Dublin Airport Authority is set to clash with the aviation regulator over a claim the cost of building a second terminal was 20 per cent higher than originally allowed at €923 million, as a debate over future airport charges gets under way.
The Commission for Aviation Regulation (CAR) is preparing to revise the cap on the airport's passenger charges from the start of 2015. Yesterday, it published a consultation paper outlining the costs likely to be taken into account when calculating this, including the authority's investment in the terminal.
Associated projects
According to the figures produced by the regulator yesterday, the total cost of Terminal 2 and its associated projects came to €923 million, 20 per cent more than the €771 million allowed by the commission when it was being planned in 2007. It says the terminal itself cost €759 million, 22 per cent more than the €620 million allowed, while the associated projects ran 9 per cent over at €151 million.
However, a DAA spokesman disputed those figures yesterday. He explained that what the commission describes as associated projects is a collection of developments not part of terminal two. "DAA said at the outset that the overall T2 project would have a construction cost of €609 million, including about €400 million for the construction of the terminal building," he said.
“The construction costs for the entire project came out at €637 million, which was a 4.6 per cent increase on our original estimates. Project and planning fees brought the overall amount to €745 million.”
The CAR sets a cap on the passenger charges the State-owned airport company can levy on airlines, which pass them on to their customers. The current maximum is about €10.70, which was set in 2009.
The charges include provision for capital expenditure, allowing the airport authority to recoup its investment in the second terminal. Its spokesman said that while the DAA has already made its investment without State funds, it will not be paid for the bulk of that investment through airport charges for 30-40 years.
“This is the start of a nine-month consultation process in relation to the next ruling on airport charges and, as part of that determination, the regulator is looking at the construction costs of T2 and how they might be applied to charges decades from now,” he said.
Terminal 2 opened in late 2010. The DAA built it in the face of warnings from airline customers that the facility would be too big. The regulator’s paper notes the number of passengers using the airport is now similar to 2005/2006.
“In 2007, the DAA was forecasting 2012 passenger numbers more than 40 per cent higher than has been subsequently realised,” it says. The authority argues that its construction was warranted and resulted in the launch of extra long- and short-haul services.
Consultation process
The CAR did not comment yesterday. The paper is designed to kick off a consultation process that will, in theory, aid it in arriving at an appropriate cap before 2015. It is seeking submissions from all interested parties. The paper deals with passenger numbers, costs, capital spending, commercial revenues and service quality.
It points out that quality-of-service failures – such as passengers queuing for longer than 30 minutes at security and the fact the airport did not have free wi-fi – would cost the DAA €1.1 million by the year’s end.
