THE Covid pandemic has done “profound and lasting damage” to the finances of the DAA, the outgoing chief executive of Dublin and Cork airport operator has warned.
In a submission to the Air Transport Regulation Commission, which plans to introduce passenger charges between 2023 and 2026, Dalton Philips said DAA’s net debt had doubled to a record €1 billion and its balance sheet was now “materially impaired”. .
“Providing a quality airport experience through extremely low passenger fees is an unsustainable permutation,” he warned the commission, which sets the maximum fees the airport operator can impose on passengers.
Mr Philips has argued that a 15 per cent increase in charges is needed just to restore Dublin Airport’s loading position to what it was in 2019.
“Unfortunately, Dublin Airport has entered the pandemic with unsustainably low airport charges, reduced allowable revenue and limited financial space to withstand downside risks or external shocks,” Philips said in the DAA’s submission.
Airport passenger numbers plummeted during the pandemic, and about 1,000 of Ireland-based DAA employees – a third of the country’s total – left the company.
The post-pandemic air travel recovery has stumped airport operators and airlines in Europe in their efforts to meet demand. Some airlines have had to cancel flights due to staffing issues, while airports like Dublin have struggled with security staff shortages, resulting in passengers waiting hours to be checked in.
“The entire aviation value chain will experience service delivery challenges this summer,” Philips warned. “Frontline functions have reduced their coverage throughout 2020/1 and are now equipped with baseline resources to support only a gradual recovery into 2025, as opposed to a surge in holiday activity this summer.”
He added: “Covid-19 has revealed certain gaps in the airport’s overall resilience. Recent experience has shown that passengers in general expect a speedy return to pre-pandemic levels of service. Unfortunately, it will take time, cost and additional human resources to improve standards from current minimum levels.”
The Air Traffic Regulations Commission sets passenger charges for Dublin Airport – the only airport in the country that has regulated charges.
An attempt is being made to establish a multi-year range of charges, taking into account the expected number of passengers and the investment required at Dublin Airport. It also seeks to ensure efficiencies are achieved to mitigate passenger charges.
“Price competitiveness has always been at the heart of Dublin Airport’s business strategy, but a reset of charges is now needed so that the airport can appropriately invest in resilience and efficiency and provide a good passenger experience,” stressed Mr Philips.
He said the DAA faces “some real decisions” about the developments it plans to make over the next five to 10 years. The DAA plans to invest €2.5 billion in capital at Dublin Airport to help it serve 40 million passengers a year. Before the pandemic, about 33 million were processed per year.
Mr Philips said Dublin Airport’s ability to finance itself has been “seriously hit” and that it also needs €400m in additional investment to meet national carbon reduction targets by 2030.
“Consecutive years from 2024 to 2026 will require record levels of capital spending,” he added, noting that the DAA’s “escalating debt” means it must be able to generate higher revenue to sustain lending metrics .
“The simultaneous pursuit of growth, efficiency, sustainability and affordability requires difficult trade-offs,” said Mr. Philips. “The post-pandemic reality is that the ‘value’ promise that consumers and airlines are demanding cannot be delivered under the currently artificially low price caps.”
https://www.independent.ie/business/daa-boss-calls-for-higher-charges-at-dublin-airport-as-finances-severely-compromised-41662664.html DAA chief calls for higher fees at Dublin airport as finances are ‘seriously at risk’