Dublin Airport warns of revenue hit from passenger cap

Ireland’s biggest airport has warned it will miss out on revenue growth of 10 per cent because of a 16-year-old cap on passenger numbers that could push airlines to expand at UK and other European hubs instead.

Although Ireland is a small island, its open economy makes it disproportionately dependent on air travel and the Dublin-London route is among the busiest in Europe. But since 2007, the main gateway to the country has been limited to 32mn passengers a year, not counting those in transit.

Other European airports are facing pressure to reduce flights for environmental reasons — an international outcry forced the Dutch government to pause efforts to cut flights at Amsterdam’s Schiphol. Climate concerns have threatened projects at UK airports and led France to abandon plans for a new terminal at Paris Charles de Gaulle in 2021.

But the state-owned Dublin Airport Authority is seeking to go the other way, and has applied for permission to raise the cap to 40mn. Last year, 31.9mn people passed through Dublin Airport, 1.1mn of whom were in transit, while turnover during the first six months of 2023 rose 55 per cent on a year earlier to €459mn.

Increasing passenger numbers to 35mn — where DAA chief executive Kenny Jacobs predicts they could be by the end of next year, were it not for the cap — would mean “about 10 per cent additional revenue . . . 10 per cent growth out there that could be forgone because we’re stalled at 32mn because of the cap”, he told the Financial Times.

Big airlines and the Irish prime minister have warned that maintaining the cap could hit an economy where multinationals such as Microsoft, Apple, Google and Pfizer pay billions of euros in corporation tax.

Jacobs, a former Ryanair chief marketing officer who took over as DAA chief executive last year, said airlines want to expand in Dublin because they “make an absolute killing” thanks to regulated passenger charges that average less than half the level of European peers.

But he said: “Growth at Dublin is stalled for up to three years while we’re waiting for planning. It could take longer. The airlines are already anxious about this. Some of them have said ‘it’s just too complicated, I don’t want to be waiting’.”

Dublin’s passenger cap was imposed as a condition for permission to build a second terminal in 2007, in order to control congestion on the roads. Dublin is one of only a handful of European capitals with no airport rail connection.

Raising the cap could boost the airport’s emissions by 22 per cent by 2031 compared with where they would be if the cap remains, which has drawn criticism as Ireland is struggling to meet its climate targets.

Jacobs said DAA was “still committed to being net zero by 2050”, noting advances in aviation fuel. DAA — which also operates duty-free shops in 27 cities across Canada, the Middle East and elsewhere — offers airlines a 25 per cent discount on runway charges if they use new, more efficient planes, he added.

In December, the airport applied to the area’s local council to lift the passenger cap by 25 per cent. The national independent planning body, which is battling a lengthy backlog of cases, will have the final say.

Unless the cap row was fixed quickly, Dublin risked losing out to Manchester, Edinburgh, London Gatwick and big hubs in mainland Europe, Jacobs said. “That’s what’s at stake here . . . That’s not Dublin Airport losing — that’s Ireland losing.”

Jacobs said he saw sufficient demand to boost existing passenger numbers by 8-12 per cent by 2025. Illustrating that, US airline JetBlue launched two routes to Dublin on Thursday.

Michael O’Leary, the head of Ryanair whose airline accounts for 40 per cent of traffic in Dublin, said he would like to grow its Irish traffic by 50 per cent this decade but cannot because of the “bogus” cap.

“We’ve capped the traffic so we can’t grow aviation and we can’t grow f***ing tourism,” said O’Leary, who regularly issues vitriolic criticism of airports and governments that stand in his way.

The Irish government said transport minister Eamon Ryan, who is also leader of the Green party, “cannot intervene in the planning process, including the application seeking an extension of the existing passenger cap”.

But Luis Gallego, chief executive of IAG, the multinational that owns Ireland’s flag carrier Aer Lingus, said a decision “is urgently required to facilitate growth and the ongoing competitiveness of Dublin Airport”.