Ryanair and DAA at war

By Doug Newhouse |

The ongoing war of words and lack of any meaningful partnership continues between the Dublin Airport Authority (DAA) and Ryanair after the DAA claimed yesterday that Ryanair has rejected more than E.60m ($82m) worth of discounts on airport charges to stimulate increased traffic into its three Irish airports of Dublin, Shannon and Cork.

Negotiations between the two companies ended yesterday with the DAA pointing to Ryanair’s ‘insistence’ that it be paid more than E.100m ($136m) in discounts, ‘with no guarantee of any additional traffic’. The DAA said: “Ryanair also wanted to be paid more than E.10m ($14m) in discounts for existing passengers at Dublin Airport.”

In a statement, the DAA added: “The Ryanair proposal would have seen the airline potentially being financially rewarded for reducing traffic at Cork and Shannon airports and transferring it to Dublin Airport.

“DAA initially tabled a series of incentives that would have given Ryanair more than E.50m ($68m) in discounted airport charges if Ryanair delivered incremental growth of four million passengers at Dublin Airport over the next five years. DAA subsequently indicated its willingness to improve its offer and to provide Ryanair with more than E.60m ($82m) in incentives if it delivered incremental passenger growth.

“Regrettably, Ryanair has refused to accept this proposal and instead continues to demand E.100m ($136m) in subsidies with no guarantee of any extra traffic for the airport or for the country.”

DAA Ceo Declan Collier said: “Our incentives are structured to ensure that airlines cannot qualify for tens of millions of euro in discounts unless they deliver new passengers. But Ryanair gave no commitment in relation to how many of its projected four million passengers would be additional traffic, or what percentage of the traffic would be inbound tourists.”

DAA said it also strongly rejects Ryanair’s ‘spurious claims’ that it has not properly responded to the company’s proposal. DAA said it has sought clarification from Ryanair in relation to ‘several issues surrounding its proposal’ on a number of occasions in recent weeks, ‘but Ryanair has declined to provide answers to these requests’. 

Meanwhile, Ryanair has ‘rejected the DAA’s false claims’ about the offer to grow traffic at Dublin Airport by 4m passengers.

The airline said yesterday: “At a meeting this morning with Ryanair, the DAA Chief Executive, Declan Collier, refused to extend the DAA’s current traffic incentive scheme – which Aer Lingus benefit from although they are cutting traffic.”

Ryanair said that instead, the DAA had offered Ryanair a discount scheme under which the growth discounts would be given at Dublin – only after traffic losses in Cork and Shannon were made up. Ryanair adds that only 40% of the discounts generated by Ryanair’s traffic growth would be awarded to Ryanair, whereas 60% of Ryanair’s growth discounts would be given to Aer Lingus and other airlines at Dublin, even as they continue to cut traffic.

In a statement released yesterday, Ryanair Ceo Michael O’Leary said: “It’s extraordinary that the DAA, having presided over two years of traffic collapses during which Dublin Airport’s traffic has fallen from 23.5m to just 18.5m per annum, has now rejected Ryanair’s offer of 4m passenger growth which would generate up to 4,000 jobs and more than E.2bn ($2.7bn) for Dublin and Irish tourism. 

“The DAA is presently giving discounts to Aer Lingus, despite the fact that Aer Lingus’ traffic is in decline, but have this morning refused to extend these discounts to Ryanair because Mr Collier claims that Ryanair’s growth would be ‘too expensive’ for the DAA.

“It is absurd – even for the DAA – to propose that if Ryanair delivers 4m additional passengers, 60% of these growth discounts will be allocated to Ryanair’s competitor airlines at Dublin Airport and even these growth discounts will be further reduced by traffic declines which the DAA preside over at Cork and Shannon airports. 

“The DAA want Ryanair’s growth to subsidise their traffic falls at Cork and Shannon, and they also want to allocate 60% of Ryanair’s growth discounts at Dublin Airport to Aer Lingus, Aer Arann and other non-growth airlines.

“Ryanair will grow by 5m passengers in 2011, but will not now allocate any of this traffic growth at Dublin,” said O’Leary.

COMMENT: In 30 years of reporting I can’t remember witnessing such a broken relationship than the one that ‘exists’ between the DAA and Ryanair – and at a time when Ireland is in the midst of one of the worst recessions that it has ever faced.

The inability of both sides to find middle ground on this issue – and many others – bodes extremely badly for the country, with the obvious need for some intermediary to mediate between the two parties if they will even agree to it.

While who said what and why – behind closed doors – seems to be the central focus on this and other issues between the two parties, any moves to try and improve the fundamental ‘relationship’ seem to be very thin on the ground.

About the only thing the two parties agree upon is the importance of air traffic to tourism in Ireland. Neither the DAA or Ryanair were exactly helped by the Irish Government’s seemingly crazy decision to introduce a E.10 ($14) tourist tax on all passengers. 

At the same time, Ryanair – which is now the world’s largest scheduled international carrier – has said many times that it will continue to walk away from airports where passenger tax increases adversely impact upon its profitability. 

Last year the airline put its money where its mouth is by announcing big route reductions in other countries where tourist taxes have also been imposed – including Germany – and so the woes continue. 

While the impact of these taxes is always a matter of debate, Ryanair is right that there is solid evidence that they can decimate traffic, but ironically this is even more pronounced where an airport is too reliant on low cost carrier(s) and one or more subsequently decides to cut its services. 

A good example was Schiphol Airport in the Netherlands, where its stealth tax was abolished after a year because of the damage it did to overall passenger levels and local tourism revenues after carriers pulled out their services.

Even in a less than perfect world, you would think that these would be issues that airlines and airports should be fighting together – and Ryanair and the DAA should be no exception to this.

IATA and ACI talk quite rightly about the need for improved relationships between airlines and airports, in the same way that travel retail Trinity and other discussion platforms talk about operator, supplier and landlord relationships.

The central issues are essentially the same. They revolve around ‘people’ relationships, trust and mutual financial risk and reward. Where all of these elements are totally absent, then nothing will change.



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