Tuesday 28 April 2015
Indecon International Economic Consultants appointed to conduct the review
Minister for Transport, Tourism and Sport, Paschal Donohoe, T.D., today announced the commencement of a major review of the system for regulating airport charges in Ireland. Following a procurement process which attracted bids from a number of Irish and international consultancy firms, Indecon International Economic Consultants have been awarded the contract to conduct the review, which will commence immediately and be completed before the end of 2015. The review will involve full consultation with impacted stakeholders and will deliver options and recommendations for the future of airport charges in Ireland.
The Minister said he considers it appropriate and timely to carry out a comprehensive review of the airport charges regulatory regime at this time. The current system for regulating airport charges has been in place since 2001. Stakeholders have frequently pointed to difficulties with the system. Developments in the aviation business and in international regulatory models since 2001 also suggest that a review would be appropriate. The Minister already articulated his intention to carry out this review in the draft National Aviation Policy, and this was welcomed by all parties impacted by the current system.
It is intended that, after the completion of the Review, the Department will finalise and publish its policy on airport charges regulation, and make preparations for any necessary changes to legislation, by mid-2016.
Background Note: In the draft National Aviation Policy, the Department stated its intention to commission an independent review of airport charges. This was welcomed by many respondents to the draft Policy. It is also significant that Aer Lingus, daa and Ryanair collectively withdrew their requests for the establishment of an Appeal Panel to review the Commission for Aviation Regulation (CAR) price determination for the period 2015 – 2019 partly because of the commitment to conduct the review.
This current system of airport charging regulation involves the setting of a price cap by the Commission for Aviation Regulation (CAR) with the objective of ensuring that charges paid by airlines to Dublin Airport facilitate the efficient and economic development of the airport as well as meeting the requirements of airport users and allowing the airport to operate in a sustainable and financially viable manner. This task has proved to be complex and controversial, and stakeholders have identified difficulties with the regulatory regime and its operation on a consistent basis since it was established in 2001. Successive Ministers have considered it necessary to issue policy directions to the CAR, and these in turn have given rise to objections from airport users. Each determination made by the CAR has been subject to appeals and/or legal challenge.
The latest airport charging determination made by CAR in October 2014 sets the price cap for airport charges for the regulatory period 2015 – 2019. Aer Lingus, daa and Ryanair collectively withdrew their requests to appeal that determination, partly on the basis that the regulatory regime was to be reviewed.
The Review is intended to deliver options and recommendations for a future regulatory system for airport charges in Ireland taking account of the following:
· operation of the current system;
· developments in the global aviation industry;
· developments in the Irish Aviation Sector;
· the objectives outlined in the draft National Aviation Policy;
· the general principles for economic regulation contained in the Government Policy Statement of July 2013;
· EU aviation policy and regulation, and
· International practice in the field of airport charges regulation.