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[Article] Charges cap cuts Aer Rianta profits

13-03-2004 3:35am

#1

Victor

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http://home.eircom.net/content/irelandcom/topstories/2720440?view=Eircomnet

Charges cap cuts Aer Rianta profits
From:ireland.com
Friday, 12th March, 2004

A cap on landing charges and difficulties in some of its markets halved profits at the State airports' authority, Aer Rianta, last year, The Irish Times has learned.

The company is currently finalising its accounts for last year. It is expected to post profits after tax in the region of €18 million - around half the €36.23 million after-tax earnings reported for 2002.

An Aer Rianta spokesman declined to comment last night, saying that the accounts had yet to be finalised. However, it is understood that the State company's earnings were hit by a cap on landing charges imposed by the Commission for Aviation Regulation (CAR).

It also had other difficulties, including ongoing losses at its subsidiary, Aer Rianta International, which is exposed to weakness in continental markets through its involvement in Hamburg and Dusseldorf airports.

Aer Rianta had been seeking an increase in landing charges (the levies paid by airlines for the passengers that pass through its three airports) throughout last year.

Currently, the maximum it is allowed to charge is €8.48 per passenger, while the levy for Dublin airport is capped at €5.45. However, it does not impose the maximum charge on every passenger, as it offers incentives to attract new airlines or to encourage its existing customers to open new routes.

Consequently the average charged is lower than the maximum. In Dublin, it is understood that the average payment per passenger is closer to €5.

At one point last year, the Aer Rianta chairman, Mr Noel Hanlon, suggested that the charges would need to rise by 20 per cent to cover both its ongoing operations and the capital expenditure needed to continue developing its airports.

The company subsequently told airlines that it wanted to increase charges by 9 per cent. This would have generated an extra €85 million from the estimated 16 million passengers using Dublin airport last year.

However, a CAR review of charges recommended cutting the maximum charge by over 10 per cent to €7.56, and reducing the Dublin levy to €4.89.

The CAR had originally been expected to recommend an increase along the lines that Aer Rianta had been seeking. In a response to the CAR review, the company warned that this proposal would leave it with little or no cash to develop its facilities, and would ultimately leave it with severe capacity constraints.

It also emerged at the beginning of last year that Aer Rianta had been losing money on its Irish airport operations. In 2001, the three airports lost €5.7 million, after exceptional charges, on revenues of €353 million. The company had debts of over €400 million at the end of 2002.

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