The aviation regulator may set new tougher efficiency targets for Aer Rianta following an appeal by Ryanair and Aer Lingus that current targets are too lenient. The Aviation Appeals Board ruled last week that the airlines had made a strong enough case for it to ask Mr Prasifka, the regulator, to reconsider his original targets set last August.
The efficiency targets were part of a complex ruling by Mr Prasifka on the fees that Aer Rianta can charge airlines and which feed into airline ticket prices. Higher efficiency targets should ultimately lead to lower landing charges.
Several other aspects of the determination were also appealed to the panel by airlines and other parties. The panel did not - as reported yesterday in The Irish Times - rule that the regulator should reconsider his findings on Aer Rianta's investment plans. Ryanair and Aer Lingus had challenged his decision to allow Aer Rianta fund £272 million (€345.4 million) in new investment at its airports through landing charges. The airlines argued that they - as the major customers - should have more say in how the money was spent.
Aer Rianta did not lodge an appeal on the issue but did make a representation to the panel, claiming it was up to it to determine investment policy at the airport. The panel concluded that the airlines had not shown sufficient grounds to require the regulator revisit his ruling.
Although this represents a victory of sorts for Aer Rianta, the figure approved by Mr Prasifka - and upheld by the panel - is still well short of the £1 billion that Aer Rianta originally wanted sanctioned. The airport company has challenged the original determination in the High Court and the case will be heard later in the year.
The appeal panel also looked at the proposed Pier D extension to the airport. Ryanair has claimed that £34 million had been allowed for its construction and that this was excessive and would amount to "gold plating". The panel did not consider Ryanair had made a strong enough case for it to ask the regulator to look at this aspect of the issue. It stressed, however, that it was not making any judgment on whether the project should go ahead or who should use it.
The development of Pier D as a low-cost hub is one of the recommendations of the committee set up by the Government to find ways of boosting visitor numbers following the September 11th attacks in the US. It has been enthusiastically championed by Ryanair, which has offered to fund its construction.
Aer Rianta is opposed to private sector development at the airport and no longer favours developing a separate low-cost facility. It argues that the original extension - costed at around £15 million - no longer meets security and other requirements. The committee, chaired by the Department of the Taoiseach, has now hired its own consultant to look at this and other issues.
Ryanair claimed to the appeal body that the regulator should consider the possibility of private sector investment. The panel found against Ryanair and concluded that it was up to Aer Rianta "to decide if they wish to involve private sector parties".
The regulator is now embarking on a public consultation and will announce by February 9th whether he will modify any aspect of his original determination. The current efficiency targets set for Aer Rianta are a 3.5 per cent per annum improvement at Dublin and a 4 per cent per annum improvement at Shannon. No target was set for Cork airport.
The panel said Mr Prasifka should consider setting more demanding targets for all three airports in light of "the need to reduce relative efficiency levels with peer airports more rapidly [reflecting the reality of more competitive markets]". It also points out that economies of scale and technical improvements which arise as the airports develop should allow for increased efficiency.
