Airlines at Dublin Airport have strongly criticised Aer Rianta over its proposal to increase charges at the airport to compensate for the loss of income from duty free. They contend that the increases are unjustified and are designed to make the company more attractive to investors before flotation.
Meanwhile, Aer Rianta confirmed last night that it would not charge customers the VAT element on luxury goods such as perfumes and electrical goods, but would absorb those costs itself. It will charge, however, high-street prices for cigarettes and alcohol when duty free ends on July 1st.
The Government is expected to decide next month whether to float Aer Rianta, which operates the airports at Dublin, Cork and Shannon. Aer Rianta met the airport users last week to outline its plans for raising charges.
Several airlines contacted by The Irish Times, however, were annoyed at the State company's proposals and complained bitterly about recent increases in car-parking charges and the general chaos at the airport, due to building work.
"There is no emphasis on providing value for money, they are just trying to cushion the transition from duty free," said one airline executive. "There is no indication that they are replacing duty free other than with increased charges to airlines," said another source.
Aer Rianta operates a complicated structure for airport charges. Airlines have to pay landing charges - based on the air-crafts' tonnage - and a charge per passenger. It operates a series of discount schemes for airlines which include factors such as passenger growth and new routes.
From July 1st, it is ending a 25 per cent discount which it gives airlines such as CityJet, Aer Lingus, British Midland and Ryanair, to fly routes to London and UK regional airports. Airlines say this will add about £1.80 per passenger. Aer Rianta counters it will add about 50p per passenger.
Other discount schemes Aer Rianta gives airlines which introduce new routes are being unwound. Last year they were worth about £24 million to the airlines, this year the figure will drop to around £20 million, being phased out gradually by 2004. The winter discounts are also being abolished.
Aer Rianta says the abolition of duty free will mean a £15 million hit on pre-tax profits for the remainder of the year.
Airlines which attended last week's meeting between Aer Rianta and the International Airport Transport Association, said they were given little detail on future charges. IATA's Mr Laurie O'Toole, who attended the meeting, said last night that he would contact Aer Rianta tomorrow to see if it will defer abolishing the 25 per cent discount at the end of June until next year.
He said airlines had been told some time ago that the discount schemes were being abolished. This represented an increase in costs to the airlines. "The airline industry is extremely competitive and any increase in costs is of concern to airlines," Mr O'Toole said.
