AnalysisReform of the public transport sector was never going to be easy for the Minister for Transport, Mr Brennan. But the latest report on the thorny of issue of breaking up Aer Rianta may compound the Minister's difficulties.

The report was commissioned by a working group made up of Department of Transport and Aer Rianta officials and the company's trade unions. It was supposed to address many of the contentious issues involved in the break-up plan, but it could end up complicating the picture further.

Up to now, the Minister has been able to portray the various Aer Rianta unions as opponents of progress. This was based on the assumption that giving the constituent airports more commercial freedom would drive down the cost of air travel. But the confidential report from consultants PricewaterhouseCoopers (PwC) does not guarantee this will happen, especially at Dublin.

The report, which the Government has been reluctant to release, suggests that - at least in the initial years of the plan - airport charges at Dublin may have to increase. These charges are levied by Aer Rianta on airlines for using the various landing facilities at the airport.

They are calculated on a per-passenger basis and, at present, the aviation regulator, Mr William Prasifka, has imposed a cap of €5.29 per passenger on Aer Rianta at Dublin. Aer Rianta has been charging just below the cap - on average €5 per passenger.

These charges may have to rise at Dublin, suggests the PwC report, for two main reasons: to allow Dublin meet its heavy debt commitments; and to fund its growth plans.

This is because, under the current plans from Mr Brennan's Department, the large debt burden of Shannon and Cork would be transferred to Dublin airport. Reading the PwC report, one gets a sense that this debt issue could become the key sticking point. Recently, a Canadian aviation expert suggested a better way to deal with this problem would be for the Government to accept the debt as a once-off charge, but the Department has so far rejected this.

Another emerging problem is that Aer Rianta is not performing well financially.

Results to be released next week are expected to show a €16 million drop in after-tax profits. The reasons for this are higher interest payments and a weak performance at the company's overseas unit, Aer Rianta International.

The PwC report picks up on this theme in the section on Dublin airport: "Aer Rianta is facing a period of financial strain in 2004 and 2005, principally due to the already committed capital expenditure at Cork, proposals for Pier D at Dublin airport and high debt levels compared with the current level of aeronautical and commercial income."

The impact of this report on the Government's thinking is hard to judge. Recently, the Minister said he would be publishing legislation setting up the autonomous airport bodies shortly.

The unions remain implacably opposed , however, and higher air fares would not please the public or the main airlines.