It is not unusual for Ryanair to fall-out with airports, in fact it has been a regular occurrence during its rapid rise to becoming one of Europe’s largest international airlines. But, its latest disagreement with Dublin Airport Authority (DAA) the parent organisation managing Dublin, Shannon and Cork airports in the Republic of Ireland has taken an interesting public twist after DAA released a statement to the press.
In this statement it claims that it offered “Ryanair more than €60 million worth of discounts on airport charges to stimulate increased traffic into its three Irish airports” but that negotiations ended last week due to “Ryanair’s insistence that it be paid more than €100 million in discounts”, with no guarantee of any additional traffic. DAA also says that Ryanair wanted to be “paid more than €10 million in discounts for existing passengers at Dublin Airport”.
The original offer from DAA to the budget carrier is thought to have offered incentives that would have given Ryanair more than €50 million in discounted airport charges if it had delivered incremental growth of four million passengers at Dublin Airport over the next five years. However, it subsequently improved this offer to provide more than €60 million in incentives.
The DAA says it is “keen to stimulate sustainable growth at its three Irish airports” but that the Ryanair proposal would have seen the airline “potentially being financially rewarded” for reducing traffic at Cork and Shannon airports and transferring it to Dublin Airport. “Regrettably, Ryanair has refused to accept this proposal and instead continues to demand €100 million in subsidies with no guarantee of any extra traffic for the airport or for the country,” it adds.
“Agreeing to the Ryanair proposal would mean that DAA could potentially pay Ryanair €100 million in incentives for no overall passenger growth and no extra inbound tourists,” according to DAA Chief Executive Declan Collier. “DAA was therefore unable to accede to Ryanair’s unrealistic and unsustainable proposal. Our incentives are structured to ensure that airlines cannot qualify for tens of millions of euro in discounts unless they deliver new passengers. But Ryanair gave no commitment in relation to how many of its projected four million passengers would be additional traffic or what percentage of the traffic would be inbound tourists.”
Ryanair currently serves almost 60 destinations from Dublin, providing over 450 weekly frequencies and offering over 85,000 seats per week. Just over half of this capacity is on domestic routes and flights to the UK, with the remainder covering destinations across Continental Europe.
Ryanair has countered DAA’s claims, most notably the comment that “our incentives are structured to ensure that airlines cannot qualify for tens of millions of euro in discounts unless they deliver new passengers”. The airline claims that DAA has confirmed that Aer Lingus, who has scaled back capacity at Dublin during 2010 and during the current year, “were receiving transfer passenger discounts, while delivering no new passengers”. A Ryanair executive says the DAA should explain why the national carrier is receiving “growth subsidies”, when it has not been offered similar incentives.
It has subsequently submitted a written proposal to the DAA stating that it would commit to growing its traffic at Shannon Airport from a current figure of 300,000 passengers per annum to 1.3 million over the next five years, but only if it is “granted the same discount scheme presently enjoyed by Aer Lingus for its transfer traffic at Dublin Airport”. It says such a deal will reverse “the unprecedented collapse in traffic” since the DAA “refused to extend Ryanair’s five year Shannon cost agreement in April 2010”.
Ryanair has given the DAA two weeks (until March 5) to respond so I am sure this ‘discussion’ will continue for many weeks to come, although how much longer it will be played under the spotlight of the media is not clear.
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