Ryanair will continue to oppose a terminal that is designed to double passenger charges and boost DAA's profits, writes Michael O'Leary
For most people, the biggest investment they will make is the purchase of their home. Accordingly, they take great care to ensure that the property meets their family's needs, that the cost is affordable, and that any renovations or extensions will be keenly costed to deliver the best value for their family.
Imagine what you'd think of a cowboy builder who proposed: (a) to spend €800,000 building your house, when a competing builder, providing the same size of house, would build it for €200,000; (b) to knock down your seven-year-old house, which cost €150,000 to build, so that he could spend €800,000 building a new house that should cost €200,000; (c) to spend €450,000 refurbishing and renovating your existing house, but then reduce it in size from 2½ bedrooms to just 1½ bedrooms; and (d) to carry out this work even though the cowboy has proven his incompetence by wasting €200,000 building a holiday home in Cork that should have cost just €20,000.
I suspect that the last thing you would do is allow this "cowboy" anywhere near your family or your bank account. You would probably have him jailed for gross incompetence or committed for insanity. Yet this is exactly what the Dublin airport monopoly has been doing in recent years and proposes to do again with the second terminal, except that in this case the figures are not hundreds of thousands, but hundreds of millions.
Yes folks, the government-owned Dublin Airport Authority (DAA) monopoly plans to: (a) spend €800 million on a second terminal that should cost €200 million; (b) scrap the €150 million Pier C which is only seven years old just to make way for Terminal 2 (T2); (c) waste €450 million "refurbishing" Terminal 1, but then reduce its capacity from 25 million to 15 million passengers a year; and (d) do all this after wasting €200 million on a terminal at Cork airport that should have cost just €20 million.
Of course, this "cowboy" monopoly now promises passengers a brave new world. It claims this massive waste will "put the needs of travellers first", which is rich coming from a State company that has never cared a toss about passenger needs. Just ask any passenger stuck in Dublin airport whether the DAA puts their needs first, and the answer will be a resounding "no".
Like all government monopolies, the DAA has been misleading about the cause of the present shambles. It claims that the mess at Dublin airport is either due to years of under-investment or that no one could have forecast the passenger numbers of recent years. These claims are false.
In its 1999 annual accounts, Aer Rianta proudly claimed that it was "continuing with its major capital investment programme at the three airports: €470 million in Dublin, €101 million in Shannon and €76 million in Cork". In its 2000 accounts, Aer Rianta proudly announced that, "by 2006 passenger numbers at Dublin airport are forecast to reach 20 million per annum, the predicted capacity of the current development programme". Last year 21 million passengers used Dublin airport, just 5 per cent above the planned capacity of the DAA's terminal buildings, and yet the place was in chaos.
Like all government monopolies, the DAA is incapable of designing efficient facilities. It repeatedly builds white elephants that don't work, cost 10 times more than necessary and which, in the case of Pier C, will be pulled down seven years after being opened.
Having wasted €200 million building a €20 million terminal at Cork airport, the DAA now proposes to waste more than €800 million building a €200 million second terminal at Dublin. It (falsely) claims that the increased size is to accommodate airline growth plans, yet the capacity of the terminal hasn't changed: it remains fixed at 25 million passengers a year. On the contrary, the increase in the size of the terminal does not provide any extra passenger capacity; it just provides more space for high-priced shops and restaurants for the DAA monopoly.
Ryanair is opposed to this waste, to these badly designed, badly located facilities. The only reason why the DAA wastes such vast sums on buildings is because the Aviation Regulator rewards it by fixing its charges and income as a percentage of its capital expenditure. This system rewards waste. It makes perfect sense for the DAA to waste €800 million on T2 instead of €200 million, because the regulator will set its income at 5 per cent of €800 million, rather than 5 per cent of €200 million.
The regulator has already confirmed that, should the DAA's €2 billion investment programme proceed, then passenger charges at Dublin airport will double from current high levels. Passengers will yet again pay for the DAA's waste. Worse still, Ryanair's passengers will be asked to pay higher charges to pay for T2, despite the fact that they will never use it. This is contrary to every international regulatory principle that the "user pays". In the case of the DAA, it intends to force non-users to pay for T2 as well.
Imagine this scenario: your cowboy builder escapes from the asylum and proposes that your family doubles their mortgage so that you can help pay for your neighbour's new house, which your family will never live in. Crazy. Only a government monopoly could get away with this rip-off.
None of this insane waste or passenger discomfort would be necessary of course if the "great ditherer" Bertie Ahern had kept his 2002 government promise to deliver a competing second terminal at Dublin airport. If dithering Bertie had honoured this promise, then one of the 13 proposals received by the Government for a competing second terminal in 2002 would now be opened and operating, without any increase in passenger charges at Dublin. Yet again this Government dithers, transport infrastructure is delayed and passengers suffer.
Ryanair will continue to oppose a second terminal (built by the same people who have already wasted almost €500 million on the awful first terminal), which is primarily designed to double passenger charges, boost the DAA's profits and destroy passenger facilities at Dublin airport for the next 20 years. Eventually even dithering Bertie must accept that government monopolies are incapable of delivering efficient transport infrastructure, and incapable of putting the needs of travellers first. Sadly, "passenger needs" will remain as foreign to the DAA as "decisive action" is to Bertie Ahern.
Michael O'Leary is chief executive of Ryanair