The Aviation Regulator, Mr Bill Prasifka, has cut airport charges and imposed tougher efficiency targets on Aer Rianta, the operator of Dublin, Shannon and Cork airports.

The reduction in charges follows a review of the regime imposed by Mr Prasifka last August which was criticised for not being demanding enough by Ryanair, Aer Lingus and other airlines. It will now be up to the airlines to pass the lower charges - which only amount to a few cents per passenger - on to customers in the form of lower prices. The cumulative savings for the airlines could be considerable and run into hundreds of thousands of euros, if they do not pass the reductions on to customers.

The airlines appealed to an appeals panel set up by the Department of Public Enterprise which asked the regulator to revisit a number of issues. His new ruling issued yesterday has cut the time allowed for Aer Rianta to achieve efficiency improvement targets at Dublin and Shannon from five years to three. The airlines had argued that the original targets did not take into account factors such as economies of scale which would arise as the airports expanded and developed.

Aer Rianta will have to find cumulative efficiency improvements of 18.76 per cent at Dublin airport and 21.66 per cent at Shannon over the next three years. This accelerated efficiency and a number of other factors will feed into the maximum charge that Aer Rianta will be allowed levy airlines. The global cap for all three airports has been cut from €6.71 per passenger to €6.34 per passenger. The sub cap for Dublin airport has been cut from €5.60 per passenger to €5.38 per passenger.

Aer Rianta said yesterday it would implement the new caps when they became applicable. The timing will depend on passenger numbers, according to a spokesman. The company has already sought a judicial review of the process under which the original caps were imposed. That case will proceed later this year, but in the meantime Aer Rianta will adhere to the new ruling.

The company said the complex cap structure discriminated against Cork and Shannon airports. The average charge per passenger for Shannon and Cork will be €9.78 compared to €5.38 in Dublin.

Mr Noel Hanlon, the chairman of Aer Rianta, said the revised charges were "at total variance" with the findings of a report commissioned by the Government committee charged with boosting visitor numbers. The ad hoc interdepartmental committee - which was established in the wake of the September 11th attacks on the US - asked Prof Regis Doganis to look at issues, such as airport charges and the case for a dedicated area for low-cost airlines such as Ryanair at Dublin airport.

Prof Doganis found that Aer Rianta's charges "have been very low compared to those of other major European airports", said Mr Hanlon. The consultant recommended that Aer Rianta proceed with plans to construct a low-cost facility - called Pier D - which had been shelved by the company in favour of a higher specification extension to the airport.

Mr Hanlon sidestepped this issue but pointed out that Prof Doganis's recommendation that new facilities be constructed was at odds with Mr Prasifka's position that there were too many aircraft parking stands at the airport.

The regulator has also altered how it calculates deprecation on Aer Rianta's assets. Mr Prasifka has removed the company's land holdings from the asset base used to calculate depreciation. This contributed to the lower cap.

The regulator had to revise many of his original calculations after the airlines pointed out that the wrong passenger numbers and forecasts had been used. THE Tánaiste yesterday called for the development of a second new terminal at Dublin Airport to be operated independently of Aer Rianta. Ms Harney also said Aer Rianta's airports at Cork and Shannon should be given "greater autonomy" to develop their full commercial potential.

The comments were made less than a week after the Government called on Aer Rianta to construct a new terminal at Dublin Airport for use by "low fare" carriers. Such a terminal is expected to be built along the lines of proposals which received planning permission in 1997. Ms Harney said the absence of competition for airport services in Dublin was not satisfactory. A new terminal should be built and operated independently of Aer Rianta.