Today, yet again, the Cabinet is due to discuss a second terminal for Dublin airport, writes Fintan O'Toole
A decision has already been delayed, again and again, by the insistence of the Progressive Democrats, following the lead of Michael O'Leary of Ryanair, that the second terminal should be privately owned and operated in competition with the first.
For Michael O'Leary, acting in the interests of his shareholders, this is a commercial demand, one that, if satisfied, will increase his already abundant profits. For the PDs, it is an ideological demand, a Pavlovian response to the magic word "competition".
For anyone else, especially those who have to use the airport, it is a classic example of why things don't work in this country. The building of a piece of infrastructure whose necessity has been obvious for at least a decade has been held up by a combination of private interests and ill-considered political populism.
The notion of competing terminals in the same airport is not new. It has been tried elsewhere. The largest example is Toronto's Lester B Pearson Airport. There, terminals one and two are owned and operated by Transport Canada, the government transport authority, and terminal three, operating since 1991, is owned by a private company, the Terminal Three Limited Partnership.
Since competition naturally increases efficiency, it is obvious that Toronto airport has been a fantastic success story since it adopted the O'Leary-Harney approach.
Landing charges have come down, passenger numbers have boomed, workers are more productive, and both consumers and the airlines are delighted with themselves.
Well, no. The average per passenger airside charges at the privately-run terminal three are twice as high as those at the State-run terminals one and two. The State-run terminals operate on a break-even basis, but the private terminal has to cover not only higher operating costs and capital costs but also profits. And, overall, the innovative structure has helped to make Toronto one of the most expensive airports in the world. Passenger numbers and revenues have steadily declined, whereas staff costs and operating costs have risen steeply.
Comparing 2004 figures to 1998 results, the airport has incurred drops in airport staff productivity (down by 34 per cent), aircraft handling efficiency (down by 22 per cent), and passenger handling efficiency (down by 19 per cent). Non-airline revenue is down by 36 per cent. For the same period, staff costs per passenger show an 88 per cent increase, and the operations and maintenance costs per passenger have soared upward by 140 per cent.
Four years ago, when the Civil Aviation Authority in the UK asked for submissions on the idea of having competing terminals in their main airports, a group of smaller airlines, who have most to benefit from real competition, came out strongly against the proposal. In a joint submission Air 2000, Airtours International, Britannia Airways, JMC Airlines and Monarch Airlines argued that there was no reason to think that having different terminals owned by different companies would really do much for competition: "If the terminals are differentiated into, for example, charter, or short haul, or long haul, then the level of actual competition may not be increased at all. Indeed, in the absence of regulatory oversight of terminals following the introduction of competition, the airlines may be faced with a more determined approach by the new operators to increase charges or decrease standards."
Competition, as the airlines pointed out, only really works when there is room for someone to come along and add capacity to the service being offered. "Competition between different terminals can only be truly effective when there is unused terminal capacity available, and when there is every likelihood that additional capacity can be made available when demand warrants."
But neither Heathrow, which they had in mind, nor Dublin meets these criteria. A second Dublin terminal will merely meet existing demand, and the overall capacity will always be limited by the space available for runways and the planning procedures for developing them.
The airlines were also emphatic in their view that they would prefer to deal with a single airport management than with two different companies trying to cut each other's throats.
Even if competing terminals at Dublin airport resulted in lower landing charges for Michael O'Leary, it is passengers who would pay the price of boosting his profits.
To make up for a drop in landing fees, the terminal operators would put the squeeze on bus operators, car rental companies, retailers and other businesses using the airports.
They in turn would pass those charges on to their customers. This, too, has been the experience elsewhere. The ordinary consumer, as usual, gets stuck with the cost of increased profits for private shareholders.
If it is really concerned for those consumers, the Government should get on with the job of providing a second State-owned terminal.