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Aer Lingus Prepared To Accept Higher Passengers Charges To Complete Dublin Airport Expansion

Published on Jul 31 2019 10:44 AM in General Industry tagged: Trending Posts / Aer Lingus / Dublin Airport / DAA

Aer Lingus Prepared To Accept Higher Passengers Charges To Complete Dublin Airport Expansion

Aer Lingus chief executive Seán Doyle has said that the airline would be prepared to accept higher passenger charges at Dublin Airport if such charges are required to complete the airport's €1.8 billion expansion plan.

Aer Lingus backs proposals by the body that determines Dublin Airport’s passenger charges, the Commission for Aviation Regulation (CAR), to decrease the levy by 22% to €7.50 per head between 2020 and 2024.

Dublin Airport owner the DAA has claimed that this reduction would threaten its plans to construct new piers, aircraft stands and boardings gates over the next five years because the organisation would not be able to afford the necessary €1.8 billion for the project if the passenger levy is lowered to €7.50 per head.

Essential To Developing Dublin Airport As A Hub

According to The Irish Times, Doyle said that Aer Lingus believes that the DAA's plan to expand facilities at Dublin Airport is essential to developing the airport as a hub, and that the airline could agree to increased passenger charges in the later years of the 2020-2024 period "if there are financial challenges".

Doyle added that this would need to be confirmed independently and the CAR could incorporate this into the rules that govern Dublin Airport's charges when the regulator's final decision is made in October.

A- Stable

The DAA stated that if the charge is reduced to €7.50, it will have to cut its budget for the expansion works at the airport by €500 million to €1 billion because such a decrease would limit the organisation's borrowing power.

However, Doyle highlighted the fact that Standard & Poors, a multinational agency that assesses businesses' abilities to repay their debts, labelled the DAA as being A- stable, meaning that the risk of defaulting is low, which should allow the DAA to borrow the necessary funds.

Standard & Poors' Analysis

Standard & Poors' analysis has stated that the proposed tariff change would harm the DAA's credit metrics.

Independent Test

Aer Lingus chief corporate affairs officer Dónal Moriarty said that the airline would agree to an independent test of the DAA's ability to raise the required money.

"Fully In Line"

The Irish Times quotes a DAA spokesperson as saying, "The capital expenditure plan of almost €2 billion, which is fully in line with government policy to expand the airport and further develop it as a hub, was supported by almost all of Dublin Airport’s airline partners following a detailed consultation process."

The spokesperson added that decreasing the proposed expansion budget by between €500 million and €1 billion would be "contrary to the interests of passengers and airlines".

Additional Dubai Service

In other news related to the DAA's Dublin Airport expansion plan, Emirates has said that it might consider launching a third daily service from Dublin Airport to Dubai if the DAA's plan is completed.

The gulf airline anticipates that it will have carried 2.5 million million people on its twice-daily Dublin-Dubai route by December of this year.

The Irish Times quotes Emirates country manager Enda Corneille as saying the "logical next step for us would be to add a third flight, but that would depend on a lot of things".

Corneille added that if the DAA completes its plan to construct new piers, aircraft stands and boardings gates, Emirates could be prompted to consider launching a third daily service on its Dublin-Dubai route.

© 2019 Hospitality Ireland – your source for the latest industry news. Article by Dave Simpson. Click subscribe to sign up for the Hospitality Ireland print edition.

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