Passenger limits threaten to hamstring Dublin Airport and damage economy

By the end of 2023, Dublin Airport should have reclaimed most – if not all – of the passengers lost during two years of Government Covid curbs, restoring traffic close to 32 million people. With no sign of the revived Irish appetite for overseas holidays abating, and the continued, but slower, rebound in business travel, Ireland’s biggest gateway should be set for another period of growth from 2024.

According to current estimates, passenger numbers at Dublin should approach 40 million by the decade’s end, potentially pushing on to 46.6 million by 2040 and 55 million by 2055, although the immediate expansion plans of the State company DAA only run to 2030.

There is one problem though: An Bord Pleanála, the planning appeals board, has limited Dublin Airport to 32 million passengers a year. Planners imposed the “cap”, as it is now dubbed, in 2007 when they first granted planning permission for a new north runway that was finally opened last year.

Once that started functioning several conditions the planners had imposed on Dublin Airport when it granted permission for the new airstrip kicked in. Effectively even as they allowed the DAA to build infrastructure to meet growth in demand at the airport, planners imposed terms that limited that growth.

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In practical terms this means that the airport’s scope for growth from this point on is severely limited. In fact it’s almost non-existent outside increasing the number of passengers who transfer between flights without ever leaving the airport as the limit does not apply to them.

And even that could be under threat as a DAA submission notes that airlines attempting to work within the planner’s limits could focus on Dublin only as an endpoint, shifting transfer traffic to other airports. That in turn would affect the viability of some transatlantic services, with obvious knock-ons for tourism and investment.

Neither DAA nor its key airline customers, the Irish carriers Aer Lingus and Ryanair, are remotely happy with the cap. Lynne Embleton, Aer Lingus chief executive, said the limit amounted to the Republic shooting itself in the economic foot.

Last summer she hinted the airline could end up expanding at its Manchester base, opened in 2021 while the State’s pandemic response continued to restrict travel here, rather than at Dublin. That said, Aer Lingus has announced three potentially popular new routes from the capital to the Mediterranean next summer.

Michael O’Leary, Ryanair’s chief executive, declared recently that DAA should just ignore what he called the entirely arbitrary limit. What, he asked, was local planning authority, Fingal County Council, going to do? “Stop the planes flying? It’s nonsense and rubbish.”

He called it another example of mismanagement by Eamon Ryan, the Minister for Transport. In response Fingal told the Business Post, which reported O’Leary’s comments, that the planning board had imposed the cap, not it, but the council would “act accordingly” if it received any complaints.

O’Leary also questioned why DAA did not apply to have the cap lifted five years ago. The State airports company only applied recently to Fingal County Council to lift the passenger limit to 40 million, part of an overall submission seeking leave to build new infrastructure that will allow Dublin Airport cope with the 40 million travellers it expects by 2030.

The cap imposed by a State agency also runs counter to national aviation policy, which has broad political support. Just days after O’Leary’s comments, Jack Chambers, Minister of State for Transport, confirmed this to the Dáil, adding that the Government backed development at the airport which balanced national interests with locals’ rights.

The reality is that DAA faces a two-year wait until Fingal County Council decides on its planning permission application. During that time it has pledged to comply with the cap so, as the situation stands the company cannot grow its business at the State’s biggest airport any further.

That presents significant short-term challenges but the key question for the airport operator is what happens if approval is not forthcoming ultimately and what ramifications would that have for the State as a whole?

The company’s submission states bluntly that the cap at Dublin Airport “could ultimately result in higher air fares to the detriment of air passengers and other sectors of the economy that make use of or rely on air services”, including tourism and business travel.

The company cites studies of European airports by the likes of Frontier Economics, accountants PwC and SEO Economic Research, all of which found that fares were higher at airports with passenger limits – by as much as 18 per cent in some cases.

Less choice is another obvious impact. DAA acknowledges that airlines can adjust capacity to work within the limit but the bottom line will force them to focus on higher value routes, the more expensive destinations if you are a passenger. Inevitably they will have less scope to add new services.

“Connectivity will be largely frozen,” DAA says bluntly. It adds that it will not be possible for airlines to add new services to new destinations “from which Ireland can attract tourists and develop trade and investment”.

Air links are vital to luring foreign investment here, which is in turn critical to creating jobs, the DAA notes. So along with paying more to travel, fewer of us than would otherwise be the case will have jobs in the first place. The State company calculates that if the limit remains by 2030 the Republic will have forgone 17,800 jobs, worth an extra €1.5 billion. If the limit were to remain until 2055 those figures would increase to 53,000 and €4.4 billion.

Those sums are based on predictions that Dublin would otherwise handle 39.6 million people in 2030 and 55 million in 2055. The airport itself will suffer alongside the rest of the State, with less employment and business. That will also have a knock-on effect on the gateway’s own demand for support services.

If the cap results in higher fares, less choice, falling investment and fewer jobs, what happens if it is lifted? DAA predicts that unfettered, Dublin Airport will support 151,000 jobs in 2030 from 116,100 now, contributing €12.5 billion to the Republic’s economy from €9.6 billion currently. By 2055 those figures could increase to 191,600 jobs and €15.8 billion, it says.

Population growth alone will require Dublin Airport to grow beyond 32 million passengers a year over the next decade and a half, DAA chief executive Kenny Jacobs argues.

“The continued sustainable development of the airport to meet this growing demand will be crucial to facilitating the level of growth in tourism, trade, investment and jobs that’s recognised and required by Government policy,” he says. That is why the company wants the passenger limit lifted to 40 million a year, Mr Jacobs says.

The ball is now firmly in Fingal County Council’s court. Plenty of people will be watching to see how the local authority responds.