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Minister, members of the press, colleagues, ladies & gentlemen, thank you for joining us here today for what we believe is a very significant and exciting announcement in the development, not only of the Irish aviation industry, but of Irish transport infrastructure generally: Namely, the DAA’s plans for the construction of a second passenger terminal and other associated infrastructure at Dublin Airport over the next three years.
In a few moments, I will invite the Minister to give his views on the significance of this development and then the Chief Executive of the DAA, Declan Collier will deliver a detailed presentation of our plans. Following that, we will be happy to answer any questions you may have arising from the presentation.
Firstly, I would like briefly to place today’s announcement about T2 into context both in terms of the DAA itself and the requirements of its various stakeholders and customers.
When the DAA formally came into being less than two years ago in October 2004, one of the principal objectives required of it by its shareholder the government, was to facilitate delivery of the significant enhancement in infrastructure required by Dublin Airport and its rapidly growing number of passengers.
Six months later in May 2005, the Government having considered a range of
options, approved the DAA’s proposals to build a second passenger terminal at
Dublin Airport by 2009 and to reactivate plans to construct a new boarding gate
facility - Pier D - before the end of 2007. Following this decision, the DAA set
about meeting the very challenging logistical and timeline issues involved
One of the first deadlines that had to be met was the Commission for
Aviation Regulation’s requirement to make a determination on airport charges at
Dublin Airport, by October 2005. That left very little time for the DAA to hold
detailed consultations with its airline and other customers last summer and
subsequently to lodge a fully costed capital development plan with the
Regulator.
Nonetheless, this consultation process was completed through last summer and an initial development plan, was published by the DAA in September of last year.
Within a further three months the company tendered for and appointed a range of highly-experienced international consultants to plan, design and cost the second terminal and the other infrastructure required at Dublin Airport, in the short term.
Beginning early this year, these consultants working with our own internal specialists in the DAA, commenced the more detailed and extensive consultation process with airline and other stakeholders, before developing the detailed scope, design and specifications of T2.
It is worth remembering at this stage that in the short period of time between the DAA’s submission of its initial capital development programme to the Regulator early last Autumn and the detailed consultation process that took place through early 2006, many material variables had changed. To take just two - Aer Lingus had appointed a new management team with plans firmly fixed on expansion of that airline’s long-haul route network funded by an IPO, and Ryanair had reversed its long-held policy of limited expansion from Dublin Airport and had announced an aggressive growth plan which it continues to accelerate. Added to that was the fact that double digit passenger growth continues unabated at Dublin Airport through 2006.
The consequence of the recently-updated, expansive growth plans by Dublin Airport’s two major airline customers combined with the clear requirement to provide additional space and comfort to the Airport’s existing passenger base of over 20 million per annum, is a significant increase in the scale of the infrastructure needed at Dublin Airport in the near term - i.e. over the next four years.
In addressing these challenges, the DAA believes it has produced an appropriate, high- quality yet cost-effective solution to Ireland’s 21st century airport requirements and to the specific needs of its airline and passenger customers.
Dublin Airport serves the capital city of a progressive and economically successful EU member state. As such, any major new infrastructure developed there, serves not only as a key gateway to the country and its economy, but also in some measure must make a statement of the aesthetic values of the Irish nation and its people.
While it is important that these buildings are well designed and look well, it is critical that they function effectively. T2 will provide the operational services and capacity that our airline and other business customers require. It will also provide the efficiency and comfort that our passengers require and the optimum safety and security features needed for contemporary international air travel.
It has also been a key priority of the DAA that this major new infrastructure is delivered as cost-effectively as possible. The DAA was established with a fully-commercial mandate and the Board, which has just completed the sale of the Great Southern Hotels Group and many of whose members manage businesses in the commercial world, is determined that all aspects of the Dublin Airport development plan deliver optimum value for our various stakeholders. We are pleased to note that the independent cost-verification consultants appointed by Government will affirm that the plan we are announcing today, delivers such value.
There is a distinction between value and cost. To some, the projected cost of this development may seem high, particularly in the light of the necessary significant increase in scale that has resulted from the recent consultation process. Let me assure you that benchmarked against the €83bn that Europe’s major airports will spend on developing new infrastructure over the next ten years, the cost of Dublin Airport’s development is not in any way out of line. And we in Dublin have the additional challenges of operating in a successful but high-cost economy and of delivering the new capacity within a very challenging time frame, while “playing catch up” in a very dynamic growth business.
The new infrastructure must be financed appropriately through the mechanism of airport charges and commercial revenue. Last year, when we costed our initial development plan for Dublin Airport and when airport charges at Dublin were approximately €5 per passenger, the DAA estimated an average increase in airport charges of approximately €2.50 per passenger over the next four year period was required to fund it appropriately. The DAA believes it can deliver its longer-term development plan for the Airport for an average increase of approximately €3 per passenger over the next ten years.
At this appropriate level of charges the DAA will deliver the capacity, efficiency and comfort that its customers require and deserve, while remaining significantly below the average charge currently earned by large European airports of €11 and rising. It will also ensure that the DAA (and whoever operates T2) will have to benchmark very efficiently cost wise to remain profitable and fund its enormous debt, which at its peak will rise to over €1bn.
To date, our Regulator has not agreed fully with this analysis, nor with the arguments put forward by a statutory appeals panel earlier this year. We acknowledge that due to pressure of time the Regulator was unable to conduct a full assessment of the capital programme submitted by the DAA last September and that a promised review of our full capital requirements has just commenced. We will continue to work proactively with the Regulator to carry out this review as swiftly as possible and we encourage our various stakeholders to support our requirement for the appropriate increase in airport charges in order to transform Dublin Airport over the coming years into a facility we can all look forward to using for many years and of which we will all be justly proud.
I would now like to call on the Minister to address you, thank you.
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