Comment: Dublin Airport Authority's (DAA) planning application to build a second terminal at Dublin Airport, that will be fully operational in 36 months time and that will significantly enhance the passenger experience, represents a major step forward for all the airport's customers and for the Irish economy overall.
In our view, some significant misconceptions and inaccurate information has been aired about this development since it was announced.
First, there is the issue of the projected €395 million cost of the new terminal (T2) and the differential between that cost and the DAA's initial estimates for the proposed new facility, published in September 2005.
This is not a case of the development being "already over budget before planning permission is even lodged", as one particular airline executive and some other commentators have stated.
The plans announced last year followed the Government's decision, only four months previously, that the DAA should build the new terminal at Dublin Airport and a subsequent swift consultation period with airlines and other customers that was time-constrained by the requirements of the aviation regulator for an updated airport development plan from the DAA.
These plans, while detailed, were conceptual by their nature, and envisaged an initial 50,000sq m (538,196sq ft) terminal costing up to €190 million, with an additional 25,000sq m (269,097sq ft) to be added between 2010 and 2015.
In contrast, the planning application lodged by the DAA last week is for a specific 75,000sq m (807,293sq ft) building, whose detailed design and specifications have been fully developed and rigorously assessed.
The principal reason for the significant increase in the scale of the first phase of the terminal building and the other associated infrastructure now required, is the radically more aggressive growth plans of the principal airlines at Dublin Airport, as revealed to the DAA over the past 12 months.
Since the summer of 2005, for instance, Aer Lingus has appointed a new senior management team with a strong focus on the development of an extensive long-haul network financed by an IPO. Ryanair has overturned its previous policy of minimal expansion from Dublin and is rapidly expanding its based fleet and route network there.
Far from being "over budget" on an existing plan, last week's announcement represents a linked but very different plan and one that cost-effectively meets the requirements of all Dublin Airport's stakeholders.
Critically, the process by which the functional and design plans for T2 have been formulated and its detailed cost projections have been endorsed by the independent cost verification consultants appointed by the Government as being in line with best international practice.
It has also been suggested that the DAA does not yet have any clear idea as to how the new terminal, and indeed all the other infrastructural development needed at Dublin Airport, will be funded.
Again, nothing could be further from the case. Under the so-called "Single Till" mechanism that pertains in Ireland and in many other Western European jurisdictions, new infrastructure at regulated airports is financed by an appropriate combination of regulated airport charges, commercial revenues earned by the airport management company and borrowings on the part of the airport company.
There is no change to the clear message from the DAA, that in terms of the airport charge element of this equation, an average charge of at least €7.50 per passenger is required over the next four years to fund the new terminal and other directly-related infrastructure.
This charge will be passed directly to passengers and will not impact on the finances of airlines in any way. It will also leave the charge at Dublin Airport, significantly below the average of €11 per passenger, levied by other major airports throughout Europe. And remember, this small increase in the current average charge of €6 per passenger, combined with a significant increase in the DAA's borrowing levels, will fund a development that meets the urgent demands of passengers, that is supported by the vast majority of airlines operating at Dublin Airport and that has been affirmed by independent cost-verification consultants.
It has also been speculated, inaccurately, that T2 will not deliver sufficient capacity to meet Dublin Airport's passenger growth projections and that an additional terminal will be required almost immediately to bridge this capacity gap.
The initial phase of T2 is designed to handle up to 15 million passengers at improved and internationally-acceptable levels of passenger service, bringing the capacity of the overall airport to a potential 35 million passengers.
The double-digit passenger growth experienced by the airport may be sustained over the next two years as Aer Lingus and Ryanair in particular expand their networks aggressively.
Thereafter, the rate of growth is expected to trend at close to the current international average of 3-4 per cent.
Consequently, we expect an annual passenger throughput of approximately 26 million when T2 comes on stream in 2009, and up to 10 years of sufficient capacity across both terminals to meet current projected demand.
The 10-year planning application currently being sought, also allows for an extension to T2 of 15,000 sq m, should capacity prove an issue before a third terminal is delivered.
Finally, it is important to point out that the DAA plans to spend at least €300 million over the next three years in developing, extending and refurbishing facilities for those passengers who continue to use T1, highlights of which will include the major boarding gate facility currently under construction known as Pier D, and a planned extension to the existing terminal.
• Declan Collier is chief executive of the Dublin Airport Authority
