Published on July 24th, 2022 | by Alan Dwyer0
CAR Proposes Price Cap for Dublin Airport
The Commission for Aviation Regulation (CAR) has published its Draft Decision on the maximum level of Airport Charges at Dublin Airport for 2023 to 2026. CAR is responsible for setting airport charges in the best interest of airport users (airlines and passengers), balancing efficiency with the delivery of high quality services and infrastructure. This is the third interim review by the CAR of the 2019 Determination and is in response to the COVID-19 pandemic, which has had a devastating impact on the aviation industry. CAR is proposing to amend the price caps for 2023 and 2024 and to extend the period of the determination by two years, proposing new price caps for 2025 and 2026. A Final Decision will be made later this year following consultation with interested parties, with publication before the end of 2022. The two year extension is contingent on the enactment of the Air Navigation and Transport Bill, 2020 (ANTB). The CAR is proposing an average base price cap of €8.52 per passenger for the period, starting at €8.68 in 2023 and with price caps of €8.60, €8.29 and €8.48 in 2024, 2025 and 2026 respectively. This compares to the €8.24 price cap in 2022. If Dublin Airport delivers its capital investment programme as planned, the price will increase further, up to €9.81 per passenger by 2026. The CAR estimates that the proposed price cap will allow Dublin Airport to collect €1.2bn from Airport Charges over the 4 years, and it will collect a further €1.15bn from commercial revenues. The CAR has proposed that the Price Cap serves the best interest of passengers and airlines and will accomplish the following:
• Enable and incentivise the delivery of high-quality airport services to passengers
• Allow Dublin Airport to invest in significant increases in capacity, with a total capital investment allowance of €2.9bn (of which €1.8bn is expected to be spent by 2026).
• Allow Dublin Airport to invest in sustainability projects, to enable it to meet its climate targets
• Ensure Dublin Airport charges an efficient price, which will assist in the aviation industry’s recovery from the COVID-19 pandemic and bring associated benefits to the Irish economy.
• Encourage competition between airlines and increase overall connectivity, leading to value and choice for passengers
Commenting as the proposal was published the Deputy Commissioner, David Hodnett said, “Our proposed price will enable Dublin Airport to deliver a high-quality service for passengers. Like many other airports and aviation stakeholders, the faster than expected recovery in traffic has posed a significant operational challenge to Dublin Airport. This review covers the period 2023-2026 and we expect the service level to be at pre-pandemic levels throughout, this is reflected in our proposed service quality targets. We propose to allow sufficient levels of operating costs to achieve the high quality service levels we have specified, with associated rebates and bonuses to incentivise delivery. The proposal reflects confidence in the rebound in aviation traffic levels and the return to growth. We expect passenger numbers at Dublin Airport to exceed 2019 levels by early 2025, and therefore it is timely for Dublin Airport to invest significantly in key pieces of national infrastructure. We have made capital investment allowances of €2.9bn, which, when completed by Dublin Airport, will provide capacity to handle 40m passengers per year. We also propose making allowances for sustainability investments of €360m to enable Dublin Airport to achieve its sustainability targets.”
In response, the daa has said it, “will take time to review CAR’s draft determination report in detail and will respond to the consultation process. CAR’s final decision will serve as one of a number of data points that daa will use to evaluate and determine its operational and investment plans for the years ahead.”