – Dublin Airport makes revenues of €22.64 per passenger, which is just above the midpoint for the airports that it tracks for comparison purposes.
The figure is split between aeronautical revenue (passenger charges and so on paid by airlines) and commercial revenues (such as parking and shopping, paid by you). Dublin Airport’s aeronautical revenues were €9.33 per passenger last year. This is less than the average of €13.44 for the airports tracked by the IAA.
However, Dublin Airport’s commercial revenue per passenger of €11.13 ranks towards the upper end of the airports tracked by the IAA (average of €8.64), according to the DAA. More of that later, but first there is the issue as to whether airlines are being overcharged.
Ryanair’s average airport and handling charge per passenger across its network was €8.41 in the year to March. This is almost a euro less than the average for Dublin. The IAA believes that Ryanair’s true cost per passenger is even lower.
This is certainly suggested by its fares. As of this week you can go on Ryanair’s website and find flights advertised for low double-digit prices. They are offering flights from Dublin to Liverpool for €14.99 and to Fuerteventura for €19.99.
If Ryanair’s airport and handling charges were €8.41 it would have to be losing money on those fares (although the situation improves after they hit passengers up for baggage charges and overpriced toasties).
Aer Lingus does not disclose its costs but told the IAA that Dublin’s average airport charge per passenger is “mid-range” compared to the other European airports that it operates to and from. Aer Lingus will fly you to Birmingham or Manchester for €26.60.
You can argue, based on the IAA figures, that there is room for some reduction in airport charges in Dublin although you are not necessarily comparing apples with apples. The cost of operating an airport is a function of its input costs such as energy and labour, which are higher here than elsewhere. You cannot blame the airlines for trying but you have to factor the DAA’s cost base into the equation.
It is harder to argue that a reduction is justified. We all blindly accept that everything at the airport – from car parking to sandwiches – is more expensive when in truth there really is no reason why it should be. In so far as most of us think about it, we assume there is some sort of extra cost involved.
But what we don’t realise is that those costs are in effect the DAA subsiding the likes of Ryanair and Aer Lingus and passing this on to you.
Unless the DAA wants to go bust, which we presume it doesn’t, then every cent that comes off the passenger charges paid by the airline has to be recouped from the tills in Dublin Airport.
The two airlines would be better off doing their negotiating in private lest the penny drop with the travelling public as to who is picking up the tab for lower airport charges. Likewise, if the DAA gets its increase it might want to think about passing some of it on to the travelling public.
