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Ireland's largest airport has warned it will miss out on 10 per cent revenue growth due to a 16-year-old passenger cap which could prompt airlines to expand into the 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 country's main gateway has been limited to 32 million passengers annually, not counting transit passengers.
Other European airports are facing pressure to reduce flights for environmental reasons, with international protests forcing the Dutch government to halt its efforts to reduce flights at Amsterdam's Schiphol Airport. Climate concerns have threatened projects at UK airports and prompted France to abandon its plans for a new Paris Charles de Gaulle terminal in 2021.
But the state-owned Dublin Airport Authority is seeking to go the other way, applying for permission to raise the cap to 40 million. Last year, 31.9 million people passed through Dublin Airport, 1.1 million of whom were in transit, while traffic during the first six months of 2023 rose 55 per cent compared to the previous year to €459 million.
Increasing passenger numbers to 35 million passengers – which DAA chief executive Kenny Jacobs expects they would reach by the end of next year, were it not for the cap – would mean “about 10 per cent of additional revenue…” . . “Growth of 10 percent could be missed because we are stuck at 32 million because of the cap,” he told the Financial Times.
Major airlines and the Irish Prime Minister have warned that keeping the cap could hurt the economy as multinational companies such as Microsoft, Apple, Google and Pfizer pay billions of euros in corporate taxes.
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 are “absolutely profitable” thanks to regulated passenger fares that average less than half the level of their European counterparts.
But he said: “Growth in Dublin is on hold for up to three years while we wait for planning. It could take longer. Airlines are already worried about this. 'It's too complicated, I don't want to wait,' some said.”
Dublin's passenger cap was imposed as a condition of obtaining permission to build a second station in 2007, in order to control congestion on the roads. Dublin is one of the few European capitals that does not have a rail connection to the airport.
Lifting the cap could see airport emissions 22 per cent higher by 2031 than they would be if the cap remained, which has drawn criticism as Ireland struggles to meet its climate targets.
DAA “remains committed to reaching net zero by 2050,” Jacobs said, citing advances in jet fuel. He added that DAA — which also operates duty-free stores in 27 cities across Canada, the Middle East and elsewhere — is offering airlines a 25 per cent discount on runway fees if they use new, more efficient aircraft.
In December, the airport submitted a request to the district's local council to raise the maximum number of passengers by 25 percent. The independent National Planning Authority, which faces a large backlog of cases, will have the final say.
Jacobs said that unless the cap issue was resolved quickly, Dublin risked losing out to Manchester, Edinburgh, London Gatwick and major centers in continental Europe. “That is what is at stake here… This is not the loss of Dublin Airport, this is the loss of Ireland.”
Jacobs said he sees enough demand to increase current passenger numbers by 8-12 per cent by 2025. Illustrating this, US carrier JetBlue launched two routes to Dublin on Thursday.
Michael O'Leary, the chairman of Ryanair, whose airline accounts for 40 per cent of Dublin's traffic, said he would like to increase Irish traffic by 50 per cent this decade, but cannot because of the “false” ceiling.
“We've restricted traffic so we can't grow aviation and we can't grow tourism,” said O'Leary, who regularly issues harsh criticism of airports and governments that stand in his way.
The Irish government said Transport Minister Eamonn Ryan, who is also leader of the Green Party, “cannot interfere in the planning process, including the application seeking to extend the current passenger cap.”
But Luis Gallego, chief executive of IAG, the multinational company that owns Irish airline Aer Lingus, said the decision was “urgently needed to facilitate the continued growth and competitiveness of Dublin Airport”.
