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Appendix (iii)
Our ref: A.1 / S.16 18 October 1988
Dear Sir We refer to your letter of 15 September about airport charges at Dublin Airport. The first point we would like to make is that both IATA (the worldwide organisation representing airlines) and ICAO (the international regulatory body for aviation as a whole) accept that comparisons of airport charges at airports in different countries can be very misleading and, if taken in isolation, are almost worthless. This is because airport authorities are structured in so many different ways; have such widely diverging financial responsibilities and have, in any event, such a wide range of ways of charging. Some airport authorities make significant profits while others operate at a loss and these losses are picked up by the taxpayer in some form or other. We are responsible for raising and remunerating our own capital as well as meeting the requirement of an annual cash surrender to the State. In other words, we make a real net contribution to the Exchequer. We also bear the full costs of airport security, whereas almost all European airports have a major element of direct State operation in this area. Our landing charges i.e the charges levied on arriving aircraft are set on an all-inclusive basis i.e. there are no extras such as navigational fees, fuel throughput charges, security charges, lighting charges etc as apply at many other airports. In spite of this, our landing charges are among the lowest in Europe. While your letter lists a small number of airports which have lower landing charges than Dublin, we can supply a list many times longer than that showing airports that have higher charges - for example, Stansted is the only airport in the whole of the UK with lower landing charges than ours. (Your letter mentions Luton as being lower, but this is true only during the winter when that airport offers a special rate: the normal rate of £8.10 per tonne is over 35% higher than ours!) We know that calculations can be produced to show that Heathrow can be cheaper than us - but the fact is that Heathrow has such chronic congestion problems that it has introduced special off-peak rates to tempt airlines away from the busiest hours. It is of interest to note that this has largely been a failure proving yet again that airport charges have no effect whatsoever on airline operating decisions. Of the airports on mainland Europe, we can mention Oslo, Stockholm, Vienna, Helsinki, Amsterdam, Frankfurt, Munich, Dusseldorf, Hamburg, Geneva and Berlin among the major airports having higher landing fees than ours. Our passenger load fee (i.e. the charge levied for each departing passenger) is in the middle range of those applying elsewhere. For example, passenger load fees in the UK - other than ‘special offers’ - range from 11% higher (Luton) through 30% higher (Prestwick, Edinburgh, Cardiff, Leeds/Bradford, Newcastle etc) to over 75% higher (Glasgow, Belfast and Heathrow). If we take a look at the overall level of combined airport charges, we find that ours are very favourably placed from a market point of view. In order to make comparisons here it is necessary, firstly, to include all charges; secondly, to take an average of charges incurred on arrival and those incurred on departure and, thirdly, to take reasonable examples of passenger loads. For example, a Boeing 737 with 80 passengers on board will pay an average of £10.93 at Dublin, Shannon and Cork Airports. The corresponding charge at other airports ranges from a low of £3.46 at Luxembourg (which is not a commercial charge) to a high of £19.27 at Heathrow (which is a deliberate deterrent). The majority of airports in Europe are in a range between £8.50 and £16 per passenger: those below us in this range are all in mainland Europe, while those above us are mostly in the UK. We are firmly in the second lowest quadrant and, indeed, expect our position to become lower over the next year or so as other airports continue to increase their charges. We note your mention of the CII statement that we are overcharging airlines by £20 million a year in respect of landing fees and passenger load fees. We are puzzled by this allegation. Our total revenue from these sources in 1987 was £29 million - so you can see that an overcharge of £20 million would be a bit difficult to achieve! A reduction by this amount would mean a cut of almost 70% in our charges - our standard charge at that stage would be a mere one-third of Luton’s special off-season offer! We feel that the CII has been misinformed on this subject. We should also mention that the increased passenger throughput which we have enjoyed - and indeed for which we toiled behind the scenes for many years - has an expenditure side as well as a revenue one. Apart from increased operating costs, we are already involved in a major physical development programme which is estimated to cost up to £100 million in the period 1988 - 1993. In order to finance this level of investment it is essential that we maintain our income from airport charges at least at its present level, while continuing our policy of maximising revenue from non-aviation sources. In this connection, we would like to remind you of the role which our commercial activities play in keeping our airport charges at their present low level. In 1987 we earned almost £50 million from direct commercial activities, while our income from all other sources combined (including airport charges) was £41.6 million. The threat to the future of duty-free sales within the European Community is therefore a matter of grave concern to us and should be of concern to the Air Transport Users Committee: the loss of this revenue would have a severe impact on airport and airline economics and, therefore, on air fares. If you require further information on any of the foregoing, please do not hesitate to contact me. Yours faithfully
John Burke Company Secretary |
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