War and economic uncertainty are hitting growth at Dublin Airport, with its operator DAA warning regulators not to cut passenger charges at the country’s biggest gateway.
The Irish Aviation Authority (IAA) has proposed cutting charges levied by Dublin Airport on airlines to €8.58 per passenger next year, from €10.39 currently, despite a request from State company DAA to be allowed to increase charges to fund expanded facilities.
Airlines have cut flights at Dublin Airport in response to surging fuel prices sparked by the US-Iran conflict, an escalation of the Ukraine war and economic uncertainty, DAA told the aviation authority in a formal response to the proposed cut in charges.
Carriers are reducing capacity at Dublin “on a rolling basis” in a trend likely to persist until next summer, DAA warned.
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Aer Lingus recently announced plans to drop or reduce flights on some routes in a cost-cutting plan.
Earlier this year, Ryanair said it had cut its summer schedule by 10 per cent in response to an increase in Dublin Airport’s charges.
Meanwhile, DAA noted that Air Baltic suspended its Dublin-Riga route after filing for bankruptcy protection in the US last month.
DAA wants to increase charges to a maximum of €13 a head up to 2031 to pay for a €5.6 billion expansion that will allow it handle 10 million more passengers a year.
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However, the IAA, which sets the airport’s charges, argued that as Dublin could grow to 44.5 million annual passengers from about 36 million, there will be more people to share the cost of the expansion, allowing DAA to reduce what it charges airlines for each individual.
In a draft setting proposed charges that will apply from 2027 to 2031, the regulator will allow Dublin to spend between €2.4 billion and €3.8 billion up to 2031 on its planned expansion.
At the same time, the IAA calculates that the airport will collect between €1.6 billion and €2 billion from airlines in that period and earn €2.6 billion in commercial turnover.
DAA argued that the authority did not take into account that passenger numbers will be limited to 40 million for the next few years, and ignored other risks to growth.
Focusing solely on cutting costs would result in a “lower-capacity” airport in the future, the State company warned.
“This is not in the interests of airport users or passengers which is IAA’s key statutory driver,” DAA said in its submission, which was published on Wednesday.
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Ryanair pledged to add 5.5 million seats to its Dublin Airport schedules between next year and 2032 if the IAA cuts the charges by 25 per cent instead of the proposed 15 per cent, and maintains them at that level.
Ray Kelliher, Ryanair’s director of airports and commercial finance, welcomed the proposed 15 per cent cut but argued that it simply unwinds previous “excessive increases”.
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Ryanair pledged to add two million seats next year if the IAA goes through with its original proposed cut in charges.
Aer Lingus said the IAA’s proposal was “reasonable and appropriately balanced”.
The IAA should ensure that Dublin Airport delivers its investment programme and meets quality and service standards at an efficient cost, said Steve Ronald, Aer Lingus director of schedules planning and alliances.
The IAA will publish a final decision setting Dublin Airport’s charges up to 2031 before the end of the year.
