RYANAIR PAID €3.5 million last month to the Dublin Airport Authority to settle a legal action relating to the breach of a five-year contract with Shannon airport on passenger charges, The Irish Timeshas learned.
It is understood that the airport authority had sought about €5 million in damages from Ryanair, but accepted the lower amount in an out of court settlement.
Ryanair has also agreed to pay the airport authority’s legal costs, which are thought to amount to several hundred thousand euro.
At a hearing in the Commercial Court last Tuesday, Justice Mary Finlay Geoghegan struck out the case and an order was made on consent for costs against Ryanair.
The action related to a five-year discount deal on passenger charges between Ryanair and Shannon that was agreed in November 2004.
The deal ran from May 2005 until April 2010.
It involved Ryanair being offered a substantial discount on airport charges – it paid between €1 and €2 per person – in return for carrying an agreed number of passengers.
Shannon’s standard charge at the time was €4 per departing passenger.
Ryanair agreed to increase the number of passengers it carried each year of the deal up to a target of two million by April 2010.
Ryanair based a number of aircraft at Shannon and met its targets for the first three years.
But it failed to hits its target in year four and announced in February 2009 that it was scaling back its operations at Shannon.
Under the terms of the agreement with Shannon, Ryanair was required to pay compensation to the airport manager if it did not meet its targets.
This involved Ryanair paying the full airport charge on any shortfall in passengers as per the deal.
A force majeur clause was included in the contract and Ryanair sought to invoke this by claiming that the introduction of a €10 air travel tax by the Government in March 2009 made it impossible for it to reach the agreed targets and rendered the deal null and void.
The airport authority, which has responsibility for Shannon Airport, rejected this claim and initiated legal proceedings with Ryanair to recover the sum owed under the terms of the contract.
The airport authority also took action in relation to the late payment by Ryanair of fees due in relation to its activities at Dublin, Cork and Shannon airports.
This was settled in January, too, with Ryanair paying compensation to the airport authority.
When contacted a spokesman for the airport authority said: “The case had been settled and the company is satisfied with the outcome.”
He declined to comment on the details of the case or the settlement. Ryanair declined to comment on the case yesterday.
Shannon’s deal with Ryanair was announced shortly after the airport was given greater autonomy from the former Aer Rianta, a predecessor of the airport authority, by the Government.
Under a plan devised by former minister for transport Séamus Brennan, Shannon and Cork airports were to have been given full autonomy from the airport authority.
However, this move was shelved by former minister for transport Noel Dempsey some time ago in light of the economic crash and a sharp reduction in visitor numbers to Ireland.
Ryanair operates flights to just 10 destinations from Shannon airport.